Dow Jones Forecast: Stocks slip with bonds in focus after jobs data
US futures
Dow futures -0.21% at 33030
S&P futures -0.22% at 4251
Nasdaq futures -0.15% at 14749
In Europe
FTSE +0.6% at 7458
Dax +0.02% at 15097
- US jobless claims rise to 207k from 205k
- US bond yields climb higher fueling fears of a hard landing
- USD holds steady after data
- Oil slumps for a second day
US jobless claims remain low
US Stocks are pointing to a modestly weaker open after gains in the previous session and as investors digest the latest cues from the US labour market.
US jobless claims showed that 207k Americans filed for unemployment benefits for the first time last week, which was up from 205k the previous week but slightly below the 210k expected and remain low by historical standards. The data comes after yesterday's ADP private payroll which showed 89,000 jobs were added in September, well below estimates of 160k and down from 180k previously.
Yesterday’s figure revived hopes that the US labour market could be cooling which could encourage the Federal Reserve to adopt a less hawkish tone and question rate hikes this year.
Investors will be keeping an eye on sovereign bond yields as both the 10-year and the 30-year treasury yields inched higher, suggesting that yesterday's rally in the bond market could be short-lived. Concerns are rising that the sharp rise in bond yields in recent weeks could take its toll on some parts of the financial system.
Looking ahead attention will be on fed speakers with Cleveland Fed President Loretta Mester due to speak along with Mary Daly and Barkin.
Corporate news
Constellation Brands is set to open unchanged despite the drinks maker lifting its annual profit guidance after Q2 sales beat forecasts.
Exxon is falling 1.2% pre-market as oil prices drop, but the oil giant also said it would deliver Q3 operating profit between $8.3 billion and $11.4 billion, which was below last year's record earnings although up from Q2
Blackberry is rising pre-market after the tech firm announced that it would separate its Internet of Things and cybersecurity business units. It plans an IPO for the Internet of Things business next fiscal year.
Dow Jones forecast – technical analysis.
The Dow Jones has risen from yesterday’s low of 32815 and while the RSI remains in oversold territory, the rebound is lacking momentum. Buyers would need to retake 33220, Monday’s low to build confidence in a recovery and extend gains 33600 the July low and expose the 200 sma at 33820. Sellers will be looking to take out support at 32815 to create a lower low and extend the bearish trend towards 32675 the May low.
FX markets –USD falls, EUR rises
The USD is falling lower for a second straight day as yields steady and as investors digest the latest jobless claims data and look ahead to US non-farm payroll figures tomorrow.
EUR/USD is rising, capitalising on the weaker U.S. dollar even as investors digest more disappointing data. German exports plunged by -1.2% in August after falling 1.9% in July, highlighting the weakness in the eurozone's largest economy. Meanwhile, French industrial output also unexpectedly declined by 0.4%. ECB policymaker Peter Kazimir said that the rate hike last month was likely the last although more data is needed to confirm this.
GBP/USD is holding steady around 1.2125 after gains in the previous session. GBP is managing to brush off data that showed the construction in industry saw the biggest slide in activity in more than three years. The construction PMI fell to 45 in September, down from August's 50.8. This was one of the sharpest falls in housebuilding since the 2008-2009 recession.
EUR/USD +0.09% at 1.0505
GBP/USD -0.08% at 1.2124
Oil slumps further
Oil prices are falling further, extending yesterday's slide, which saw oil prices fall by over 5% as concerns over the demand outlook overshadow the prospect of ongoing tight supply from OPEC.
Oil fell a 5% on Wednesday marking its largest daily decline in over a year, as concerns over the deteriorating economic outlook and weaker oil demand pulled oil prices lower even though Saudi Arabia and Russia reiterated that they will continue the voluntary output cuts until the end of the year.
US service sector PMI data slowed in September and ADP payrolls dropped sharply. Data from the eurozone was also weak and pointed to a likely contraction in the third quarter and a possible recession in the second half of the year. As economies, the oil demand outlook weakens pulling oil prices lower.
WTI crude trades -1.5% at $81.99
Brent trades -1.5% at $84.35
Looking ahead
14:00 Fed Mester
15:00 Cad. Ivey PMI
16:30 Fed Barkin
From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.
As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.
City Index is a trading name of StoneX Financial Pty Ltd.
The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.
While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.
StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.
It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.
StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.
© City Index 2024