Investing.com - Here are the top five things you need to know in financial markets on Friday, September 1:
1. Jobs report on watch to measure rate hike odds
The U.S. Labor Department will release its August nonfarm payrolls report at 8:30AM ET (12:30GMT) on Friday.
The consensus forecast is that the data will show jobs growth of 180,000 this month, following an increase of 209,000 in July, with the unemployment rate forecast to hold steady at 4.3%.
Most of the focus will likely be on average hourly earnings figures, which are expected to rise 0.2% after gaining 0.3% a month earlier and maintain a 2.5% rise year-on-year.
Despite the solid job market, wage inflation has lagged, making markets skeptical that the Federal Reserve will indeed to follow through with its forecast of one more rate hike this year.
While markets appear to have priced in the fact the Fed is expected to make an announcement regarding the start of winding down its balance sheet at the September 20 policy decision, Fed fund futures continue to put the odds of an increase in interest rates by the end of the year at only 39%, according to Investing.com’s Fed Rate Monitor Tool.
2. Dollar holds gains ahead of NFP, other key data
The dollar registered cautious gains on Friday as traders waited for a slew of economic data later in the session.
Apart from the monthly employment report, investors will focus on the publication of ISM manufacturing sector activity for August at 10:00AM ET (14:00GMT) Friday. Expectations are for a slight pick-up growth with the index inching up to 56.5 from the prior 56.3.
Also scheduled for release Friday are data including construction spending for July along with revisions to both IHS Markit’s manufacturing purchasing managers’ index (PMI) for August and the University of Michigan’s consumer sentiment index for the same month.
Ahead of the data dump, the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, gained 0.12% at 92.70 by 5:55AM ET (9:55GMT).
3. Chinese and European manufacturing PMIs show resilience
Ahead of the ISM data stateside, similar measures for both China and Europe released on Friday showed resilience.
In China, August factory activity picked up to six-month high as orders surged.
The Caixin/Markit manufacturing PMI rose to 51.6 in August, compared with 51.1 in July and beating economists' expectations for a slight dip to 50.9.
Euro zone factory activity also rose in August thanks to strong demand as output grew at a faster pace than in the previous month.
Notably, the region registered its fastest rise in export orders since February 2011 despite a strengthening euro.
In the U.K. too, manufacturing PMI unexpectedly picked up the pace in August, hitting a four-month high on the back of stronger new order inflows.
4. Global stocks higher with jobs report in focus
U.S. futures registered cautious gains as traders awaited nonfarm payrolls and a string of other data to gauge the strength of the American economy. At 5:56AM ET (9:56GMT), the blue-chip Dow futures advanced 34 points, or 0.15%, S&P 500 futures inched up 2 poinst, or 0.09% while the Nasdaq 100 futures edged forward 4 points, or 0.07%.
Elsewhere, European bourses traded higher on the back of some positive news from French media company Vivendi (PA:VIV) and the resilient manufacturing data. At 5:57AM ET (9:57GMT), the European benchmark Euro Stoxx 50 gained 0.61%, Germany’s DAX rose 0.67%, while London's FTSE 100 traded up 0.17%.
Earlier, Asian shares closed higher on Friday with regional manufacturing figures aiding sentiment and the market, though traders showed caution ahead of the U.S. employment report.
5. Harvey continues to pummel oil ahead of U.S. shale production data
Oil prices fell on Friday in the wake of Hurricane Harvey, which has killed more than 40 people and brought record flooding to the oil heartland of Texas, paralyzing over a quarter of the U.S. refining industry.
Harvey, downgraded to a tropical storm and losing steam as it moved inland, shut at least 4.4 million barrels per day (bpd) of refining capacity, according to company reports and Reuters estimates.
That sparked fears of a fuel shortage ahead of the Labor Day weekend and cut refinery demand for crude oil.
U.S. crude oil futures fell 1.12% to $46.70 at 5:58AM ET (9:58GMT), while Brent oil traded down 1.00% to $52.33.
Market participants will also keep an eye on the state of U.S. shale production when Baker Hughes releases its most recent rig count data in the week leading up to Harvey hitting the mainland, later on Friday.