Market Wraps
Watch For:
Employment Report for August; Construction Spending for July; ISM Report on Business Manufacturing PMI for August; Canada GDP for June
Today’s Headlines/Must Reads
– China Central Bank to Cut FX Reserves Ratio
– The Generational Paradigm Shift Taking Over Markets
– UAW Accuses GM, Stellantis of Unfair Labor Practices
Opening Call:
Stock futures pointed higher on Friday, ahead of data that could show a slowing pace of hiring, which would reassure investors that the Federal Reserve won’t take interest rates much higher.
The release of nonfarm payrolls data is at 8:30 a.m. Eastern, with expectations that 170,000 jobs were created in August. That would be the weakest showing since Dec. 2020, a month that saw 268,000 jobs lost.
“There have been indicators that the U.S. jobs market is finally starting to lose some of its tightness, and if the NFP print confirms this trend, it will be one less thing for the FOMC to worry about given labor market resilience has long been a source of inflationary pressure, ” KCM Trade said.
Overseas
Global stock indexes advanced moderately. Japan’s Nikkei 225 and Europe’s Stoxx Europe 600 both rose around 0.3%.
Mainland Chinese stocks edged up. The Shanghai Composite Index rose 0.4%, led by real-estate stocks, after Beijing put forward new measures to support the property sector and shore up the yuan. A private gauge of factory activity showed a rebound in August.
Trading was halted in Hong Kong. The Hong Kong Exchanges and Clearing canceled trading Friday due to a typhoon alert.
Premarket Movers
Broadcom was down 4% after it forecast fiscal fourth-quarter revenue in line with Wall Street estimates.
Dell Technologies soundly topped its own earnings forecast and also issued fiscal-year guidance that topped analysts’ estimates. The stock was up 9%.
Intel gained 0.4% after its CEO said it was tracking above the midpoint of its third-quarter guidance.
Lululemon earnings in the second quarter beat analysts’ estimates and the company raised fiscal-year guidance. The stock rose 2%.
MongoDB rose 6% after its earnings easily topped forecasts.
Nutanix reported fiscal fourth-quarter revenue that beat analysts’ estimates and issued strong first-quarter sales guidance. The stock rose 18%.
PagerDuty was down 7% even after the company’s second-quarter adjusted earnings and revenue beat estimates.
Tesla unveiled a revamped Model 3 with a longer range but raised the price on the electric vehicle by about 12%. It also cut prices on its expensive Model S and Model X cars. Tesla shares declined 0.7%.
Other Stocks to Watch
Planned industrial action at Chevron’s Wheatstone and Gorgon LNG plants from Sept. 7 is unlikely to result in a complete halt to production in the initial weeks, should it proceed, Wood Mackenzie said.
“Chevron, unions and workers will continue to negotiate” and “it might not be until October that production is seriously affected if an agreement is not found,” it said. If a strike happens, it’s likely prices will still rise on concerns about how long it could last, Wood Mackenzie said.
“But with European storage levels well above 92% and Norwegian planned maintenance now expected to be shorter, there is a risk of a price collapse if strikes were called off.”
Forex:
ING said U.S. jobs data are expected to show payrolls growth slowing but the unemployment rate staying at 3.5%, enough for the dollar to hold onto its recent gains.
An unemployment rate at this low level supports U.S. consumption and keeps the prospect of the Federal Reserve raising rates further.
“Unless we see some kind of sharp spike higher in unemployment today, we would expect investors to remain comfortable holding their 5.3% yielding dollars into the long U.S. weekend.”
This should keep the DXY dollar index towards the top of a 103-104 range, ING said.
Worries about a deteriorating eurozone economy is putting pressure on the euro, Commerzbank Research said.
“What is relevant for this kind of euro weakness is not the growth outlook for the next quarter or two. This is about the long-term growth outlook.”
The post-Covid recovery era has been flatter than that of the U.S. and it’s possible Europe “suffered a lasting hit to its average growth speed, ” which could be weighing on the euro currently.
Energy:
Oil prices moved higher in Europe and were on course for their first weekly gain since early August on expectations that major OPEC+ members will extend production curbs.
Russia’s deputy prime minister said in a televised meeting that Russia had agreed with other OPEC+ members on further cuts to its crude exports, but would announce the details next week.
Analysts broadly expect Saudi Arabia to roll over its 1 million barrel a day supply cut for another month, a move which would likely be followed by Russia extending its export reductions.
Metals:
Base metals rose more than 1% in London after data showed China’s manufacturing sector expanded in August, a positive sign for industrial demand.
However, BMI said it expected prices “to remain relatively static in the coming days as the market awaits the announcement of pivotal monthly U.S. and Chinese economic data.”
Today’s Top Headlines
Why Spectrum Customers Can’t Watch the U.S. Open and College Football
Disney-owned networks including ESPN and ABC-TV local stations went dark for Charter Communications customers Thursday, leaving viewers without access to major events such as the U.S. Open and college football amid a carriage dispute between the companies.
FX, Freeform and National Geographic also stopped appearing on Charter systems Thursday evening when the companies’ prior agreement expired.
VinFast Stock Keeps Tumbling. Why Short Sellers Aren’t Winning Big.
VinFast Auto stock dropped again, but that doesn’t mean short sellers are making out like bandits. There are few shares shorted, for good reason.
Shares of the Vietnamese EV maker fell 15.9% to $34.71 Thursday while the S&P 500 fell 0.2% and the Nasdaq Composite gained 0.1%. It was the third consecutive decline. Shares are now down about 63% from an intraday high of $93 reached on Monday.
Chinese Property Stocks Gain on Stimulus Measures
Property stocks listed in mainland China gained Friday after Beijing said it would lower minimum down-payment requirements for first- and second-time home buyers and cut rates on existing mortgages to boost its economy and revive its ailing real-estate sector.
Stocks of real-estate developers, including Poly Developments & Holdings Group and China Vanke, gained 1.6% and 3.1%, respectively.
Hiring Cooled This Summer. Here’s What to Focus On in August’s Jobs Report.
Friday’s jobs report is expected to show a slowing pace of employment growth alongside historically low joblessness. Adding fewer jobs would take pressure off the Federal Reserve to raise interest rates further.
Dockworkers Ratify Labor Deal at West Coast Ports
The International Longshore and Warehouse Union said its members have ratified a new, six-year contract covering dockworkers at West Coast ports, ending more than a year of uncertainty for importers and exporters at some of the nation’s busiest gateways for ocean shipping.
The union said 75% of its members voted in favor of the contract.
U.S. Sanctions Russian Company Over Alleged Support for North Korean Weapons Programs
The U.S. has imposed sanctions aimed at a Russian company’s alleged support for North Korean development of weapons of mass destruction and ballistic missiles, part of a coordinated move with South Korea and Japan.
The U.S. Treasury Department said Thursday that it added three names to its sanctions list: Moscow-based company Intellekt, Russian national Sergey Mikhaylovich Kozlov and Russia-based North Korean national Jon Jin Yong. Intellekt is linked to Kozlov, Treasury said.
Mitch McConnell’s Health Scares Shine Spotlight on Senate’s ‘Three Johns’
WASHINGTON-Senate Minority Leader Mitch McConnell’s second public health scare in as many months has fueled speculation about who might succeed him, even as the Capitol’s top doctor cleared him for duty and backers played down the significance of the incidents.
The developments have focused attention on a trio of McConnell allies seen as potentially next in line: Sens. John Thune of South Dakota, John Cornyn of Texas and John Barrasso of Wyoming-often referred to in Capitol Hill shorthand as “the three Johns.”
Source: Dow Jones Newswires