The US released its payrolls report on Monday and the figures were rather disappointing. The report invoked mixed reactions from the Asian markets, with most prominent indexes failing to put out encouraging results. The broadest index of MSCI for the Asia-Pacific could not show an upward trend, although Nikkei made an addition of 1.7%. South Korean KOSPI Composite Index posted downward growth of 0.1%, and a similar devaluation was witnessed in the S&P 500 Futures. However, Nasdaq futures remained flat in terms of valuations.
The data from the report shows that the employment opportunities decreased considerably in the month of August. What has made the situation even worse is that there are hardly any indications of a pickup in labor supply in the coming months. This has put extra pressure on the US Federal Reserve, which is walking a tightrope as it tries to balance between a decrease in demand and supply and inflationary pressure.
There were enough indications in the policy domain that the Federal Reserve will start the tapering in the month of September, although now, it seems that it won’t start the process before December. It’s important to note that the meeting of the European Central Bank will take place this week, and the indications are that most members are calling to cut back on the asset-buying program of the bank.
For non-yielding gold, the delay in the asset tapering process by US Federal Reserve is positive, though the data on payroll is causing concern among oil investors. As demand for oil will be negatively impacted by poor payroll numbers, the Brent and US crude registered a decline of 65 cents ($71.95/barrel) and 59 cents ($68.90), respectively. It will be interesting to witness the future course of action from the US fed reserve as the central bank is stuck between a rock and a hard place.