Looming Monthly Jobs Data May Lead To Choppy Trading On Wall Street

The major U.S. index futures are pointing to a roughly flat open on Thursday, with stocks likely to show a lack of direction ahead of Friday’s monthly jobs report.

Traders may be reluctant to make significant moves ahead of the release of the Labor Department’s report on the employment situation in the month of June.

Economists currently expect the report to show employment jumped by 690,000 jobs in June after surging up by 559,000 jobs in May. The unemployment rate is expected to dip to 5.7 percent from 5.8 percent.

A day ahead of the release of the monthly jobs report, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended June 26th.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

U.S. stocks closed broadly higher on Wednesday as optimism about a strong economic recovery outweighed concerns about inflation and the possibility of interest rate hikes happening next year.

Investors reacted to data on private sector employment, pending home sales and a reading on Chicago business activity, and looked ahead to crucial non-farm payrolls data due on Friday.

A surge in infections due to the delta variant of the coronavirus and curbs on travel in several countries raised some uncertainty about the pace of the global economic rebound and rendered the mood cautious.

Among the major averages, the Dow came back fairly strongly after suffering a setback in the previous session, the S&P 500 hit another record high and the Nasdaq edged down marginally.

The Dow ended up by 210.22 points or 0.6 percent at 34,502.51. The S&P 500 settled at 4,297.50, gaining 5.70 points or 0.1 percent, and the Nasdaq closed lower by 24.38 points or 0.2 percent at 14,503.95.

The Dow ended the month almost unchanged from the previous month’s level after posting four monthly gains. The Nasdaq added more than 6 percent for the month, while the S&P 500 gained more than 2 percent.

Data from Automatic Data Processing, Inc. showed private business in the U.S. hired 692,000 workers in the month of June, higher than an expected addition of 600,000. However, the hiring in June was below a downwardly revised 886,000 job additions in May.

A separate report released by the National Association of Realtors showed pending home sales in the U.S. increased by 13.1 percent year-on-year in May after soaring by a record 51.7 percent in April.

Meanwhile, the MNI Chicago Business Barometer came in with a reading of 66.1 for June, down from a score of 75.2 in the previous month.

Commodity, Currency Markets

Crude oil futures are spiking $1.94 to $75.41 a barrel after climbing $0.49 to $73.47 a barrel on Wednesday. Meanwhile, after advancing $8 to $1,771.60 an ounce in the previous session, gold futures are rising $6.20 to $1,777.80 an ounce.

On the currency front, the U.S. dollar is trading at 111.44 yen versus the 111.11 yen it fetched at the close of New York trading on Wednesday. Against the euro, the dollar is valued at $1.1875 compared to yesterday’s $1.1858.

Asia

Virulent variants of the Covid-19 virus emerged as the villain again to play spoilsport with the Asian stock markets in the beginning of a new quarter.

China’s Shanghai Composite Index edged down 0.1 percent to close at 3,588.78 amidst data showing a dip by the Caixin China General Manufacturing PMI for June to 51.3, a three-month low from 52 in May, primarily due to an uptick in Covid-19 cases as well as supply chain disruptions. The Hong Kong Stock Exchange was closed for a local holiday.

Japan’s Nikkei 225 Index opened at 28,832.41 but soon corrected to 28,624.80 before finally closing at 28,707.04, down 0.3 percent from the previous day’s closing as the coronavirus delta variant stoked risk aversion in the stock market.

An increase in May’s unemployment to 3 percent and a slide by June’s Manufacturing PMI to 52.4 from 53.0 a month earlier eclipsed the positive sentiment attributed to the big manufacturers’ sentiment jumping to 14 in the June quarter, the highest reading since the December quarter of 2018.

Sumitomo Heavy Industries rallied 3.9 percent, followed by Hitachi Zosen Corp., which gained 2.5 percent. Mitsubishi Electric Corp declined 6.1 percent, whereas Kawasaki Kisen Kaisha shed 4.6 percent.

South Korea’s KOSPI moved 14.62 points or 0.4 percent lower to close at 3,282.06 amidst concerns over an increase in the case-loads of the Covid-19 virus.

Meanwhile, South Korea’s trade surplus in the month of June increased to $4.44 billion amid a 30.7 percent jump in exports and a 40.7 percent surge in imports. Data also showed that the IHS Markit Manufacturing PMI rose marginally to 53.9 in June from the level of 53.7 in May.

Australia’s S&P/ASX200 Index closed 0.7 percent lower at 7,265.60 as a worsening coronavirus situation and consequent lockdowns dampened sentiment.

Gold miners Regis Resources and St Barbara were the leaders in the day’s movement with Regis Resources gaining 8.1 percent and St Barbara adding 5.6 percent. Chalice Mining Ltd. shed 5.9 percent, while Iluka Resources Ltd. dropped 4.9 percent.

Australia’s trade surplus surged to a record high of AUD 9.68 billion in May as exports jumped 6 percent compared to a 3 percent increase in imports.

The IHS Markit Australia Manufacturing PMI decreased to 58.6 in June from 60.4 in May, whereas the Ai Group Australian Performance of Manufacturing Index increased to 63.2 from 61.8 during the same period.

Europe

European stocks are in positive territory Thursday afternoon as investors continue to bet on a strong economic rebound, although the surge in the delta variant of the coronavirus has raised some uncertainty about the pace of the recovery.

Investors are currently digesting the latest batch of upbeat economic data from the euro area and are also awaiting the crucial monthly jobs data from the U.S., due on Friday.

While the U.K.’s FTSE 100 Index has advanced by 0.9 percent, the French CAC 40 Index is up by 0.5 percent and the German DAX Index is up by 0.3 percent.

In the U.K. market, Fresnillo is jumping 5.7 percent. IAG, JD Sports Fashion, Associated British Foods, Aveva Group, Compass Group, BP, Hikma Pharmaceuticals and Royal Dutch Shell are up 2.5 percent to 4.7 percent. Barclays, Standard Chartered, Glencore and Prudential are also up sharply.

In France, Sodex, ArcelorMittal, Unibail Rodamco, Societe Generale, Renault, Technip and Vinci are gaining 2 to 5 percent.

In the German market, Thyssenkrupp is rising 2.5 percent. Lufthansa, Covestro, Daimler, Munich RE, Deutsche Post, Allianz, BASF, Bayer and MTU Aero Engines are up 1 to 2 percent.

In economic news, the unemployment rate in the euro area fell to 7.9 percent in May from 8.1 percent in the previous month, data from Eurostat showed. The rate was forecast to fall marginally to 8 percent.

Data showed that the EU unemployment rate was 7.3 percent in May, down from 7.4 percent in April.

A report from Destatis showed Germany’s retail sales grew 4.2 percent month-on-month in May, in contrast to a 6.8 percent decrease in April. On a yearly basis, retail turnover was down 2.4 percent, in contrast to April’s 5.1 percent rise.

The euro area manufacturing sector grew at a fresh survey record pace for a fourth successive month in June as demand surged with the further relaxation of containment measures, final data from IHS Markit showed.

The final manufacturing Purchasing Managers’ Index rose to 63.4 in June from 63.1 in May. The final reading was higher than the flash 63.1.

June marked a twelfth successive month that the index has posted above the 50.0 no-change mark that separates growth from contraction.

Germany’s manufacturing sector showed an improved performance in June, with rates of output and new order growth accelerating for the first time in three months. The headline IHS Markit/BME manufacturing PMI advanced to 65.1 in June from 66.4 in the previous month. The flash reading was 64.9.

The French manufacturing sector ended the second quarter with continued strong growth across output, new orders and employment. Although the manufacturing PMI fell marginally to 59.0 in June from 59.4 in May, the index signaled another substantial increase. The initial reading was 58.6.

Data from the Federal Statistical Office showed Switzerland’s consumer price inflation remained stable in June, growing 0.6 percent year-on-year, same as seen in May. Economists had expected inflation to rise 0.7 percent. The core CPI rose 0.3 percent yearly in June and remained unchanged from the previous month.

Another report from the same source showed Switzerland’s retail sales increased in May, growing by 2.8 percent year-on-year. On a monthly basis, seasonally adjusted retail sales declined 1.8 percent in May.

U.S. Economic Reports

The Labor Department released a report on Thursday showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended June 26th.

The report said initial jobless claims slid to 364,000, a decrease of 51,000 from the previous week’s revised level of 415,000.

Economist had expected jobless claims to dip to 393,000 from the 411,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of June.

The manufacturing PMI is expected to edge down to 61.0 in June from 61.2 in May, although a reading above 50 would still indicate growth.

The Commerce Department is also due to release its report on construction spending in the month of May at 10 am ET. Construction spending is expected to rise by 0.4 percent.

At 2 pm ET, Atlanta Federal Reserve President Raphael Bostic is scheduled to participate in panel before a virtual Habitat for Humanity +You Thought Leadership Series.

Stocks In Focus

Shares of Walgreens (WBA) are moving notably higher in pre-market trading after the drug store operator reported better than expected fiscal third quarter results and raised its full-year guidance.

Lighting and building management firm Acuity Brands (AYI) may also move to the upside after reporting fiscal third quarter results that exceeded economist estimates.

On the other hand, shares of Micron Technology (MU) are seeing pre-market weakness even though the chip maker reported better than expected fiscal third quarter results and provided upbeat guidance.