Friday ushers in the first day of August, but it also ushers in one of the most important announcements out there: the nonfarm payroll numbers. However, there are plenty of other announcements during the day that could impact the markets on one level or another. With that being the case, the first thing that we see is China releasing its Manufacturing PMI numbers for July. The expected number is 51.4, which of course suggests that the manufacturing sector in China is expanding.
While there isn’t necessarily an asset to trade directly from this, we believe that this market moving event could affect stock markets in both Asia and Europe initially, as the markets could in fact see a less than anticipated number is assigned that the world could be slipping back into recession. It’s not expected, but it certainly could happen. This is one of those events that could be high impact, but only if something goes horribly wrong. If it does, and we get a number underneath the 50 level, the Nikkei, DAX, and FTSE will probably all selloff for the next few hours. This could make a somewhat bumpy session during the European morning for stock indices.
Keep in mind that the HSBC Manufacturing PMI number comes out 45 minutes later, and that of course has to be watched as well. That is because many traders are suspicious of government numbers coming out of China, and this one is considered to be a little bit more reliable. However, they are often fairly close in their assessments.
However, without a doubt the most important economic announcement during the day is the nonfarm payroll number, and as a result the markets might be quiet until we get to that point. Really on a day like this, more than likely the only way some of these other numbers can move the market will be if they are that poor. There has to be a shock to the system in order for the economic information to move the markets drastically before the jobs number out of America.
The nonfarm payroll number is expected to be 231,000 jobs added for the month of July. That being said, if we get a strong report, you can expect the S&P 500, the NASDAQ, and the Dow Jones Industrial Average all bounce after the significant falls and we saw during the Thursday session. That being the case, it is very likely that most of the action will be in the US stock indices during the day, which of course were sold off viciously on Thursday due to some poor earnings.
On the other hand, if the jobs number is really bad, you can expect a continuation of the sell off and the S&P 500 looks particularly vulnerable, as we could head down to the 1900 level. With that being the case, this could be one of the more interesting trading days of the summer as we enter the lull of the August trading month.