The Friday Market Minute
- Global stocks mixed as Delta variant cases in Asia pull stocks lower, while caution ahead of the June jobs report caps gains in Europe.
- Employers likely added 700,000 new jobs last month, but luring workers with higher pay could lift average hourly wage gains to 3.7%.
- Tesla edges higher ahead of second quarter delivery figures that could top 200,000.
- Virgin Galactic surges as billionaire founder Richard Branson plans to board July 11 test flight.
- Oil slips lower amid delayed OPEC+ meeting in Vienna, but remains within touching distance of seven-year highs.
- CDC data shows 155.8 million Americans have now been fully vaccinated against the coronavirus, with around 328.1 million doses administered as of Thursday.
- U.S. equity futures suggest a muted open on Wall Street ahead of the June jobs data at 8:30 am Eastern time.
U.S. equity futures edged higher Friday heading into a crucial June jobs report that could ignite fresh inflation concerns as employers look to entice recalcitrant workers with higher wages just as trillion in fiscal stimulus looks to extend the post-pandemic recovery.
Analysts expected that today’s employment report will show a net new 700,000 jobs were added to the economy last month, but, more notably, average hourly earnings could rise by as much as 3.7% from last year as bosses offer higher pay and financial incentives to lure people back onto the stop floor.
That, alongside the trillions in fiscal stimulus — including a $715 million surface transportation infrastructure bill passed by Congress only last night — and record levels of central bank support, could carry faster inflation prospects well into next year as the economy extends its post pandemic recovery.
The Fed’s preferred inflation gauge, the core PCE Price Index, rose 3.4% from last year in May, the highest since 1991, while headline CPI was pegged at 5% amid a surge in car and travel prices.
The U.S. dollar is sitting a 15-month high against the yen, and near similar levels on an index basis against a basket of its global peers, largely on the basis of a hawkish reaction from the Federal Reserve to faster inflation prospects. Bond markets, however, remained muted, with benchmark 10-year notes trading at 1.451% heading into today’s data.
That could leave stocks vulnerable to big moves once the data is released at 8:30 am Eastern time, although the market’s key benchmark volatility gauge, the VIX, is holding at the lowest levels in more than a year.
Future contracts tied to the Dow Jones Industrial Average were marked 20 points higher, while those linked to the S&P 500 are indicating a 3.3 point advance from last night’s record close, the sixth in succession.
Nasdaq Composite are indicating a modest 20 point bump for the tech-focused benchmark.
Tesla (TSLA) – Get Report shares were active in pre-market trading, rising 0.1% ahead of an expected release of its second quarter delivery figures, which could come prior to the start of trading at 9:30 am Eastern time.
Virgin Galactic (SPCE) – Get Report shares were also on the march, rising 26.4% in heavy volumes after billionaire founder Richard Branson said he would board the group’s maiden space flight on July 11, just a few days ahead of Jeff Bezos’ Blue Origin.
In Europe, stocks hovered near record highs ahead of the U.S. jobs data, with semiconductors and automakers driving the region-wide Stoxx 600 to an early 0.24% advance.
In Asia, a 1.9% slide for China’s Shanghai Composite, potentially linked to yesterday’s bellicose address from President Xi Jinping, pulled regional stocks lower, as did the renewed surge in Delta variant coronavirus infections, which has triggered lockdowns in Sydney, emergency measures in Indonesia and the highest rate of infections in more than six months in South Korea.
Oil prices were modestly weaker, largely as a result of the firmer U.S. dollar, as traders awaited the final word from yesterday’s delayed OPEC+ meeting in Vienna, with reports still suggesting the cartel will make only modest changes to its production cut pact while extending it into April of next year.
WTI crude futures for August delivery, the benchmark for U.S. oil and gas prices, slipped 10 cents on the session to trade at $75056 per barrel, still near to the highest levels since November of 2014.
Brent crude contracts for September delivery, which are more tightly-aligned to global prices, were marked 25 cents per barrel lower at $75.58.