Jobs data ahead, US dockworkers suspend strike - what's moving markets

Published 04/10/2024, 08:42
© Reuters
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Investing.com -- US stock futures hover near the flatline as markets gear up for an all-important nonfarm payrolls report on Friday. The figures are expected to point to a stable, albeit decelerating, labor market picture ahead of the Federal Reserve's two remaining meetings this year. Elsewhere, dockworkers in the US East and Gulf Coasts suspend a strike that threatened to place heavy pressure on the broader economy.

1. Nonfarm payrolls loom large

Markets are focused on the publication of the September nonfarm payrolls report at 08:30 ET on Friday.

The US economy is tipped to have maintained a moderate pace of job growth during the final month of the third quarter, while the unemployment rate is seen matching August's level of 4.2%.

Should the Labor Department's key readings meet those expectations, it could lessen the need for the Federal Reserve to roll out another 50-basis point interest rate reduction at the central bank's upcoming meetings in November and December. The Fed announced a jumbo reduction in borrowing costs at its gathering last month, partly fueled by a desire to bolster the labor market.

Potentially impacting the report could be Hurricane Helene, which raced through parts of the US Southeast last week, and an ongoing strike by Boeing (NYSE:BA) workers in the US Pacific Northwest.

The figures, coupled with job openings data and private payrolls earlier this week, are broadly expected to point to a sustained and orderly slowing in labor demand underpinned by mostly steady wage growth.

2. Futures muted

US stock futures were muted on Friday as investors prepared for the release of the crucial US jobs data.

By 03:27 ET (07:27 GMT), the Dow futures contract and S&P 500 futures were both mostly unchanged, while Nasdaq 100 futures had climbed by 25 points or 0.1%.

The main indices ended the prior session slightly lower, signaling a note of caution ahead of the nonfarm payrolls report. Traders were also eyeing escalating tensions in the Middle East.

The benchmark S&P 500 dipped by 10 points or 0.2%, the 30-stock Dow Jones Industrial Average shed 185 points or 0.4%, and the tech-heavy Nasdaq Composite ticked down by 7 points or 0.04%.

In a note to clients, analysts at Vital Knowledge argued that recent stock market trends have been marked by stimulus measures from the Chinese government and a host of interest rate cuts by global central banks counterbalancing higher stock valuations.

"[T]he former [is] preventing sustained and extended slumps while the latter acts as an obstacle to further material gains," the analysts said.

"We think stimulus is ultimately the more powerful of these two countervailing forces, which will keep the equity trend pointed higher, but elevated [price to equity ratios] leave stocks exposed to negative headlines."

3. Dockworkers suspend strike

US dockworkers across the East and Gulf coasts are due to suspend their days-long strike after their union and the group representing large ocean shipping firms reached an agreement on Thursday.

The work stoppage had closed down ports from Maine to Texas, threatening large swathes of the US economy by crimping supply chains and the imports of goods like food and pharmaceuticals. Analysts at JPMorgan had said the strike cost the economy as much as $4.5 billion a day, the Financial Times reported.

The tentative deal will see a wage hike of roughly 62% over six years, Reuters reported, citing two sources familiar with the matter. The number would be between the 77% sought by the International Longshoremen's Association (ILA) workers union and the almost 50% offered by the employer group, United States Maritime Alliance (USMX).

In a statement, the ILA and the USMX said they would extend their master contract until Jan. 15 of next year. However, key issues between the two remain, including workers' concerns that automation at ports could cause job losses.

Shares in shipping companies slipped following the announcement, including AP Moeller - Maersk (CSE:MAERSKb) in Denmark. Investors banking on a rebound in recently depressed freight rates due to the strike were disappointed, analysts told Reuters.

4. Seven & i Holdings eyeing sale of majority stake in supermarkets - reports

Japan's Seven & i Holdings (TYO:3382) is mulling a possible sale of a majority stake in its supermarket businesses, including its flagship Ito-Yokado division, according to Nikkei business daily.

The parent company of the 7-Eleven chain of convenience stores is looking to sell the units to overseas investment funds, among other potential candidates, Nikkei reported. The process is due to begin as early as the end of this year, it added.

A Seven & i spokesperson quoted by Reuters said the move is "not something officially announced by our company," noting there are "no facts that have been decided at this time."

In September, Seven & i rebuffed a $38.5 billion takeover offer from Canada's Alimentation Couche-Tard. It would have been the biggest foreign buyout in Japanese corporate history.

5. Oil gains

Oil prices edged slightly higher Friday, and were on course for their largest weekly gain in over a year on the increased risk of a growing conflict in the Middle East.

By 03:28 ET, the Brent contract gained 0.4% to $77.96 per barrel, while U.S. crude futures (WTI) traded 0.5% higher at $74.06 a barrel.

Brent crude futures were set to gain around 8% for the week - its steepest since February 2023, while U.S. crude futures' 8% weekly rise would be the largest since March last year.

(Reuters contributed reporting.)

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