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U.S. futures dip, JOLTS data ahead - what's moving markets

Published Dec 05, 2023 11:20
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Investing.com -- U.S. stocks point lower as markets gear up for fresh job openings data that will serve as a precursor to Friday's much-anticipated nonfarm payrolls report. Elsewhere, the Reserve Bank of Australia leaves interest rates unchanged and flags some uncertainty around the global outlook, while a private survey shows that activity in China's services sector expanded at a faster than expected rate in November.

1. Futures inch down

U.S. stock futures edged lower on Tuesday after equities on Wall Street started the first full week of trading in December in the red.

By 04:58 ET (09:58 GMT), the Dow futures contract had shed 29 points or 0.1%, S&P 500 futures had dipped by 10 points or 0.2%, and Nasdaq 100 futures had fallen by 69 points or 0.4%.

The main indices in New York ended the previous session lower, as a decline in shares in megacap tech firms interrupted a surge in equities that saw the benchmark S&P 500 post its highest close so far this year. U.S. Treasury yields, which typically move inversely to prices, also rose, adding to the downward pressure on stocks.

Investors seemed to be turning somewhat cautious with the release later in the week of the key monthly U.S. jobs report, which could lead markets to reassess their expectations for a Federal Reserve interest rate reduction early next year. Analysts at ING have also suggested that traders may be "positioning" themselves for potential pushback from Fed Chair Jerome Powell against rate cut bets next week, when the central bank holds its last policy meeting of 2023.

2. JOLTS ahead

A slew of economic figures this week are set to give color to a picture of the U.S. labor market that will completed by Friday's much-anticipated nonfarm payrolls report.

One of those data points includes the Job Openings and Labor Turnover Survey, a closely-watched gauge of labor demand.

Economists predict that the so-called JOLTS report, which is due out later today, will show that job openings in the world's largest economy slipped to 9.3 million on the final day of October, down from 9.553 million on the last day of the prior month.

Resilience in the labor market has helped to bolster hopes that the U.S. economy may be able to avert a recession despite a long-standing campaign of Fed interest rate hikes aimed at cooling red-hot inflation.

However, signs of lingering strength in job demand could be interpreted as a possible accelerant to price growth, boosting the case for the Fed to keep policy at restrictive levels for a longer period of time.

3. RBA leaves rates unchanged

The Reserve Bank of Australia kept interest rates on hold at 4.35% as anticipated on Tuesday, fueling expectations that it may be bringing its own tightening cycle to an end.

But RBA Governor Michele Bullock said in a note that there were still “significant uncertainties” around the outlook on goods inflation. She also noted that while the Australian economy had cooled under high interest rates, it remained largely resilient, possibly presenting more upward pressure on price growth.

Meanwhile, Bullock flagged that there is still a "high level of uncertainty" around the outlook for the Chinese economy and the impact of foreign conflicts. 

Like the Fed and other central banks around the world, the RBA has moved recently to increase borrowing costs, citing a recent uptick in price gains. But with inflationary pressures expected to abate globally, debate is heating up among policymakers over whether it is time to back away from these more hawkish stances.

4. Chinese services activity grows at quickest pace in three months in November - Caixin PMI

Chinese service sector activity grew by more than expected in November, a private survey showed on Tuesday, in a sign that stimulus measures from Beijing may be helping to boost local demand. 

The Caixin China Services Purchasing Managers Index (PMI) came in at 51.5 in November, above projections for a rise of 50.7. The reading was the highest in three months, although it remained under the long-term average.

A figure topping 50 indicates expansion. 

Services have been a bright spot in China's broadly sluggish economy this year, somewhat countering weakness in a manufacturing industry reeling from a decline in local and overseas demand. 

5. Oil rises amid Middle East tensions

Oil prices rose Tuesday as traders gauged ongoing tensions in the Middle East, but gains were tempered by uncertainty surrounding recent OPEC+ production cuts.

By 04:57 ET, the U.S. crude futures traded 0.9% higher at $73.73 a barrel, while the Brent contract climbed 0.8% to $78.66 per barrel.

Fears of a potential escalation in the Israel-Hamas conflict have grown after the U.S. held Iran responsible for an attack on U.S. vessels in the Red Sea by Houthi forces. But traders remained wary of pricing a significant risk premium into oil over the conflict, given that it has so far had a minimal impact on Middle Eastern oil supplies.

The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, agreed to an additional voluntary output reduction of 900,000 barrels per day last week, although analysts told Reuters that markets were skeptical over the impact of the move.

U.S. futures dip, JOLTS data ahead - what's moving markets
 

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