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Non-Farm Payrolls Miss Expectations, DocuSign Shares Drop 40% & Omicron Concerns Force BoE’s Michael Saunders to Reconsider Rate Vote

S&P 500 drops as Non-Farm payrolls miss expectations

The S&P 500, Dow Jones and NASDAQ were all trading lower on Friday, as November’s Non-farm payrolls severely missed expectations.

Markets had anticipated that 550,000 jobs were added to the U.S. economy last month, however the actual figure was less than half of this.

💡 What does this mean to the Fed?
Despite the bad print in the Non-Farm Payroll data, this is likely to mean little to the FOMC committee when they meet on December 14th and 15th.  The Fed is likely to focus on the inflation component when deciding to raise interest rates.  The Fed has told us that both inflation and maximum employment goals have been achieved.

However, Powell testified earlier in the week that he is retiring the word “transitory” and that the FOMC would discuss increasing the pace if tapering at their next meeting.  Therefore, traders have been led to believe that inflation is the focus, not jobs. Also, the Omicron variant of the virus will be in the forefront of their minds!

November’s payrolls came in at 210,000, with the national unemployment rate falling to a 21-month low of 4.2%.

This came as October’s payrolls number was revised up to 546,000, after being initially reported at 531,000.

Gold rallied by as much as $17 on the news, hitting an intraday high of $1,782 in the process.

As of writing, the S&P 500 was down 1.06%.

DocuSign shares down 40% on disappointing Q4 forecasts

Shares in digital signature company DocuSign were down by close to 40% on Friday, as the firm’s Q4 revenue forecasts were lower than analysts’ estimates.

The selloff began shortly after the company reported that it expected revenue of between $557 million and $563 million in Q4.

This was a surprise to markets which had anticipated revenue for the quarter to come in closer to $573.8 million.

Through humor and analysis, people on Twitter have reacted on the matter

Friday’s drop, saw the company’s share price hit an intraday low of $136 per share, after previously hitting a high of $155 shortly after the open.

News of this came as the company also posted better than expected Q3 earnings, with EPS coming in at 58 cents, versus forecasts of 46 cents.

Q3 revenue also beat estimates, coming in at $545.5 million versus $531 million expected.

FTSE 100 lower, as BOE’s Saunders reconsiders rate vote

In the United Kingdom, London’s FTSE 100 closed the week lower, as a senior policy maker at the BOE, sparked concerns over the Omicron variant.

Michael Saunders, of the Bank of England’s Monetary Policy Committee, voted last month to increase rates, however he now believes that the latest variant of COVID-19 needs to be considered before increasing rates. 

💡 Where does this put investors?
Sterling fell on the comments by Saunders which investors took as reducing the likelihood of the BoE raising rates from their current all-time low of 0.1% on Dec. 16, at the end of this month’s meeting.

Investors were pricing in only a 33% chance of a December rate hike after the speech, down from about 75% last week before news broke of the new variant.
The British central bank upended bets by investors on a rate hike on Nov. 4 when it said it wanted to wait for more data on whether the end of the government’s job protecting furlough scheme had led to a jump in unemployment.

Speaking on Friday, Saunders stated that, “At present, given the new Omicron COVID variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy”.

The FTSE 100 closed marginally lower, whilst GBPUSD fell to an intraday low of 1.3265.

“Stocks are bought not in fear but in hope. They are typically sold out of fear.”

– Justin Mamis

Eliman Dambell

Senior Market Analyst