The closely watched report from the Labor Department showed that the unemployment rate rose to 3.7% in October from an expected 3.6%, while average hourly earnings rose by 0.4% against a forecast of 0.3%.

Meanwhile, nonfarm payrolls increased by 261,000 jobs last month versus 200,000 expected after an increase of 263,000 in September.

Although the U.S. economy added more jobs than expected in October, the unemployment rate rose more than expected.

Investors are still digesting Fed head Jerome Powell's speech on Wednesday, in which he said that interest rates will go higher than previously thought. The market was forced to revise upwards its prediction of the maximum rate that the Fed will have to implement before taking a break. This rate is now set at around 5.1% and is expected by the middle of next year. Currently, including Wednesday's 75 basis point hike, U.S. rates are in a range of 3.75 to 4 percent. So we are still short.

For the projections to become more solid, visibility on the consequences of the mishmash of inflation, geopolitics, growth and shortages of all kinds would have to be better. And central banks are not yet able to improve this visibility, whether in the US, the UK, Europe or elsewhere. Basically, no one knows whether we will have to raise interest rates to levels not seen in decades to regain control of inflation, or whether central banks are seriously screwing up and risk destroying the economic dynamic.

Meanwhile, China is also boosting markets. A big rebound took place in Hong Kong, Shanghai and Shenzhen against the backdrop of rumors, notably about the easing of restrictions linked to the pandemic.

The Chinese surge is again based on rumors that the Communist Party is going to change its so-called zero-covid policy, which is causing severe damage to the economic dynamics and the free movement of people in the country. The rumor started with an obscure document posted on social networks a few days ago. The latest news is that a committee has been set up to consider a relaxation next March. The movement was amplified by the news that the audit mission of the US authorities to ensure that Chinese companies listed in the US comply with the best accounting standards has ended earlier than expected. This news was immediately translated by financiers into "things went well", leading to an even more pronounced rush on the big Chinese technology groups whose shares have been slashed in recent months.

Meanwhile, corporate results continue to pour, even if they seem to have a somewhat secondary influence on the great monetary mechanics at work today. Or rather, since there are no disasters and listed companies seem to be able to weather the world's woes, the influence of this reporting season is relatively neutral. Except perhaps for the technology sector, whose results have shaken investors' certainty about its ability to be an eternal cash cow.

 

Economic highlights of the day:

The main statistic of the day is the October employment data in the US. The full macro agenda is here. 

The dollar is down 12% to EUR 1.031. The ounce of gold is back up a few dollars to 1667 dollars. Oil is firm, with North Sea Brent at USD 98.52 per barrel and US light crude WTI at USD 92.34. The yield on 10-year US debt is climbing back up 4.13%. Bitcoin is trading around USD 20,800.

 

In corporate news:

* Starbucks reported like-for-like sales and quarterly profit above expectations, saying demand in North America remained strong and the decline in sales in China was not as severe as expected. The coffee chain's stock was up 4.3% in pre-market trading.

* Warner Bros Discovery reported quarterly results below Wall Street expectations after taking a major restructuring charge. The stock was down 4.8% in after-hours trading.

* PayPal lowered its annual revenue growth forecast, anticipating a deeper economic slowdown and modest growth in its U.S. business in the fourth quarter. The U.S. payments group was down 6.4% in pre-market trading.

* Amgen was up in after-hours trading after reporting a slight increase in third-quarter revenue on sales growth in its cancer, rheumatology and cardiovascular treatments.

* Pfizer, BioNTech - The two companies said Friday that their COVID-19 vaccine specifically targeting the Omicron variant of the coronavirus and its BA.4/5 subvariants produced an improved immune response compared to the original vaccine one month after injection.

* Doordash - The meal delivery group's orders hit a record high in the third quarter, despite higher prices. Its stock was up 11.8% in pre-market trading.

* Coinbase Global reported a third-quarter net loss Thursday amid high inflation, rising interest rates and geopolitical tensions that weighed on demand for risky assets.

* GoPro - The sports camera maker fell 9% in premarket trading after announcing a lower-than-expected Christmas quarter revenue forecast due to higher inventories, heavy promotions and lower consumer demand.

* Hershey raised its full-year earnings and sales forecast as the confectionery maker saw strong demand during the Halloween celebrations that is expected to continue through the holiday season despite higher prices. The stock was up 1.7% in pre-market trading.

 

Analyst recommendations:

  • Advanced Energy: Citi upgrades to buy from neutral. PT up 18% to $95.
  • Ansys: Rosenblatt Securities upgrades to buy from neutral. PT up 27% to $270.
  • Arrow Electronics: Truist Securities downgrades to $114 from $126. Maintains hold rating.
  • Cigna: Truist Securities upgrades to $375 from $330. Maintains buy rating.
  • eBay: Susquehanna Financial lowers PT to $42 from $48. Maintains neutral rating.
  • Expedia: Benchmark Company lowers PT to $160 from $197. Maintains buy rating.
  • Fidelity National: Susquehanna Financial cut the target to $100 from $160. Maintains positive rating.
  • Kemper: Raymond James raised the recommendation to outperform from market perform. PT up 21% to $60.
  • Lincoln National: Credit Suisse upgrades to neutral from underperform. PT up 18% to $41.
  • McDonald's: Guggenheim Securities raiseq PT to $302 from $280. Maintains buy rating.
  • Mercury General: Raymond James upgrades to strong buy from underperform. PT up 39% to $45.
  • Papa John's: Benchmark Company downgrades to $95 from $105. Maintains buy rating.
  • Qualcomm: Fubon Securities downgrades to neutral from buy. PT up 20% to $125.
  • Roku: Cannonball Research downgrades to neutral from buy. PT up 10% to $57.
  • Severn Trent: Morgan Stanley upgrades from Equal-Weight to Overweight targeting GBp 3200.
  • Skyworks: Benchmark Company lowers PT to $120 from $155. Maintains buy rating.
  • Twilio: Cowen downgrades to market perform from outperform. PT down 0.6% to $65.
  • United Utilities: Morgan Stanley upgrades from Underweight to Overweight, targeting GBp 990.
  • Virgin Galactic: Cowen lowers PT to $7 from $8. Maintains outperform rating.