Geoffrey Smith 

ADP keeps up the series of U.S. labor markets data releases, according to Investing.com. Hong Kong reacts with fear to the Omicron variant Covid-19 spread, and has reduced restrictions on flying and eating out. Goldman Sachs, NYSE:), tells clients it could reach $100k in this year’s financial markets. But there is a large ‘if’. What you need to know about the financial markets, Wednesday 5th January.

1. ADP job report due

The second of the week’s big labor market releases comes in at 8:15 AM ET (1315 GMT) as payrolls processor ADP publishes its estimate of how many jobs were created in the private sector in the month through mid-December.

Analysts project a gain in employment of 400,000, which is a slowdown from the November 534,000 and lowest levels in the past four months. However, it would still be an impressive month when compared to the long-term history.

The data come a day after ISM’s monthly survey indicated that hiring dynamics in manufacturing are still strong, while the Labor Department’s JOLTS survey showed vacancies continue to run near record levels, prompting more and more people to quit their jobs in search of better pay.  

We continue the labor market update with Thursday’s jobless claims data and Friday’s official report.

2. Hong Kong tightens restrictions as Omicron spreads

Hong Kong closed all its international airports and suspended dining at restaurants to accommodate Chinese tourists arriving from India, Australia and North America.

Case rates in Hong Kong have been rising rapidly, and sit uncomfortably with mainland China’s zero-tolerance policy for Covid-19, which has already forced a number of local lockdowns in recent weeks. One of the reasons that a city with more than 1,000,000 inhabitants was shut down this week was because of three Omicron cases, none of which were symptomatic.

Elsewhere, Germany’s Health Minister said that tighter curbs on activity look unavoidable, a day after France and the U.K. chose to try to ride out the current infection wave without any more business closures. The U.S. Airlines cancelled an additional 1,000 flights Tuesday.

3. Bonds consolidate and stock prices will fall, causing stocks to open lower

U.S. stocks will open lower to flat later after consolidating the rally that began at the beginning of the week, which was hampered by the strong bond market.

Higher long-term interest rates, driven by fears of inflation and the Federal Reserve’s reaction to it, pushed the benchmark 10-year yield as high as 1.68% on Tuesday, its highest in five weeks. The overnight session also saw it consolidating near the 1.65% mark.

By 6:20 AM ET, were flat, while were down 0.1% and were down 0.4%, continuing to reflect the greater pressure on ‘profitless tech’ and other long-duration bets whose valuations are sensitive to higher discount rates.

General Motors (NYSE) is likely to come under scrutiny later. The loss of U.S. market leader to Toyota provided an abrupt contrast to the sharp rise in Ford shares on Tuesday.

4. Kazakhstan’s fuel protests turn violent. EIA inventory data available

In response to rising energy and food prices, a wave of protests rocked Kazakhstan’s former Soviet republic.

Protesters stormed the office of the mayor in the country’s largest city Almaty, unappeased by the decision on Tuesday by President Kassym-Jomart Tokayev, the hand-picked successor of long-ruling Nursultan Nazarbayev, to dismiss the government and reintroduce a cap on fuel prices.

These protests may be a warning sign about what lies ahead for this year. As the pandemic is over, countries will attempt to normalize their economic policies. This could expose some structural issues that were hid by the emergency stimulus programs of the past two years. Caps on fuel prices and household energy bills – and the cost of associated subsidies – are particularly likely to be an issue in Europe this spring.

Prices for oil, Kazakhstan’s biggest export, drifted sideways in the overnight session after a mixed report on U.S. inventories from the American Petroleum Institute. Normal government data due at 10:30 ET.

5. Goldman says Bitcoin may reach $100k

Analysts at Goldman Sachs believe that Bitcoin may reach $100,000 by the end of this year.

They note that it is contingent on taking over market share from safe haven gold, but they do not believe this will happen.

Bitcoin and other cryptocurrencies have traditionally been seen by their supporters as a hedge against the devaluation – sometimes steady, sometimes abrupt – of fiat currencies such as the dollar. They have been traded in momentum assets for the past couple years, becoming increasingly linked with other risk assets.

Market was not affected: Bitcoin fell 0.6% to $46,389 in the final month, towards the bottom of its range.