Geoffrey Smith 

Investing.com — October payrolls day is upon us, with hiring expected to rebound from September’s eight-month low. When the headlines go up at 8:30 ET, the key variables will be average earnings and participation. Europe has caught Covid once more, and China is now in control of nearly all its provinces’ health as part of its Zero-Tolerance Policy. One other big Chinese developer also has problems with its debts, and this is not limited to debts owned by distant foreigners. The stock market is expected to rise, however Peloton and Uber will face pressure following weaker updates on Thursday. This is what you should know about financial markets Friday 5th November.

1. Payrolls day

At 8:30 AM ET (1330 GMT), the official U.S. monthly labor market report will be available. There are signs that the job outlook has improved significantly in October, as the economy has put behind the Delta-variant Covid-19 summer wave.

Analysts anticipate that nonfarm payrolls have increased by 450,000 between the middle and end of September. This is an increase from 194,000 in September which was an 8-month low. However, recent evidence suggests an upward revision. Attention will be paid to the decline in participation in the labor force and earnings growth. These are expected to increase to 4.9% from September’s 4.6%.

Weekly jobless claims numbers suggest that the labor market’s momentum has remained intact since the cut-off point for the payrolls report. On Thursday, initial jobless claims fell for the second consecutive week following the pandemic.

2. Europe captures Covid again

As new infections and hospitalizations rise across the continent, the World Health Organization has warned that Covid-19 may cause up to 500,000 deaths this winter.

The latest wave is driven by seasonality, weakening immunity to the first vaccine wave and most importantly, high levels of resistance to vaccination. East Europe is home to the highest number of new infections, and the greatest proportion of deaths. Russia has over 1100 deaths per day, and the number of new infections is 40% higher than last year.

Germany, the Netherlands and other countries are experiencing new infections at eleven-month highs. This raises concerns of further lockdowns. The developments come as the Eurozone’s industrial sector battles a sharp slowdown due to supply chain disruptions. German industrial production declined for the second consecutive month in September. French output fell, and Spanish output growth slow to a crawl. Retail sales for the Eurozone also fell 0.3% in September.

3. Stocks will open higher, Uber and Peloton are under pressure

Stocks in the United States are expected to open higher and close the week near new records. This is due to optimism about the strength of America’s economy, combined with Jerome Powell, the Federal Reserve Chairman,’s assurances regarding the rate of interest rates hikes.

By 6:20 AM ET they had increased nine points (or less than 0.1%), while the clearer 0.2% was up and 0.4% were higher

Peloton Interactive (NASDAQ) will be under pressure later. This stock tumbled nearly one third after the company cut sales forecasts and after that, its shares fell by more than a quarter. Uber is also under threat, although not quite as severe, following a $2.4 Billion net loss, which overshadowed the company’s first profit (heavily adjusted at basic operating level).

4. Covid outbreak and Chinese developer woes continue to spread

Kaisa Group Holdings opened a new front in the battle to keep China’s financial system steady. A few wealth management products that were held by local retail investors, and not the overseas or professional dollar bonds, was not paid to Kaisa Group Holdings.

Kaisa is the sector’s third-largest issuer of international debt and already has a history of having to restructure it, having become the first Chinese issue to do so five years ago.

Worryingly, the missed payments come despite no sign of financial stress in the company’s accounts, which easily satisfied the authorities three ‘red line’ metrics on leverage in its latest disclosures.  The Wall Street Journal also reported that China Evergrande sold two private aircrafts in order to raise $50million to pay the missed interest payments.

5. Oil steadies after post-OPEC slide

After sliding on Thursday, crude oil prices stabilized in the wake of guidance from OPEC+. This was due to the OPEC+ meeting’s expected discussion about the risk of a renewed oversupply next year.

The market is more likely to listen to such warnings after seeing evidence of increasing Covid-19 incidences in Europe.

By 6:30AM, futures had risen 1.1% to $79.66/barrel, while they were up 0.6% to $81.02/barrel The week was rounded out by the Baker Hughes rig count, and CFTC positioning data.