Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Stocks Off The Flat Line After Soft Start, US Jobs Data Eyed

By Neil WilsonMarket OverviewSep 02, 2021 10:38
uk.investing.com/analysis/stocks-off-the-flat-line-after-soft-start-us-jobs-data-eyed-200495400
Stocks Off The Flat Line After Soft Start, US Jobs Data Eyed
By Neil Wilson   |  Sep 02, 2021 10:38
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

European stock markets showed some signs of wanting to kick on after shrugging off some early weakness at the start of the session. The FTSE 100 is handicapped to the tune of 13pts already due to ex-dividend factors but the overall tone was initially one of caution as yesterday’s ADP jobs miss has investors looking ahead to tomorrow’s nonfarm payrolls. Slightly hawkish chatter around the European Central Bank is also maybe leading to some caution, whilst there is yet further evidence of China’s crackdown on tech firms as it hauls up 11 ride-hailing for ‘illegal behaviour’. After an hour’s trade the main bourses were trading with a bit more confidence, up by around 0.1-0.2%, but still stuck in recent ranges.

Wall Street ended the day largely flat with defensive/bond proxies real estate and utilities leading the gainers, whilst risk-on sectors like energy and financials were the weakest. United States 10-Year yields at 1.30% in the middle of the week’s range. Note continued rotation into mega cap tech with Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL) hitting record highs and lifting the Nasdaq Composite to another all-time peak, though both stocks pared gains to finish off their highs. Reopening did better in Europe yesterday as the Stoxx 600 outperformed.

Zoom (NASDAQ:ZM) rebounded very mildly as Cathie Wood said she’d bought the stock on the 16% dip earlier this week. Wood also added some Robinhood (NASDAQ:HOOD) and there is a new transparent ETF being launched, stuffed full of the same stocks the other ETFs are invested in. Suppose it makes it easier to say you’re not overconcentrated – just open a new fund to bid up the stocks in the others. The Transparent ETF will be at least 80% invested in stocks in the Transparency Index published by Solactive. Excluded from the index are stocks in the following industries: (i) alcohol, (ii) banking, (iii) chemicals, (iv) confectionary, (v) fossil fuel transportation, (vi) gambling, (vii) metals, (viii) mineral, (ix) natural gas, (x) oil, and (xi) tobacco. The SEC filing can be found here.

Stagflation: ADP (NASDAQ:ADP) payrolls were a big ol’ miss at just +374k vs the +638k expected. Well over half (+200k) were in leisure and hospitality as reopening continues. Not a great indicator for Friday’s nonfarm payrolls and this would potentially give the Fed more rope to delay the taper. If data keeps getting worse, or less good, rather, then you can see the FOMC start to voice concerns at the Sep meeting and we could be in a position where the US central bank actually doesn’t taper asset purchases this year. I still think they will, but this is a very dovish, somewhat politically-motivated Fed with jobs on its mind and Powell looking to keep his job.

The US ISM PMI showed slowing growth and more inflation, albeit the pace of price growth is cooling. The Prices Index registered 79.4%, down 6.3 percentage points compared to the July figure of 85.7%. This was its first reading below 80% since December 2020. Labour shortage evident with the Employment Index slipping into contraction.

Anything really interesting? Well, that Employment Index reading in the ISM neatly matches the ADP report, so something to consider for anyone expecting a blowout NFP on Friday. Want to hire, can’t hire. Just wait ‘til the stimmy cheques wear off. Federal stimmy cheques end Monday Sep 6th - Labor Day ironically - although about half of states have already stopped them. Companies might find it easier to hire thereafter. US initial claims later today seen at 345k, which will also be watched with some scrutiny ahead of the NFP tomorrow.

FTSE reshuffle: Meggitt (LON:MGGT) and Morrisons (LON:MRW) to join FTSE 100, whilst there are seven changes to the FTSE 250. Just Eat Takeaway (LON:JETJ) and Weir Group (LON:WEIR) will leave the FTSE 100 index. You have to wonder why on earth the FTSE Russell bods think that it makes sense to promote Morrisons just as it’s about to become a private company – particularly as it’s only due to the bidding war that the share price has risen enough to get in. Joining the FTSE 250 are Baltic Classifieds Group (LON:BCG), Throgmorton Trust (LON:THRG), Bridgepoint Group (LON:BPTB), Darktrace (LON:DARK), Draper Esprit (LON:GROW) and Endeavour Mining (LON:EDV). Couple of recent IPOs in there that have been performing well since listing. Out go Wickes (LON:WIX), Tullow Oil (LON:TLW), Temple Bar Investment Trust (LON:TMPL), Civitas Social Housing (LON:CSH) and Avon Protection (LON:AVON).

Melrose Industries (LON:MRON) shares rose to the top of the FTSE as it returned to profit and reported trading ahead of expectations, with better profit margins, better earnings per share and significantly lower net debt. It also said the balance sheet has room for a significant further Capital Return next year. Profits rose to £223m from a loss of £11m last year. Shares rose 5% in early trade.

JD Sports (LON:JD) still spitting feathers over the CMA’s continued refusal to allow it to acquire Footasylum. The regulator still seems to be taking a high street market share approach with regards the two must-have brands – Nike (NYSE:NKE) and Adidas (DE:ADSGN) – whilst seemingly not factoring in the amount of direct to consumer business they do already and plan to do in future. Retail changes all of the time and the pandemic has accelerated trends that mean blocking JD Sports from acquiring Footasylum increasingly makes less sense.

ECB speakers are doing the rounds: It’s an interesting moment for the European Central Bank next week so we’re paying close attention to what some of the ECB speakers are up to. After inflation rose to a decade-high 3% this week, leading hawk Jens Weidmann of the Bundesbank to call for stimulus to be rolled back.

Hawks are gaining confidence albeit the recovery is showing signs of lost momentum. Vice President Luis de Guindos told a Spanish newspaper that “the economy is performing better in 2021 than we expected, and this will be reflected in the projections that will be published in the coming days”.

Next week on Sep 9th the ECB will need to take a decision on the future path of bond purchases. De Guindos hinted that withdrawal of stimulus is on the cards. "If inflation and the economy recover, then there will logically be a gradual normalisation of monetary policy, and of fiscal policy, too," he said.

But hawks have been in the minority for many years. ECB policymaker Yannis Stournaras was also on the tape, saying the central bank should be prudent, cautious regarding course of inflation, but stressed that wages are not yet following the course of inflation. This kind of follows what ECB chief economist Philip Lane said last week when he reiterated the central bank’s believe in the transience of inflationary pressures.

OPEC+ stuck to its plan, raising output by 400k bpd, and increasing its 2022 demand outlook amid growing confidence within the bloc and the fundamentals for the market. Members noted that while the pandemic has cast a shadow on sentiment, market fundamentals have strengthened and OECD stocks continue to fall as recovery accelerates. A well-telegraphed move but it shows more consensus than was evident last time when talks dragged on for days.

On stocks, US oil inventories shrank sharply last week, according to EIA data. Stocks fell by 7.2m barrels, double the draw that was expected. However, gasoline inventories rose as Tropical Storm Henry shut driving on the US east coast. Nevertheless, total product supplied, the key measure of implied demand, hit an all-time high of more than 22m bpd. The wash-out in July and August on delta fears may have played out enough to allow speculators to come back in as physical markets remain tight and fundamentals still solid.

After touching old support just under $67 WTI trades around $68 this morning as it continues to maintain a slightly bullish medium-term bias hugging the trend line, near-term descending trend is approaching but momentum is already fading a touch before this.

Spot Crude Oil Daily Chart
Spot Crude Oil Daily Chart

Stocks Off The Flat Line After Soft Start, US Jobs Data Eyed
 

Related Articles

Ryan Anderson
PREVIEW: ECB Policy Announcement By Ryan Anderson - Oct 27, 2021 1

ECB policy announcement due Thursday 28th October; rate decision at 12:45BST/07:45EDT, press conference from 13:30BST/08:30EDT A decision on the future of PEPP is not expected to...

Stocks Off The Flat Line After Soft Start, US Jobs Data Eyed

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (1)
Setornam Addy
Setornam Addy Oct 04, 2021 21:45
Saved. See Saved Items.
This comment has already been saved in your Saved Items
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Any information, analysis, opinion, commentary or research-based material on this page is for information purposes only and is not, in any circumstances, intended to be an offer of, or solicitation for, a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any person acting on it does so entirely at their own risk and ETX Capital accepts no responsibility for any adverse trading decisions. You should seek independent advice if you do not understand the associated risks.
Continue with Google
or
Sign up with Email