By Geoffrey Smith
Investing.com -- Weekly jobless claims and the Challenger job cuts survey set the stage for tomorrow's U.S. payrolls report. France unveils a big stimulus plan as PMIs show momentum fading in Europe in August. And oil slides on growing signs of the market falling back into oversupply. Here's what you need to know in financial markets on Thursday, September 3rd.
1. Labor market stays in focus with jobless claims, Challenger survey
After a disappointing report on private-sector hiring from ADP on Wednesday, there’ll be lots of attention again on the weekly jobless claims numbers at 8:30 AM ET (1230 GMT). Initial claims have stuck above 1 million in recent weeks, pointing to a sustained high level of lay-offs even as the economy rebounds from its second-quarter disaster.
The August Challenger job cuts survey, due at 7:30 AM ET, will flesh out the picture further, ahead of Friday’s official labor market report for the month.
The data calendar is completed by the services component of the Institute of Supply Management’s monthly business survey, due at 10 AM ET.
Chicago Fed President Charles Evans will say what he thinks of it all at 1 PM ET.
2 Macron launches big stimulus plan
French stocks hit their highest level in nearly two months as President Emmanuel Macron’s government formally unveiled a 100 billion-euro ($118 billion) stimulus package.
The package, which will be 40% financed by the proposed EU Recovery Fund, aims to cut business taxes by over 20 billion euros over 10 years, one of the central policies that Macron was elected on in 2017 but has been unable to push through so far.
By 6:15 AM ET, the benchmark CAC 40 was up 1.6% on the day, having earlier risen as much as 2.0%.
3 Stocks set to pause for breath; Tesla's under pressure again
U.S. stock markets are set to open slightly lower, adopting a more cautious tone ahead of the weekly jobless data after setting yet another new high on Wednesday,
By 6:15 AM ET, the Dow 30 futures contract was down 46 points, or 0.2%, while the S&P 500 futures contract was down 0.4% and the Nasdaq 100 futures contract was down 0.9%.
Stocks likely to be in focus on Thursday include cyber-security firm Crowdstrike (NASDAQ:CRWD), which was down 7.4% in premarket trading on profit-taking after a quarterly update that failed to live up to stretched expectations.
Tesla (NASDAQ:TSLA) stock is also under pressure, down 6.5% after U.K. investment fund Baillie Gifford, one of its longest-standing institutional investors, was forced to divest some of its position due to portfolio concentration concerns.
4. Dollar extends rebound as eurozone momentum slips
The dollar continued its comeback against the euro after the latest round of purchasing manager indexes suggested a sharp loss of economic momentum in August.
IHS Markit’s composite PMI for the euro zone fell to 51.9 from 54.9 in July, as a second wave of coronavirus infection stymied attempts to keep the summer tourist season alive. The U.K., which went into lockdown later than the rest of Europe, managed to eke out another gain in its composite PMI, but IHS warned of increasing numbers of companies preparing to lay off staff as the government’s furlough scheme approaches its end. Eurozone retail sales also fell in July, Eurostat reported.
The EUR/USD was down 0.2% at $1.1833, after the Financial Times reported that a number of ECB officials were starting to be concerned at its rise. An interview by ECB board member Isabel Schnabel with Reuters contradicted this view, however.
5 Oil slumps as oversupply fears re-emerge
Oil prices extended their declines on growing concerns that the market is falling into oversupply.
The market has worked for the last couple of months on the assumption that output restraint from OPEC and its friends, combined with a rebound in global fuel demand, would rapidly eat into stockpiles accumulated in the first half.
However, U.S. government data released on Wednesday indicated a disturbing drop in U.S. gasoline demand, while other government numbers also show jet fuel consumption levelling off at less than half of its levels from a year ago.
Reuters energy columnist John Kemp noted that the contango in dated Brent, the very front end of the physical market, was now at its steepest since June 1.
U.S. crude futures were down 2.1% at $40.65 a barrel, while Brent futures were down 1.8% at $43.65 a barrel.