Top 5 Things to Know In the Market on Friday

Here are the top five things you need to know in financial markets on Friday, July 8:

1. June jobs report in focus

After May’s employment report showed the weakest job creation since September 2010, markets looked ahead to see if the prior numbers were simply transitory with the release of figures for June on Friday at 12:30GMT, or 8:30AM ET.

Consensus forecast that the unemployment rate will rise slightly to 4.8% despite an increase of 175,000 nonfarm payrolls (NFPs). Additionally, economists expect average hourly earnings to rise by 0.2%.

2. Fed fund futures await NFPs

June’s employment report will be a key factor for determining the Federal Reserve’s outlook for the normalization of monetary policy, especially since May’s weak numbers were one of the key reasons the U.S. monetary authority opted to hold rates steady in June.

Late Tuesday, Fed fund futures put the odds at 96.4% that the central bank would keep rates unchanged at the July 26-27 meeting, with the probability of a 25 basis point (bp) cut at 3.6%.

According to CME Group’s FedWatch Tool, markets do not currently expect the Fed to tighten until well into 2017.

3. Brexit fallout moves to background ahead of U.S. employment

The U.K.’s shock decision to leave the European Union (EU), known as a Brexit, focused markets’ attention in recent weeks as they attempted to gauge the impact on the global economy.

Moody’s took the opportunity on Friday to chime in and cut forecasts for growth in the British economy to 1.5% in 2016 and 1.2% in 2017, from 1.8% and 2.1%, respectively. Part of the credit rating agency’s rationale was a shock to confidence that would likely curb economic growth.

In fact, an overnight report from GfK designed to measure sentiment after the vote, showed that British consumer confidence plunged eight points to -9. That was the largest drop in 21 years.

4. Global stocks mixed before the U.S. jobs data

Global stocks by and large refrained from making large moves ahead of the American employment report.

Asian shares held mostly weaker on Friday with Japan suffering the most from a weaker USD/JPY.

European equities showed slight gains at the open, though London’s FTSE 100 turned lower in later morning trade.

U.S. futures also pointed to a flat open on Friday, with market participants apparently deciding to save their trades until after the jobs data. At 8:59AM GMT, or 4:59AM ET, the blue-chip Dow futures edged forward 11 points, or 0.06%, S&P 500 futures inched up 1 point, or 0.06%, while the Nasdaq 100 futures slipped 1 point, or 0.02%.

5. Oil bounces off 2-month lows; on track for largest weekly loss in 5 months

Oil bounced back on Friday after the prior day’s inventory data pushed crude 5% lower on a less-than-expected draw. Still, black gold was on track for a weekly loss of around 7%, its biggest decline in five months.

Signs of a potential recovery in U.S. drilling activity remained in focus with market players looking ahead to oil services provider Baker Hughes’ data on U.S. rig counts later on Friday.

The number of rigs drilling for oil in the U.S. rose by 11 last week to 341, marking the fourth increase in five weeks, increasing concern over a supply glut stemming from domestic production.

U.S. crude oil futures gained 0.80% to $45.50, at 9:01AM GMT, or 5:01AM ET, while Brent oil rose 0.58% to $46.66.

 

Source: Investing.com

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