Dow Futures Flat; Markets Eye Powell Speech, August Jobs Report to Extend Rally

The Friday Market Minute

  • Global stocks edge cautiously higher ahead of a key reading on U.S. job creation and a speech from Fed Chairman Jerome Powell early this morning in Zurich.
  • U.S. employers likely added 158,000 new jobs to the economy last month, with hourly wage growth slowing to 3.1% and the headline unemployment rate holding at 3.7%.
  • Fed Chair Powell will speak at 6:30 pm in Zurich at an event hosted by the Swiss Institute for International Studies.
  • Asia stocks cap best week in two months as government bond yields ease and investors creep back into risk markets.
  • Global oil prices ease from this week’s rally, fueled by the lowest levels of U.S. crude stocks since October 2018 and renewed U.S.-China trade talks.
  • Wall Street futures suggest modestly opening bell gains ahead of Powell’s speech at 12:30 eastern time and the August jobs report at 8:30 am eastern time.

Market Snapshot

Global stocks edged cautiously higher Friday, although Wall Street futures were little-changed ahead of a key reading of U.S. jobs growth and a speech from Federal Reserve Chairman Jerome Powell in Zurich that could have major implications for the central bank’s near-term rate path.

U.S. employers likely added 158,000 new jobs to the economy last month, according to median Wall Street forecasts for today’s August non-farm payroll report at 8:30 am eastern time, with average hourly wage growth slowing modestly to 3.1% and the headline unemployment rate holding at a multi-decade low of 3.7%.

Those estimates, however, were largely gathered before a stronger-than-expected reading for private sector job creation from the payroll processing group ADP, which showed 195,000 new positions for August, the highest in four months. That, as well as firmly activity in the economy’s vital services sector and a stronger U.S. dollar, suggest robust consumer demand heading into the final months of the year.

All of those issues — as well as the overhang from the bitter trade dispute between the U.S. and China and it impact on global growth — will likely be addressed during Powell’s “Economic Outlook and Monetary Policy” speech at 12:30 am eastern time this morning in Zurich, where the Fed Chair is expected to take questions from both the audience and Swiss National Bank President Thomas Jordan.

U.S. equity futures were little changed heading into the morning session, with investors unsurprisingly willing to extend risky bets ahead of Powell’s speech and the payroll reading, particularly following a week that has seen a 1.7% gain for the S&P 500.

Contracts tied to the Dow Jones Industr0 ial Average suggest a modest 16 point opening bell gain while those linked to the S&P 500 indicate little change for the broadest U.S. equity benchmark. Nasdaq Composite futures are guiding to a 5.5 point pullback for the tech-focused index.

Overnight in Asia, the stronger-than-expected ADP jobs reading, as well as the best pace of service sector growth for the U.S. economy since February, helped give stocks a Friday session boost. Yesterday’s news that U.S.-China trade talks will resume in October is also still filtering through, with the MSCI ex-Japan index rising 0.38% to cap its best week in nearly two months while Japan’s Nikkei 225 rode a weakening yen to an end-of-week gain of 0.51% in Tokyo.

Away from equities, the U.S. dollar index eased modestly in overnight trading as investors shifted cash into riskier markets, taking the greenback to 98.343 against a basket of its global peers.

The large moves in U.S. Treasury bonds yesterday, however, were also see influencing the dollar, with 10-year note yields rising to 1.576%, just over 4 basis points ahead of benchmark 2-year notes following the surprisingly solid jobs and service sector activity reads.

Global oil prices, which have lifted Brent crude to the highest levels in a month this week, eased in quiet Friday trading following data from the Energy Department yesterday which showed domestic U.S. crude stocks fell by 4.8 million barrels last week to the lowest levels sine October of last year.

Brent crude contracts for November delivery, the global benchmark, were seen 5 cents lower from their Thursday close in New York and changing hands at $60.90 per barrel while WTI contracts for October, which are more tightly linked to U.S. gas prices, were marked 5 cents lower at $56.33 per barrel.

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