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U.S. jobs data, EU Russian oil ban, REIT trouble - what's moving markets

Economy Dec 02, 2022 20:22
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By Geoffrey Smith 

Investing.com -- It's payrolls day, and analysts expect the smallest gain in nonfarm jobs in nearly two years - although that says as much about a shrinking pool of available workers as it does about labor demand. The REIT sector is on watch after shock news on Thursday that Blackstone had refused more than half of redemption requests from investors in its flagship private property fund last month. Stocks are treading water until the labor market report, but the dollar is weakening as risk sentiment continues to improve. There's another common-or-garden variety hack in DeFi world. And the European Union is set to agree on how to impose a global price cap for Russian oil, two days before a ban on imports into the EU comes into force. Here's what you need to know in financial markets on Friday, 2nd December.

1. Jobs report set to show smallest payrolls gain since early 2021

The U.S. will release its official labor market report at 08:30 ET (13:30 GMT), the climax of a week of numbers that have done little to change perceptions that the market is only cooling gradually, posing no obstacle to further interest rate hikes from the Federal Reserve.

Analysts expect the economy to have added only 200,000 nonfarm jobs through mid-November. While that would be the smallest gain since January 2021, it would only reflect the reality that the U.S. is running out of available workers with an unemployment rate at only 3.7%. Of more interest may be developments in average hourly earnings, which ticked up last month after showing signs of cooling in the two months previous.

Chicago Fed President Charles Evans will say his two cents’ worth at 10:15 ET.

2. Trouble in REITland?

All eyes will be on the REIT sector later after Blackstone (NYSE:BX) shocked the market on Thursday with news that it refused to satisfy more than half of redemption requests from investors in its flagship private real estate fund in November.

The $125 billion Blackstone Real Estate Income Trust has been hit by wealthy Asian investors in particular trying to raise cash at the end of a difficult year. Property funds have been one of the sectors hardest hit by the rise in global interest rates this year, due to their own widespread use of debt.

Additionally, as a private fund, BREIT has not had to mark its investments down to market as actively as comparable publicly traded funds. That has created a wide valuation gap and a clear arbitrage possibility.

As such, while fears about the short-term performance of REITs remains, initial fears of a systemic problem may be overblown. Blackstone stock fell another 2.3% in premarket after falling over 7% on Thursday.

3. Stocks stagnate ahead of jobs report; Marvell, Zscaler struggle

U.S. stock markets are treading water ahead of the release of the payrolls data later, despite a continued improvement in risk sentiment indicated by a further decline in the dollar.

By 06:30 ET, Dow Jones futures were down 56 points, or 0.2%, while S&P 500 futures were down 0.1% and Nasdaq 100 futures were down 0.2%. All three cash indices have held on to the bulk of the gains they made in response to Fed chair Jerome Powell’s speech earlier in the week.

Stocks likely to be in focus later include Zscaler (NASDAQ:ZS), which reversed all of its Thursday gains in premarket after giving a disappointing outlook late on Thursday, and chipmaker Marvell Technology (NASDAQ:MRVL), which likewise missed with both its guidance and its third-quarter results.

4. Ankr says only limited damage from hack

It could have been worse. Ankr protocol, which hosts some $123M worth of tokens, said it estimated the damage from a security breach at only $5M and would work on compensating the liquidity providers who had been affected.

Hackers had earlier attacked the aBNBc token issued by Ankr, essentially a derivative on the native token of the world’s biggest crypto exchange Binance. Binance had temporarily paused withdrawals but said its own customers’ funds weren’t affected.

More than $3B has been hacked from the crypto sector so far in 2022, according to blockchain specialist Chainalysis. While that’s likely to be a record, it pales in comparison to the wealth destroyed by the collapse of the Terra/Luna network and FTX.

5. EU closes in on Russian oil price cap

The European Union closed in on a deal to cap the price of Russian oil exports at $60 a barrel, although formal agreement was delayed by Polish attempts to tie it to a fresh package of anti-Russian sanctions.

The price cap would stop third parties from getting essential services such as shipping and insurance from European companies if the buyer pays a higher price for cargoes of Russian crude. An EU ban on Russian oil imports into the block comes into force on Monday.

Widely derided as unworkable, the plan has overshadowed very real progress in forcing Russia to discount its oil sales heavily on world markets. Uncertainty over its effects is likely to keep the OPEC+ bloc – which includes Russia – from changing its output quotas when it meets virtually on Sunday.

U.S. jobs data, EU Russian oil ban, REIT trouble - what's moving markets
 

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