Dow Hits Record, Apple and Meta Shine, Gold Eyes Jobs Report, Dollar Awaits NFP Data | Daily Market Analysis 

Key events:

• USA - Average Hourly Earnings (MoM) (Jan)
• USA - Nonfarm Payrolls (Jan)
• USA - Unemployment Rate (Jan)

On Thursday, the Dow marked a new record closing high, rebounding from the Federal Reserve-induced sell-off the previous day. Investors engaged in dip-buying in the technology sector ahead of the highly anticipated monthly jobs report scheduled for Friday. The Dow Jones Industrial Average surged by 369 points, or 1%, reaching a fresh record closing level of 38,519.84. Meanwhile, the S&P 500 rose by 1.2%, and the Nasdaq Composite gained 1.3%.

Apple (NASDAQ: AAPL) disclosed its fiscal first-quarter results on Thursday, surpassing Wall Street expectations despite iPhone sales falling slightly below estimates due to challenges in China amid increasing competition. Following the report, Apple Inc. shares experienced a decline of more than 1% in after-hours trading. The reported earnings per share were $2.18 on revenue amounting to $119.58 billion, surpassing analysts' expectations of an EPS of $2.10 on revenue of $118.06 billion.

Despite a 13% decline in sales in Greater China, totaling $20.82 billion and impacting iPhone sales amid a competitive landscape, Apple's overall revenue exceeded expectations.

Meta Platforms took a notable step by issuing its first dividend just days ahead of the 20th anniversary of its flagship social network, Facebook (NASDAQ: META). The company reported revenue and profit that exceeded expectations, driven by strong advertising sales during the holiday shopping season. Meta's shares surged by over 14% after the market closed, leading to an increase of more than $140 billion in the company's stock market valuation. This marks a significant milestone in Meta's recovery, as it achieved record highs for the first time in over two years in recent weeks.

As a pioneer among tech sector unicorns, Meta Platforms announced a dividend of 50 cents per share and authorized an additional $50 billion in share repurchases. This move makes Meta the first in its generation of internet giants to issue a dividend, representing a noteworthy development in a tech sector historically dominated by a small group of companies for well over a decade.

The price of gold remains within a narrow trading range during the Asian session on Friday, consolidating its weekly gains to reach a one-month peak achieved the day before. A generally positive risk sentiment, supported by reports of a potential Israel-Hamas ceasefire, is a significant factor acting as a headwind for the safe-haven precious metal. Traders, anticipating the release of the US monthly employment details, opt to wait on the sidelines, expecting these details to offer insights into the Federal Reserve's policy direction and potentially provide new momentum for the non-yielding gold.

As we approach the crucial data release, renewed concerns over the health of regional US banks, geopolitical tensions, and China's economic challenges may continue to act as a tailwind for the safe-haven gold price. Despite a modest rebound in US Treasury bond yields, which aids the US Dollar in halting the previous day's sharp retracement slide from its highest level since December 13, this might hinder traders from making fresh bullish bets on the US Dollar-denominated commodity and could limit the upside. Nonetheless, the XAU/USD appears poised to record gains for the first week in the past three.

On Friday, the Australian Dollar sustains its upward trajectory, bouncing back from a recent three-month low recorded at 0.6508 on the previous day. The US Dollar (USD) experiences a decline amid a backdrop of mixed economic indicators from the United States. Furthermore, the Australian Dollar finds reinforcement through positive developments in the Producer Price Index data. These combined factors act in concert to bolster the AUD/USD pair, contributing to its upward momentum.

The Australian Bureau of Statistics has released the Producer Price Index (PPI) for the fourth quarter, showcasing improvement with a growth rate of 4.1%, surpassing the previous figure of 3.8%. Additionally, the enhanced performance of the Australian money market plays a role in supporting the Australian Dollar. Analysts, as per a Reuters Poll, express unanimous expectations that the Reserve Bank of Australia will maintain the interest rate at 4.35% during its February policy meeting.

On another front, the eagerly awaited nonfarm payrolls data from the United States is scheduled for release on Friday at 13:30 GMT. Published by the Bureau of Labor Statistics, this report on the US labor market is anticipated to exert a significant influence on the direction of the US Dollar's price.

Projections for the nonfarm payrolls report suggest that the US economy added 180,000 jobs in the initial month of 2024, a decrease from the substantial 216,000 jobs generated in December. It is expected that the Unemployment Rate will slightly increase from 3.7% in December to 3.8% in the reported period. Another closely monitored metric, Average Hourly Earnings, is foreseen to rise by 4.1% in the year through January, maintaining the same growth pace observed in December.

The forthcoming US labor market data plays a pivotal role in gauging the timing and speed of the potential US Federal Reserve interest rate cut this year, especially in light of the Fed's decision to postpone expectations of a March rate cut following its recent two-day policy meeting. A positive Nonfarm Payrolls headline figure, exceeding 200,000, coupled with an unexpected increase in wage inflation, has the potential to reinforce the Fed's hawkish stance. This scenario could contribute to a renewed upward momentum for the US Dollar, concurrently exerting downward pressure on EUR/USD.

Conversely, disappointing data reinforcing March Fed rate cut expectations could lead to renewed selling pressure on the USD. Following the Fed’s resistance to early rate cuts, a USD sell-off on a disappointing NFP figure is likely to be short-lived.