U.S Stocks Mixed Ahead Of Important U.S. Jobs Data in the Pre-Market

Oct 6, 2022
VOT Research Desk

Key News – Insights and Analysis

After three major US benchmark indices stopped a two-day relief rally on robust economic data and Federal Reserve officials’ remarks that pushed back against bets of a pivot, December S&P 500 futures (ESZ22) are trending down -0.38% this morning. Losses in the Utilities, Consumer Goods, and Basic Materials sectors accounted for the majority of the weighting in three major stock indexes in the United States.

The stronger-than-expected ADP National Employment report released on Wednesday showed that private employers in the United States increased hiring in September, indicating underlying economic strength. Additionally, U.S. services activity rebounded more than anticipated in September, indicating that the Fed will maintain its interest rate hike.

The announcement that “We are going to raise the rate until we get into restrictive territory, and then we are going to stay it there until inflation comes down closer to 2%” is easing investor bets on a Fed shift, according to Mary Daly, president of the San Francisco Federal Reserve. The Atlanta Fed’s president, Raphael Bostic, urged the Fed to “stay deliberate and resolute” in its fight against inflation.

01:46 In the meantime, U.S. rate futures have priced in a 32.6% chance of raising the rate by 50 basis points and a 67.4% chance of raising the rate by 75 basis points at the monetary policy meeting in November.

In a few hours, all eyes will be on the U.S. Initial Jobless Claims data. Investors are likely to focus on a series of speeches from members of the Federal Reserve, including Waller and Mester, as economists anticipate that Initial Jobless Claims will reach 203 thousand, up from 193,000 the previous week.

Rates on 10-year bonds in the United States currently stand at 3.757%, down -0.05%.

This morning, the Euro Stoxx 50 is up +0.32%, regaining momentum after European markets closed lower on Wednesday as global equities’ bullish sentiment waned, particularly after Eurozone PMI data fell to a 20-month low, igniting concerns of a recession in the region. The more than 3% increase in Imperial Brands PLC (IMB.LN) shares following the tobacco company’s announcement that FY22 trading was in line with expectations is another factor that has helped European stocks.

In addition, market participants are anticipating the report from the September meeting of the European Central Bank for clues regarding the pace and course of future rate increases.

Today’s releases included data on Germany Factory Orders, the UK Construction Purchasing Managers Index (PMI), and Eurozone Retail Sales.

Despite expectations of -0.7% m/m, the German August Factory Orders data came in at -2.4% m/m, raising additional concerns about the health of Europe’s largest economy.

The Construction PMI for the United Kingdom in September was 52.3, exceeding expectations of 48.0.

In contrast to expectations of -0.4% m/m and -1.7% y/y, Eurozone August Retail Sales came in at -0.3% m/m and -2.0% y/y.

Today, Asian stock markets mostly settled in the green, helped along by hopes that the Chinese economy would improve. After reports from local Chinese media suggested that consumers’ holiday spending remained strong despite concerns about COVID, regional markets extended gains, raising hopes for a recovery. A report from Reuters also says that Chinese demand for commodity imports is expected to rise in the fourth quarter.

While the Chinese market was closed for the holidays, Japan’s Nikkei 225 Stock Index (NIK) closed up +0.70%.

Energy and chip-related stocks drove today’s rise to the Nikkei 225 Stock Index’s highest level since late September. Gains in the Precision Instruments,

Transportation Equipment, and Electrical/Machinery sectors were primarily responsible for the index’s upward momentum. The implied volatility of Nikkei 225 options is taken into account by the Nikkei Volatility, which ended the day at 23.46, down 4.32 percent.

Daily- Oct 6