Dow Futures Edge Lower, But S&P May Test 3,000 as Key US Jobs Report Looms
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The Friday Market Minute
- Global stocks little-changed ahead of key U.S. jobs report, while government bond markets continue to rally on hopes of deeper central bank support.
- U.S. employers are expected to have added 160,000 new jobs last month, but modest wage growth could compel the Fed to further define its near-term rate forecasts.
- Samsung estimates another quarterly profit decline, as a glut in global semiconductors hammers prices as Huawei restrictions hit the world's biggest smartphone maker.
- Global oil prices flat, but falling, as demand forecasts offset Gulf security concerns.
- U.S. equity futures suggest a modestly firmer open on Wall Street, with the S&P 500 testing the 3,000 point barrier for the first time, ahead of the June employment report at 8:15 Eastern time.
Market Snapshot
Wall Street futures edged lower Friday, while global government bond markets continued to test fresh-record lows, as investors prepped for a crucial U.S. jobs report that could both define the Federal Reserve's next move on interest rates and justify central bank signally from major economies around the world.
With the U.S. economy slow, global manufacturing in its worst rut since 2012 and trade disputes between Washington, Beijing and Brussels disrupting supply changes and sapping consumer demand, central banks from Ottawa to Tokyo have been priming investors for lower rates and deeper monetary stimulus in the coming months.
The Fed's similar signalling, linked to slowing domestic growth and political pressure from the White House, could be further defined this morning by official job creation figures from the Bureau of Labor Statistics, which is expected to show American employers added 160,000 new positions last month, keeping the headline unemployment rate at a half-century low of 3.6%.
Any weakness in the employment report's main readings, however, is likely to entice investors to add to bets on a deeper July rate cut, which the CME Group's FedWatch tool suggests is pricing in only a 25% chance of a 50 basis point reduction in the Fed Funds rate, against a near 100% chance of a 25 basis point cut.
U.S. equity futures suggest modest declines on Wall Street at present, with contracts tied to the Dow Jones Industrial Average indicating an 32 point slide while those linked to the S&P 500, which closed at a record 2,995.82 points on Wednesday, are guiding to a 4.2 point dip.
Much of Wall Street's direction, however, will be dictated by the strength -- or weakness -- of the jobs numbers and the interest rate market reaction to the job and monthly wage figures.
Global markets, too, are keying on the June jobs report, which is expected at 8:30 am Eastern time, and with most markets returning to full swing following yesterday's U.S. Fourth of July holiday celebrations, stocks were little-changed in markets around the world.
In Europe, the Stoxx 600 fell 0.4% lower by mid-day in Frankfurt, with smaller percentage declines from benchmarks around the region, after a much weaker-than-expected reading for May industrial orders from Germany.
Shares in Asia drifted from recent multi-month highs to pull the MSCI ex-Japan index into a 0.1% loss on the session as Samsung Electronics (SSNLF) forecast its third consecutive quarterly profit decline as the U.S. blacklisting of Huawei Technologies, and weaker global smartphone markets, continues to hammer the bottom line of the world's biggest chipmaker.
Broader investor concern for the strength of the global economy was largely at play in oil markets, as well, which have fallen more than 4.5% this week as manufacturing data around the world slumped to the weakest levels in seven years.
Military tensions in the Gulf region, however, continue to give markets some support, with news that the British Royal Marines sized and Iranian oil tanker heading for Syria, allegedly in violation of international sanctions, adding to the collective concern. A Reuters survey that noted OPEC production fell to the lowest level in five years in May also gave markets an early Friday boost.
Brent crude contracts for August delivery, the global benchmark, were seen 25 cents higher from their Thursday close and changing hands at $63.55 per barrel in early European trading. WTI contracts for the same month, which are more tightly linked to U.S. gas prices, were marked 4 cents higher at $56.84 per barrel.