US open: Futures decline as ADP payrolls beat
Fiona Cincotta June 30, 2021 2:16 PM
US futures ease back from record highs. ADP beats forecasts at 692k, but investors wary ahead of Friday's NFP.
Dow futures -0.17% at 34237
S&P futures -0.13% at 4286
Nasdaq futures -0.09% at 14562
FTSE -0.5% at 7050
Dax -1.25% at 15531
Euro Stoxx -0.9% at 4071
Stocks ease back from record highs
US futures trade mildly lower, consolidating at record levels in the wake of stronger than expected ADP payroll data.
The private payroll report revealed that 692k new jobs were created in June, ahead of the 600k forecast. This was down from the almost 1 million private sector jobs created in May but is still a very solid print. Businesses are still scrambling to find workers as the economy continues to re-open.
Whilst inflation remains elevated, the Fed is looking for more progress in the US labour market recovery before tightening monetary policy. So far strong ADP data hasn’t been translating into strong US non-farm payroll numbers. Usually, the two reports are positively correlated. However, that hasn’t been the case recently.
Yesterday Moderna announced that its covid vaccine was effective against the highly infectious delta variant.
Despite the good news, the market is struggling to move higher ahead of Friday’s non farm payroll report. Few are prepared to take on large bullish bets when the market hovers at all time highs ahead of Friday’s jobs report.
Where next for the S&P 500?
The S&P keeps grinding higher, hitting a fresh all time high of 4300 in the previous session. The index is ticking lower heading towards the open and the bearish divergence in the RSI suggests that momentum is slowing. It would take a move below 4200 the confluence of the multi-month ascending trendline, the 50 dma and horizontal support to negate the near term uptrend. Sellers could gain traction below 4138 the June 21 low. For the buyers 4300 is the target before looking for fresh all-time highs.
FX – USD rallies,
The US Dollar is edging higher for a sixth straight session and holding onto strong gains from the previous session. Strong US consumer sentiment numbers sent the US Dollar sharply higher.
GBP/USD has rebounded after hawkish comments from BoE’s Andy Haldane. The departing policymaker called for the unwinding of QE amid risks of surging inflation. Haldane sees inflation to be closer to 4% than 3% by the end of the year. His comments lifted the Pound, which had struggled for traction earlier in the session after the UK Q1 GDP final reading was downwardly revised to -1.6% quarter on quarter, from -1.5%.
GBP/USD +0.23% at 1.3868
EUR/USD -0.07% at 1.1888
Oil hits $75 after large inventory draw
Oil prices are bounding higher on Wednesday, extending gains for a second straight session. Both benchmarks continue to hover around two and a half year highs with Brent over $75 and WTI crude over $74.
The highly contagious Delta variant is spreading rapidly in some countries, promoting new lockdown restrictions. However, optimism surrounding a broader recovery in demand is keeping the bulls in control.
API reported a larger than expected draw on crude oil crude oil inventories of 8.2 million barrels. Attention will now turn to EIA data which is expected to show a -4.4-million-barrel draw.
Tomorrow the OPEC+ meeting begins. Expectations are growing that the group will raise production by 500,000 barrels per day, which could be comfortably absorbed into the market given the demand outlook. The OPEC sees demand rising by 6 million barrels per day in 2021, with 5 million of that coming in H2.
US crude trades +1.1% at $73.63
Brent trades +0.94% at $75.04
15:00 Pending Home Sales
15:30 EIA Crude Oil Stocks
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.