[Good Morning Market] Mixed Signals from US April Employment Report... Impact on Domestic Stock Market Variables

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] According to the U.S. April employment report, nonfarm payrolls increased by 428,000, exceeding expectations and showing a solid performance. On the other hand, the labor force participation rate, which indicates labor supply, fell by 0.2 percentage points to 62.2%, lowering the possibility of a slowdown in wage growth. The mixed signals from the April employment report and the U.S. stock market’s decline on the 6th (local time) are expected to act as variables for the domestic stock market on the 9th.

◆ Seo Sang-young, Researcher at Mirae Asset Securities = The April U.S. employment report results still showed solid employment, boosting confidence in the economy. The average hourly wage in April rose by 0.31% compared to the previous month, which was less than the 0.47% increase in March. A notable feature was the slowdown in wage growth in reopening-related sectors that had driven wage increases so far, which is considered a factor indicating that the wage market will stabilize in the future, contrary to concerns. Of course, since the labor force participation rate slowed from 62.4% to 62.2%, employment supply and demand instability remains, so the possibility of a sharp slowdown in wage growth is low. However, this can ease the Federal Reserve’s aggressive interest rate hike prospects, and the likelihood of continued rises in Treasury yields is not very high, indicating that the time to expect stock market stability is approaching.

Although the U.S. stock market showed a tendency for rebound buying with intraday gains on the 6th, the fact that it closed lower due to persistent anxiety is a burden on the domestic stock market. The tech-heavy U.S. Nasdaq index closed at 12,144.66, down 173.03 points (-1.40%). The Dow Jones Industrial Average fell 98.60 points (-0.30%) to 32,899.37, and the S&P 500 index dropped 23.53 points (-0.57%) to 4,123.34.

However, considering that rebound buying entered the U.S. stock market near the close, reducing losses, and that the KRW-USD exchange rate is expected to start lower, the domestic stock market is forecasted to open slightly higher.

◆ Seo Jung-hoon, Researcher at Samsung Securities = The U.S. April employment data showed mixed signals. Last month, nonfarm payrolls exceeded expectations. On the other hand, the labor force participation rate, indicating labor supply, declined. This signaled a shortage of labor supply amid solid employment growth and strengthened tightening prospects rather than economic recovery. This is because wage increases could raise inflationary pressure.

As a result, monetary policy uncertainty is expected to persist, and it will likely be difficult for the domestic stock market to rebound easily. Individual responses focusing on sectors with improved earnings such as automobiles, steel & metals, and refining & chemicals will be necessary.

This content was produced with the assistance of AI translation services.