Geoffrey Smith 

Investing.com — This Friday’s focus is on jobs. According to the weekly report, the labor market report will be released at 8:30 am ET. If you prefer to concentrate on inflation, the Eurozone CPI reached 5% in December. This puts pressure on the European Central Bank (ECB) to reduce its pace. After announcing a NFT marketplace initiative by GameStop, the stock of GameStop (NYSE) is on the rise in premarket. China still struggles with both the Covid-19 and real estate crises. What you need to know about Friday, 7 January in the financial markets

1. Payrolls are all that matters

The official government report on the labor market for December through November is released at 8:30AM ET (1330 GMT). This marks the culmination of a week’s labor market data.

Economists expect a rise of 400,000, a bounce from November’s abnormally low 210,000, but with ADP’s private payrolls report having come in at twice that number, the risk is for an upside surprise – all the more so since the cut-off date for the survey is before the first impacts of the Omicron strain of Covid-19.

With the rest of the week’s data all pointing in the direction of higher wages, attention will also be focused on average hourly earnings, which are expected to accelerate to 0.4% growth on the month from 0.3% in November.

2. Eurozone bonds and inflation

The Eurozone saw an annual inflation rate of 5.0% in 2012, which is putting pressure on the European Central Bank (ECB) to tighten a monetary policy still in its panic-era mode.

The European Central Bank has said inflation is close to peaking, but the rise in prices isn’t confined to volatile energy and food components, or to base effects. The core consumer price index rose by 0.4% in the past month, and 2.6% over the previous year.

The yields on German government bonds, which were at their highest level in almost two years, were not flat. However, spreads to other bond markets continued to increase. The ECB has a saving grace in that the region is experiencing fewer wage pressures.

3. Stocks in the USA set to rise; NFT market breathes new life into GameStop 

Stock markets in the United States are expected to open at a moderately higher level, however all will depend upon the payrolls report from now until the official opening an hour later.

After comments made by regional Federal Reserve officials, stock prices fell further on Thursday. They were responding to hawkish but familiar statements about the outlook for policy.

At 6:20 AM ET, they were up 54 points or 0.2%. They were also up 0.3% and 0.4% respectively. Long-term government bond yields were steady after retracing their gains on Thursday – a suggestion that the Fed’s attempts to keep inflation expectations anchored by tough talk are succeeding.

GameStop stock is likely to come under scrutiny later. It rose 17% during premarket trading following the announcement by the meme stock company that it would launch a market for non-fungible tokens. Meme stock combined with crypto fever gave life to one the largest speculative investments of this year. It has suffered a downward trend for eight months due to its fundamentals refusing to improve.

4. China asks banks for help in easing the property loan squeeze

China’s central bank called on banks to boost property lending and eased a key restriction on real estate companies, according to Bloomberg, a sign that authorities are becoming increasingly concerned about the industry’s liquidity crisis.

Last month’s previously unknown window guidance stated that regulators had instructed banks to increase lending to developers following at least two consecutive quarters of declines. The agency also reported that the central banking would waive its “red lines” on leverage ratios in loans used for consolidation. 

China’s real estate crises are taking the back seat to Covid-19 policies in headline generation this year. In an attempt to stop a local epidemic of the disease, Shenzhen was made a tech hub. 

5. Supply concerns push oil higher

Despite concerns that OPEC and its alliances will not be able to raise production in the next weeks, prices continued to rise. In spite of a recent dip in global consumption, inventories worldwide remain well below their historical averages despite the fact that thousands of flights were cancelled by Omicron-variant Covid-19.

There was some relief at the announcement that the major Libyan oil export pipeline had been restored to normal operations. However, this doesn’t resolve the problem of global underinvestment to ensure that the sector continues to produce high production rates. Baker Hughes will later update us on drilling rigs.

By 6:30 AM ET, U.S. Crude futures were up 0.6% at $79.97 a barrel, while futures were up 0.7% at $82.80 a barrel.