US Jobs Reports and Oil Tensions Dominate Markets This Week

The US’ employment data took markets by storm given its high importance in providing a clear picture of the ramifications of the latest geopolitical tensions on the US labor market.

On the Europe front, key economic data will be monitored closely by investors, led by inflation data, known to be the most affected by energy supply problems in the Strait of Hormuz.

What is the US jobs report?

The monthly jobs report issued by the US Department of Labor provides a glimpse of the new job openings created in the economy within the previous month, along with the unemployment rate and types of wage increases workers received. The report also gives a clear view of the general economic state.

How important is the US jobs report?

The US jobs report gives investors a deep dive into the demand by consumers and corporations for products. When demand rises, corporations tend to increase hiring and cut their workforce when demand is low.

How to read the US jobs report?

The US jobs report is considered one of the most fundamental market sentiment movers given its strategic importance in clarifying the state of the economy, be it during a growth phase or when it faces economic or trade or geopolitical crises.

Markets might react up or down, particularly if the results come different from what was expected. If the results came better than expected, that increases optimism in the market of better economic activity, and vice versa. Analysts, however, consider such market volatility to last only for a short while, with markets only needing a short while to digest the new readings and make sense of them.

The US economy

US employment reports will top the list of economic data that both traders and investors must closely monitor this week. This is due to the importance of such data in assessing how geopolitical disruptions are affecting the US economy and its performance during a particularly sensitive economic period—especially with rising energy prices pushing gasoline costs in America above $4 per gallon, which will impact both consumer spending and consumer confidence.

The report will also give the Fed another indicator to take in mind when deciding its next interest rate move, with the last few indicators pointing towards rates staying unchanged for longer than anticipated before. This also depends on how the geopolitical situations evolve by then.

The end of this week brings this year’s first quarter to a close, where the global economy has undergone many major geopolitical and economic events that have largely affected different markets and assets following years of uninterrupted gains. That will likely have an effect on investor sentiment per many acclaimed analysts.

On the US side, employment data releases will begin with the Job Openings report for February—which had previously shown an unexpected rise from January—alongside the private sector non-farm payrolls report.

All eyes will then turn to Friday's employment data to gauge hiring momentum, unemployment rates, and wage levels for March, the month in which Middle East geopolitical tensions began.

According to Reuters, the US’ employment report will probably add 48 thousand new jobs, following recording a contraction of 92 thousand jobs. Expectations also expect the unemployment rate to increase from 4.4% to 4.5% during Friday's Good Friday holiday.

The EU economy

As for the Europeans, many key economic reports will be released this week, most notably March’s preliminary inflation data, which will give early signals into the effects month-long energy supply disruptions had on European consumers. Similarly, Germany, Italy, and France will also have their individual inflation reports released.

Despite scarce economic releases on the UK front, investors will keep a close eye for new changes in the UK’s economy, including on GDP figures—which will be watched closely, particularly given rising expectations that the Bank of England will begin raising interest rates at its April meeting to combat still-elevated inflation.

The Japanese economy

Japan is experiencing growing anxiety, as it is among the hardest hit by energy market disruptions in the Middle East, due to its economy's heavy reliance on energy imports. This adds pressure on the Bank of Japan to raise interest rates at its upcoming meeting.

From Japan, the Tokyo Consumer Price Index for March will be released, along with industrial production and retail sales data—providing a deeper picture of the Japanese economy, whose currency has fallen to levels of 160 yen to the dollar, a psychological threshold that has previously prompted the central bank to intervene to prevent further depreciation.

The Chinese economy

Similar to the US and Europe, China will be facing the effects of the war in the Middle East this week, with the Purchasing Managers' Index (PMI) set to be released this week. The index showcases how companies are handling rising input costs. Focus will also be on the manufacturing PMI and whether it can improve and emerge from a prolonged period of contraction.

Economic calendar