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 As of Thursday’s stock market close, the Dow Jones (US30) index added 0.03%, while the S&P 500 (US500) index fell by 0.34% yesterday. The Nasdaq Technology Index (US100) closed at a negative 0.56% on Thursday. Interest rate-sensitive technology stocks came under pressure yesterday after better-than-expected US labor market reports pushed bond yields up and lowered expectations for a Fed interest rate cut.Weekly initial jobless claims fell by 18,000 to a 2-month low of 202,000, indicating a stronger labor market than expected at 216,000. In addition, the December employment change from ADP rose by 164,000, indicating a more robust labor market than expectations of 125,000 and the largest increase in 4 months. Markets estimate the odds of a 25bp rate cut at the next FOMC meeting on January 30-31 at 7% and at the March 19-20 meeting at 70%.Canada’s manufacturing PMI declined in the second quarter of 2020 at the sharpest pace since the pandemic, limiting the central bank’s (BoC) ability to fight inflation with restrictive policy. Meanwhile, concerns over weaker global oil demand dampened foreign exchange inflows, robbing the Canadian currency of support.Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE40) rose by 0.48%, France’s CAC 40 (FR40) gained 0.52% yesterday, Spain’s IBEX 35 (ES35) added 1.28% yesterday, and the UK’s FTSE 100 (UK100) closed at a positive 0.53%.Germany and France saw a slight increase in inflation, mainly due to higher energy prices, which coincided with market forecasts. In other economic news, the Eurozone PMI showed a seventh consecutive month of contraction in private sector activity, albeit at a slower pace than originally forecast.The latest business activity data confirmed that the UK economy remains resilient to high interest rates. UK consumer borrowing increased by £2.0 billion in November, the highest level since March 2017 and exceeding the expected £1.4 billion increase. In addition, home purchase loans totaled 50.1k, which also exceeded forecasts. Finally, the final PMI showed that UK services output rose more strongly in December than originally anticipated, with optimism hitting a seven-month high.Crude oil and gasoline prices moved to the downside as crude inventories unexpectedly rose in the EIA’s weekly report on Thursday, suggesting weak energy demand in the US.Asian markets were mostly up yesterday. Japan’s Nikkei 225 (JP225) was down by 0.53%, China’s FTSE China A50 (CHA50) decreased by 0.84% yesterday, Hong Kong’s Hang Seng (HK50) closed near its opening price, and Australia’s ASX 200 (AU200) was at a negative 0.39% on the day.Chinese markets continue to underperform. Concerns about China weighed on Asian markets after ratings agency Fitch downgraded the country’s four largest state-owned asset managers on Thursday.The offshore yuan slipped to 7.15 per dollar, falling to its lowest level in three weeks, facing pressure from a strengthening dollar as traders cut aggressive bets on the US Federal Reserve interest rate cut this year. Earlier in the week, the yuan also came under pressure after official data showed that activity in China’s manufacturing sector contracted further in December. This reinforced bets that the People’s Bank of China (PBoC) may ease policy further this year to support the fragile and uneven economic recovery. Markets expect a cut in key lending rates and another reduction in reserve requirement ratios in the first half of this year.

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