Fed expected to pull the trigger on another rate cut in December meeting after jobs report

The US economy added 227k jobs in November amid expectations of interest rate cuts for the third time this year before 2024 is out, according to data from the US Bureau of Labor Statistics on Friday. This marks a significant increase over October’s 36k new hires, giving the US Federal Reserve enough room to cut rates during its next meeting in December, with the implied probability of a reduction reaching close to 90%, according to a CME Group gauge, CNBC reports.

The unemployment rate slightly ticked up to 4.2% from 4.1% in October, The Guardian reports.

The labor market could be in for some headwinds once Trump takes office: US president-elect Donald Trump’s strategies might lead to a regression in employment rates if he chooses to go after “tns in tax cuts for the wealthy” and attempts to “slash public investments,” one expert said. Others believe that the results might be affected by Trump’s “mass deportation” plans, as the reference week for the figures was after the election, the Co-Director of the Center for Economic and Policy Research Dean Baker said.

And the path forward for rates is still uncertain: Some analysts believe the Fed should pause rate cuts, believing further rate cuts to be “unwise” while jobs pile up and inflation remains elevated, Economist Chris Rupkey said. One economist expects the Fed to pause cuts in January, and potentially go for one other cut in early 2025 before taking a longer pause.

MARKETS THIS MORNING-

Asian markets are mixed as investors digest growth data from Japan and inflation in China, with the Nikkei up 0.3%, Hong Kong’s Hang Seng trading flat, and South Korea’s Kospi down 2% following South Korean President Yoon Suk Yeol’s close brush with impeachment. Wall Street futures are unchanged after a record week for US stocks.

THE CLOSING BELL: TADAWUL-

The TASI rose 0.2% yesterday on turnover of SAR 4.6 bn. The index is down 0.1% YTD.

In the green: Al Baha (+10.0%), MBC Group (+5.3%), and Chemical (+4.9%).

In the red: Fakeeh Care (-3.8%), NCLE (-3.7%), and Bawan (-2.9%).

THE CLOSING BELL: NOMU-

The NomuC rose 1.0% yesterday on turnover of SAR 83.4 mn. The index is up 27.3% YTD.

In the green: Munawla (+10.5%), First Avenue (+10.3%), and Knowledgenet (+10.1%).

In the red: Dar AlMarkabah (-9.5%), Horizon Food (-9.3%), and Fad (-4.3%)

CORPORATE ACTIONS-

#1- Yanbu Cement will distribute SAR 78.8 mn in dividends at SAR 0.50 per share before the end of the year, according to a filing to Tadawul. The distribution date is set for Monday, 30 December.

#2- Edarat’s BoD has recommended doubling the firm’s capital to SAR 50.4 mn by granting bonus shares to shareholders, at a rate of one bonus share for each share held, according to a disclosure to Tadawul. The capital hike will be financed by reserves and retained earnings and looks to strengthen the company’s capital base ahead of future expansion. The move is still subject to approvals from shareholders and regulatory authorities.

#3- Savola Group intends to buy back and cancel SAR 859 mn of the SAR 1 bn sukuk it put up for sale in 2019, the firm said in a disclosure to Tadawul. The move comes in a bid to shore up the company’s capital structure and reduce financial obligations and financing costs.

#4- Ataa Educational’s BoD has recommended a dividend payout of SAR 52.6 mn at SAR 1.25 per share for the fiscal year ended 31 July 2024, the firm said in a disclosure to Tadawul. The distribution date is yet to be announced.