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Top 5 Things to Know In the Market on Thursday

EconomyJun 01, 2017 06:02AM ET
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© Reuters. 5 key factors for the markets on Thursday - Here are the top five things you need to know in financial markets on Thursday, June 1:

1. Eyes on U.S. job creation

Market players looked ahead Thursday to the publication of payroll processing firm ADP’s monthly report on U.S. nonfarm employment at 8:15AM ET (12:15GMT).

Consensus is looking for the creation of an additional 185,000 jobs in May.

While not viewed as a reliable guide for the government jobs report due on Friday, June 2, it does give guidance on private-sector hiring.

In another measure of the American labor market, the U.S. Department of Labor will release weekly jobless claims at 8:30AM ET (12:30GMT) Thursday.

2. Chinese manufacturing sector contracts for first time in 11 months

Worries over China’s economy are intensifying this morning after new data showed its manufacturing sector is shrinking.

The Caixin/Markit manufacturing purchasing managers’ index (PMI), which focuses more on small and mid-sized firms, fell to 49.6 in May, from 50.1 in April. That signals that activity contracted last month, for the first time in nearly a year, due to “muted” growth in new orders from domestic and overseas customers.

The number came on a day that it would see a slew of manufacturing data world-wide.

Also on Thursday, Japan reported its manufacturing PMI rose to 53.1, beating an estimate of 52.0 that would have been steady with April.

The euro zone manufacturing PMI was confirmed at 57.0 for May, showing that the strong growth of production and new business supported survey-record job creation.

In the U.K., the May manufacturing PMI fell slightly less than expected in a further sign of “marked growth”. Markit noted that output and new order growth remained solid, while the rate of job creation was at a 35-month high.

Stateside, investors also looked forward to the release of the ISM manufacturing PMI for May at 10:00AM ET (14:00GMT).

3. Oil recovers on strong inventory draw

Oil recovered lost territory on Thursday after slumping to a three-week low in the previous session as the American Petroleum Institute (API) reported that U.S. crude stockpiles fell by 8.670 million barrels at the end of last week, far more than the 2.517 million barrels expected.

The API estimates will be followed on Thursday with official data from the Energy Information Administration. The two sets of figures often diverge and both reports were released one day later than usual due to the Memorial Day holiday.

U.S. crude oil futures gained 0.62% to $48.62 at 5:59AM ET (9:59GMT), while Brent oil traded up 0.41% to $50.97.

Still, market players continued to question whether the agreement between major oil producers to extend production cuts would balance out with increases in U.S. shale production and increases by OPEC members such as Nigeria and Libya who are exempt from the output reduction.

Adding to the mix were key evaluations of demand as the U.S. summer driving season begins.

4. Global stocks show mixed trade as May comes to a close

U.S. stock futures pointed to a mostly flat, mixed open on Wall Street, with indices near record highs, as investors waited for the ADP data. At 6:00AM ET (10:00GMT), the blue-chip Dow futures slipped 0.01%, S&P 500 futures inched up 0.05% and the Nasdaq 100 futures gained 0.18%.

European stocks were mostly higher on Thursday, with the benchmark Euro Stoxx 50 up 0.18% while Germany’s DAX gained 0.33% and London’s FTSE traded up 0.37%.

Earlier, Asian shares closed mixed on Thursday even as Chinese factory activity contracted for the first time in nearly a year, but Japan’s own manufacturing PMI beat consensus. China's Shanghai Composite fell 0.5%, while Japan's Nikkei ended 0.99% higher.

5. Pound under pressure from election fears

Despite the release of better than expected U.K. manufacturing activity data on Thursday, mounting political uncertainty in Britain continued to weigh on the pound.

The latest YouGov poll released on Wednesday showed that Theresa May's Conservative Party is only 3 percentage points in front of the opposition Labour Party ahead of the June 8 election, causing fears of a hung Parliament as the U.K. looks forward to negotiations over its exit from the European Union.

Cable was last down 0.35% at 1.2845 by 6:02AM ET (10:02GMT), while EUR/GBY climbed 0.21% to 0.8742.

Top 5 Things to Know In the Market on Thursday

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