(08 MAY 2020)DAILY MARKET BRIEF 1:Could ugly US jobs data weigh on positive market mood?

US and European equities closed Thursday’s session comfortably higher, and futures rose on prospects of business reopening, even though the White House stood against issuing specific guidelines on when and how to kick start the economic activity on fear that they could be too prescriptive, and force businesses to come back too early and cause more health and economic damage in the long run.

But leaders can’t wait for the economy to rerun, even if it means a certain cost of life. As such Donald Trump is pushing Texas to reopen businesses despite rising cases, and Boris Johnson mentioned that some relaxation measures could be on the menu starting from next Monday, versus the expectations that the UK would stay closed until the first week of June.

On the data deck, the US jobless claims rose by more than 3 million last week, slightly higher than the expectations, paving the way for what’s to be printed later today. The US nonfarm payrolls are expected to confirm 22 million job losses in April and the unemployment rate is expected to have shot up from 4.4% to 16% during the same month. With numbers this gigantic and far from seasonal and even crisis averages, it is no longer a matter of whether the number is better or worse than the expectations. It is a matter of whether it has been already priced in the asset prices, and by how much. For most of the economic and corporate data that has been flowing in recently, investors consider that the asset prices already factor in the terrifying numbers - therefore any knee jerk reaction remains contained, unless the deviation from the consensus of expectations is significative. If the trend is your friend, then a further recovery in asset prices is where you should be looking for, despite the devastating economic and corporate figures.

The Nasdaq already recovered more than 80% of losses from the coronavirus-led sell-off, as the rapid democratization of remote working and rush to technology services were fueled with the global lockdown. If the rise in tech activity has been a one-off move, it is not said that a correction would wipe away gains; in most cases, it could only mean that these companies will simply have a larger organic basis.