Labor Day to labor report as Sept kicks off
A look at the day ahead in U.S. and global markets from Mike Dolan
Wall Street gets September off to a late start with a holiday- shortened week that focusses squarely on the U.S. jobs market after last month's unemployment rate scare sparked a mini panic.
Returning from Monday's Labor Day holiday, U.S. markets seem in a more comfortable place than they were a month ago when July's outsize jump in the U.S. jobless rate to 4.3% re-ignited recession fears and aggravated a volatility squall.
The S&P500 .SPX has recovered all of those losses since, however, returning to within a whisker of July's record highs on Friday - even though futures ESc1 are slightly in the red ahead of Tuesday's opening bell.
As a roller-coaster August played out, the jump in the unemployment rate was downplayed as partly distorted and subsequent weekly jobless readings were much healthier - while the Federal Reserve clearly switched its focus to the labor market and all but confirmed a September interest rate cut.
The size of that Fed cut seems to be the only debate - with futures markets convinced of at least a quarter-point move on September 18 and pricing about a one-in-four chance of a larger reduction of 50 basis points. What's remained pretty constant over the past week or so has been the 100bp of Fed cuts in market pricing to the year-end - which would imply at least one 50bp Fed cut at one of its remaining 2024 meetings.
Critical to that thinking will be the August payrolls report on Friday, with consensus forecasts for a pick-up in jobs growth to 160,000 last month and a retreat in the jobless rate to 4.2%.
Before then we get a whole heap of other labor market soundings - private sector surveys and layoffs data for August, July job opening numbers and another weekly jobless readout.
But Tuesday kicks off with critical updates on recently ailing manufacturing - with ISM and S&P Global surveys on the U.S. factpory sector due. ISM's survey showed manufacturing employment contracting in July at its fastest pace since June 2020.
Part of the downturn in global manufacturing stems from the economic funk in China, where surveys released this weekend showed factory activity there sank to a six-month low in August and factory gate prices tumbled.
And the ripple effects from that are clearly felt in Europe, where the equivalent euro zone factory survey for August came in marginally above 'flash' estimates but still deep in the contraction mode it's been registering for two years solid.
The travails of manufacturing are weighing on commodity and energy prices, with crude oil prices CLc1 clocking year-on-year losses of almost 13% for the first time in 2024. The prospects of higher OPEC production next month adds to the pressure.
That alone keeps rate cut speculation on the boil, with the Bank of Canada expected to cut its main policy rate by 25 bps for a third straight meeting on Wednesday.
The Canadian dollar CAD= weakened into the meeting, with two more cuts this year expected after this week's easing.
The U.S. dollar .DXY was firmer more generally, with the index hitting its best levels since August 19, and the euro EUR= fell back to two-week lows as well.
U.S. Treasury yields were a touch firmer early on Tuesday going into the week's big economic releases.
European stocks were slightly in the red earlier and Chinese shares .CSI300 tried to find their footing after another lunge lower on Monday. China's CSI300 index has now underperformed MSCI's all-country index .MIWD00000PUS by a whopping 17% this year so far.
Aside from another dour manufacturing reading in China, shares in major Hong Kong property developer New World Development 0017.HK plunged 13% to a 21-year low after it estimated a net loss of as much as HK$20 billion ($2.6 billion) for the financial year that ended in June.
New World has one of the highest debt-to-equity ratios among Hong Kong's property developers and its plan to cut debt has been closely watched over the past year. While Hong Kong has not seen the big defaults on debt by property developers in mainland China, investors worry about weakening liquidity for the sector due to sluggish residential and commercial property markets.
In Europe, Volkswagen VOWG_p.DE on Monday said it's considering closing factories in Germany for the first time, in a move that shows the mounting price pressure Europe's top carmaker faces from Asian rivals.
Key developments that should provide more direction to U.S. markets later on Tuesday:
* US August manufacturing surveys from ISM and S&P Global, July construction spending; Brazil Q2 GDP, Mexico July jobless
* European Central Bank board member Kerstin af Jochnick and ECB bank supervisor Claudia Buch speak in Frankfurt
* US corporate earnings: Zscaler, GitLab, Healthequity, Ascendis Pharma, Hello, Sportsmans Warehouse
* US Treasury sells $81 billion of 3-month bills, $75 billion of 6-month bills and $50 billion of 12-month bills
September is often a bad month for stocks https://reut.rs/4cMHzqV
Slower hiring, but layoffs remain tempered https://reut.rs/3yXhs2L
US manufacturing surveys show big contraction in jobs in the sector https://tmsnrt.rs/3Xp12JP
U.S. inflation is cooling https://reut.rs/3Ta4TYQ
G10 interest rates - August 2024 https://reut.rs/4dJF8GR
By Mike Dolan, editing by Gareth Jones
mike.dolan@thomsonreuters.com
Mga Kaugnay na Asset
Pinakabagong Balita
Disclaimer: Ang mga kabilang sa XM Group ay nagbibigay lang ng serbisyo sa pagpapatupad at pag-access sa aming Online Trading Facility, kung saan pinapahintulutan nito ang pagtingin at/o paggamit sa nilalaman na makikita sa website o sa pamamagitan nito, at walang layuning palitan o palawigin ito, at hindi din ito papalitan o papalawigin. Ang naturang pag-access at paggamit ay palaging alinsunod sa: (i) Mga Tuntunin at Kundisyon; (ii) Mga Babala sa Risk; at (iii) Kabuuang Disclaimer. Kaya naman ang naturang nilalaman ay ituturing na pangkalahatang impormasyon lamang. Mangyaring isaalang-alang na ang mga nilalaman ng aming Online Trading Facility ay hindi paglikom, o alok, para magsagawa ng anumang transaksyon sa mga pinansyal na market. Ang pag-trade sa alinmang pinansyal na market ay nagtataglay ng mataas na lebel ng risk sa iyong kapital.
Lahat ng materyales na nakalathala sa aming Online Trading Facility ay nakalaan para sa layuning edukasyonal/pang-impormasyon lamang at hindi naglalaman – at hindi dapat ituring bilang naglalaman – ng payo at rekomendasyon na pangpinansyal, tungkol sa buwis sa pag-i-invest, o pang-trade, o tala ng aming presyo sa pag-trade, o alok para sa, o paglikom ng, transaksyon sa alinmang pinansyal na instrument o hindi ginustong pinansyal na promosyon.
Sa anumang nilalaman na galing sa ikatlong partido, pati na ang mga nilalaman na inihanda ng XM, ang mga naturang opinyon, balita, pananaliksik, pag-analisa, presyo, ibang impormasyon o link sa ibang mga site na makikita sa website na ito ay ibibigay tulad ng nandoon, bilang pangkalahatang komentaryo sa market at hindi ito nagtataglay ng payo sa pag-i-invest. Kung ang alinmang nilalaman nito ay itinuring bilang pananaliksik sa pag-i-invest, kailangan mong isaalang-alang at tanggapin na hindi ito inilaan at inihanda alinsunod sa mga legal na pangangailangan na idinisenyo para maisulong ang pagsasarili ng pananaliksik sa pag-i-invest, at dahil dito ituturing ito na komunikasyon sa marketing sa ilalim ng mga kaugnay na batas at regulasyon. Mangyaring siguruhin na nabasa at naintindihan mo ang aming Notipikasyon sa Hindi Independyenteng Pananaliksik sa Pag-i-invest at Babala sa Risk na may kinalaman sa impormasyong nakalagay sa itaas, na maa-access dito.
