Equity markets are still moving higher despite the geopolitical uncertainties that are still ongoing.
Bullish sentiment has been in play since Wednesday and we are not seeing any signs of the positive momentum waning. Dealers are focused on the US jobs report that will be released at 1.30pm, and I suspect we could see low volatility on the run up to it.
The Caixin survey of Chinese manufacturing came in at 51.6, which was an improvement on July’s 51.1, and it topped the expectations of 50.9. This report confirms the official manufacturing conducted by the Chinese government yesterday, which also showed growth on the month.
China is a major importer of minerals, and miners like Anglo American, Glencore, BHP Billiton and Rio Tinto are higher on the day because of the report.
This week, Anglo American, Glencore and Rio Tinto have all created new highs for 2017, so the momentum is clearly with the bulls.
The GBP/USD was given a nice boost by solid manufacturing figures from the UK. The report showed growth on the month and comfortably topped economists’ expectations.
The EUR/USD slipped over night, but we did see a bit of a bounce on the back of the positive manufacturing reports from Italy, France and Germany. The euro is off the lows of the week, and whether it will retest the high of the week, will depend on the US jobs report.
At 1.30pm, the US will announce the non-farm payroll report and traders are expecting 180,000 jobs to have been added in August. The unemployment rate is tipped to remain at 4.3%. Average hourly earnings are anticipated to rise to 2.6% from 2.5%, on a year-on-year basis.
When it comes to the US jobs report, the devil is in the detail, and we would need to see all aspects of the announcement being robust before the Federal Reserve could look to tighten their monetary policy. I pay close attention to the earnings figure as job creation is all well and good, but salaries need to be strong so Americans go out and spend money.
We are anticipating the Dow Jones to open 37 points higher at 21,985, and we are calling the S&P 500 up 2 at 2473.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
Disclaimer: CMC Markets Singapore may provide or make available research analysis or reports prepared or issued by entities within the CMC Markets group of companies, located and regulated under the laws in a foreign jurisdictions, in accordance with regulation 32C of the Financial Advisers Regulations. Where such information is issued or promulgated to a person who is not an accredited investor, expert investor or institutional investor, CMC Markets Singapore accepts legal responsibility for the contents of the analysis or report, to the extent required by law. Recipients of such information who are resident in Singapore may contact CMC Markets Singapore on 1800 559 6000 for any matters arising from or in connection with the information.
