US open: Wall Street heads lower, jobs data in focus
Fiona Cincotta September 8, 2021 1:49 PM
Investors can't shake off concerns over the health of the economic recovery amid rising covid cases. JOLTS job openings data could continue raising more questions than bring answers.
Dow futures -0.13% at 35100
S&P futures -0.12% at 4520
Nasdaq futures -0.08% at 15663
FTSE -0.7% at 7123
Dax -0.7% at 15735
Euro Stoxx -0.42% at 4207
Futures head lower
US stocks are set for a softer open as investors continue to weigh up the economic outlook, the latest covid developments and the chances of the Fed moving to taper bond purchases sooner rather than later.
In the previous session, cyclicals were out of favour amid rising concerns over the outlook for the US economy. Goldman Sachs downwardly revised its US GDP for the second time in a month unnerving the market. JP Morgan also downgraded its recommendation on US equities.
Meanwhile covid cases in the US are rising sharply, with deaths also jumping higher as schools return and offices reopen. All this at a time when the Fed is considering reining in support.
Attention will return to the labout market conundrum of slowing payrolls being added yet sky high job openings. The JOLTS job data is expected to reveal 10 million openings. This comes after just 253k jobs were added in August raising more questions than giving answers
Where next for the Dow Jones?
The Dow Jones fell steeply in the previous session finding support at the 50 sma, a support which has been strong across 2021. The price is currently testing this key level again today. The bearish divergence on the RSI suggests that the momentum is slowing which often comes before a move lower. A close below the 50 sma would be significant and could open the door to 34600 the 100 sma. Any move above 35195 could set the index on the path higher back towards 35700.
FX – USD extends rebound, GBP drops on tax hike
The US Dollar is extending gains for a second straight session tracing treasury yields higher. After its steep selloff following Jackson Hole and the weak labour report, has the selloff been overdone? The risk is that the market is underpricing a move by the Fed. St Louis Fed President James Bullard said that the central bank should go forward with plans to taper bond purchases this year.
GBP/USD trades lower for a third straight session after the unveiling of tax hikes by British Prime Minister Boris Johnson. Boris Johnson plans to hike NI for both businesses and individuals by 1.25% in a move which could slow the post pandemic economic recovery. The hike would mean that the UK has its highest peacetime tax burden ever.
GBP/USD -0.14% at 1.3768
EUR/USD -0.15% at 1.1823
Oil rises ahead of EIA data
Oil is on the rise as supply concerns overshadow demand fears amid rising covid cases. Oil trades over 1% higher after US Gulf of Mexico producers make slow progress to restoring output following Hurricane Ida 9 day ago. Around 80% of production remains offline.
Inventory data will be closely eyed for further clues as to how the storm impacted crude production. Expectations are for crude inventories to fall by 3.8 million barrels.
After high levels of volatility across August, which saw the price of oil swing by 7-10% per week, September is proving to be a lot calmer so far.
US crude trades +1.4% at $69.26
Brent trades +1.2% at $72.44
15:00 JOLTS job openings
15:00 Ivey PMI
15:30 EIA oil stock change
19:00 US Beige Book
How to trade with City Index
Follow these easy steps to start trading with City Index today:
- Open a City Index account, or log-in if you’re already a customer.
- Search for the market you want to trade in our award-winning platform.
- Choose your position and size, and your stop and limit levels
- Place the trade.
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.