Investing.com - Here are the top five things you need to know in financial markets on Thursday, September 1:
1. All eyes on U.S. data as markets await Fed rate hike clues
Investors looked ahead to data on U.S. nonfarm payrolls on Friday to see if the economy is strong enough to withstand a rate hike in the coming weeks. The consensus forecast is that the data will show jobs growth of 180,000 in August, following an increase of 255,000 in the preceding month.
A strong nonfarm payrolls report would reinforce the view that a U.S. rate hike in September may be on the cards, after hawkish signals from senior Fed officials in recent days revived speculation of a near-term rate hike.
Ahead of the nonfarm employment data, markets will digest reports on initial jobless claims and nonfarm productivity, both due at 8:30AM ET (12:30GMT) on Thursday. There is also Markit manufacturing PMI data at 9:45AM ET (13:45GMT) and ISM manufacturing at 10:00AM ET (14:00GMT), as well as a report on construction spending.
According to Investing.com's Fed Rate Monitor Tool, investors are pricing in a 27% chance of a rate hike by September. December odds were at around 59%.
2. China factory activity improves to 22-month high
Official PMI data released earlier Thursday showed activity in China's manufacturing sector unexpectedly expanded at its fastest pace in nearly two years in August.
The country's purchasing managers’ index rose to 50.4, the highest in 22 months and indicating a slight expansion in the economy. That was up from 49.9 in July.
However, a separate private survey of small-to-medium sized companies revealed operating conditions in the sector stagnated. The Caixin manufacturing PMI slipped to 50.0, the no-change mark which separates expansion from contraction, from 50.6 in July.
3. Pound soars after strong post-Brexit U.K. manufacturing data
The British pound jumped against the dollar to trade near a one-month high after the release of upbeat U.K. manufacturing activity data added to optimism over the strength of the economy post-Brexit.
Research group Markit said its U.K. manufacturing purchasing managers’ index improved to a 10-month high of 53.3 this month from a reading of 48.2 in July. Analysts had expected the index to rise to 49.0 in August.
GBP/USD touched a daily peak of 1.3266, before falling back to 1.3240, up 0.75% on the day.
4. Oil prices slump to new 3-week lows
Oil prices fell to a new three-low for the second day in a row on Thursday, as data from the U.S. Energy Information Administration rekindled fears of a global supply glut.
U.S. crude was down 13 cents, or 0.29%, to $44.57 a barrel during morning hours in New York, while Brent shed 22 cents, or 0.47%, to $46.67, the weakest since August 12.
On Wednesday, oil plunged more than 3% after weekly supply data showed a surprisingly large build in U.S. crude and distillate stockpiles and a smaller-than-expected drawdown in gasoline.
5. Gold drops to lowest since mid-June
Gold prices traded at the lowest level since mid-June on Thursday, amid indications that the Federal Reserve is gearing up to hike interest rates at its September meeting.
Futures held around the $1,310-level after briefly falling to $1,307, a level not seen since June 24.
The precious metal is sensitive to moves in U.S. rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar in which it is priced.