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Top 5 Things to Know In the Market on Thursday

EconomyJul 06, 2017 06:10AM 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, July 6:

1. Jobs data and service sector activity in focus

Ahead of the jobs report out on Friday, investors will focus on labor market data as they try to adjust for the upcoming government data.

Private payroll processor ADP will release its own report on employment change for June at 8:15AM ET (12:15GMT), amid expectations for the creation of 185,000 jobs.

While the ADP report often shows wide divergences with the government data, it is still considered an important indicator for the U.S. labor market.

Also on the labor front, market players will also digest weekly jobless claims at 8:30AM ET (12:30GMT).

At 10:00AM ET (14:00GMT), the service sector will be on watch as the Institute of Supply Management (ISM) releases its non-manufacturing purchasing managers’ index (PMI) for June.

2. Oil jumps 1% on inventory draw, official data ahead

Oil prices regained ground on Thursday, jumping more than 1%, after an industry report late in the prior session showed a far larger-than-expected crude inventory drawdown.

Data from industry group The American Petroleum Institute late Wednesday showed that U.S. crude inventories fell by 5.8 million barrels, compared to expectations for a draw of just 1.6 million.

The Energy Information Administration was to release its inventory report at 11:00AM (15:00GMT) on Thursday, with analysts expecting a drawdown of 2.28 million barrels.

Both reports come one day later than usual because of this week’s Independence Day holiday.

U.S. crude oil futures jumped 1.51% to $45.81 at 6:05AM ET (10:05GMT), while Brent oil rose 1.38% to $48.45.

3. Geopolitical issues under watch

Market players were keeping an eye on international issues as China's foreign ministry called on Thursday for all sides to remain calm and exercise restraint after the United States said it was ready to use force, if need be, to halt North Korea's nuclear missile program.

Market players kept on eye on developments even as U.S. President Donald Trump visited Poland to meet up with NATO allies.

This was ahead of the G20 summit in Hamburg, Germany on Friday and Saturday. German Chancellor Angela Merkel said she expects there to be “difficult discussions” even as her country’s Foreign Minister said he’s worried that Trump could “start a trade war with Europe”.

4. Global stocks mostly lower after Fed minutes with North Korea, G20 on radar

Global stocks traded mostly lower on Thursday as markets digested the minutes from the last policy meeting of the Federal Reserve (Fed) and kept an eye on geopolitical issues.

Minutes released on Wednesday after the European market close showed that Fed policymakers were increasingly split on the outlook for inflation and how it might affect the future pace of interest rate rises.

Market participants kept a close watch on political developments surrounding North Korea’s launch earlier this week of an intercontinental ballistic missile with the U.S. declaring that it was prepared to respond with force.

Markets also looked ahead to the kickoff of the 2-day G20 meeting with a particular eye on whether U.S. President Donald Trump will follow a protectionist path in world trade agreements.

In this context, European shares traded mostly lower on Wednesday. At 6:06AM ET (10:06GMT), the European benchmark Euro Stoxx 50 lost 1.02%, Germany’s DAX fell 0.74%, France’s CAC 40 shed 0.95% while London's FTSE 100 traded down 0.69%.

Earlier, Asian stocks ended mixed with China’s Shanghai Composite up around 0.2% but Japan’s Nikkei closed down 0.5%.

U.S. stock futures pointed to a lower open on Wall Street in a session ahead of economic data. At 6:09AM ET (10:09GMT), the blue-chip Dow futures lost 0.29%, S&P 500 futures fell 0.40% and the Nasdaq 100 futures traded down 0.78%.

5. German bund yield hits 17-month high with ECB minutes on tap

The yield on the 10-year German bund jumped 15%, or 7 basis points, to 0.544% on Thursday, its highest level since January 2016.

Markets looked ahead to the minutes from the latest meeting of the European Central Bank (ECB) which will be released at 7:30AM ET (11:30GMT).

Last week, comments from ECB president Mario Draghi rocked markets on the back of their interpretation that the leader of the euro area monetary authority had become more hawkish.

ECB “sources” had to leak the opinion that markets had misinterpreted the message.

In that light, investors will likely pay close attention to the minutes which tend to go unnoticed as they search for clues on any discussions of further tweaks to the ECB’s forward guidance or possible hints at a plan for tapering asset purchases.

Top 5 Things to Know In the Market on Thursday

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