It was a positive start for US stocks as October kicked off; the S&P 500 gained 0.5% and the NASDAQ 100 outperformed with a rally of 1.5%, led by the mega technology stocks Amazon (+2.3%), Facebook (+1.8%) and Google (+1.5%).

Meanwhile, political gridlock continued to take shape in the US Congress over the passage of the second fiscal stimulus bill, as economic conditions in US had started to turn soft. In addition, yesterday’s data releases had been lacklustre; weekly initial jobless claims remained elevated at 837,000, personal income declined by -2.7% month-on-month in August (more than consensus estimate of -2.4%) and the ISM Manufacturing PMI for September decelerated to 55.4 (below consensus estimate of 56.4)

At this time of my writing, the Democrats controlled US House had passed a fiscal stimulus package of $2.2 trillion from an earlier demand of $3.4 trillion bill. However, the withered down stimulus package did not have Republican support and Senate Majority Republican leader Mitch McConnell said earlier that it was rife with “poison bills” that had nothing to do with pandemic relief. 

No positive impact on risk assets for now in today’s Asian session with the US stock futures; S&P 500 and Nasdaq 100 traded down by around -0.2%. The US dollar recovered from yesterday’s US session losses against the major currencies, up by +0.1% as measured by the US Dollar Index.

The biggest mover came from oil where the WTI crude oil futures tumbled by -3.7% to close yesterday’s US session at 38.72 due to oversupply concerns, around 7% away from a key medium-term technical support level of 35.90.

China and Hong Kong financial markets are closed today for holiday while Japan stock market had resumed trading today after a whole day of shut down yesterday due to a technical glitch; the Nikkei 225 is upped by +0.2% while Singapore’s Straits Times Index inched down lower by -0.2% to trade below the psychological level of 2500 at 2496.

Eurozone’s inflation data for September (preliminary): core inflation rate is expected to come in at 0.5% year-on-year, down slightly from Aug reading of 0.4%; a slight improvement but it is still a weak reading that indicates deflationary forces are intact in Europe.

US non-farm payrolls and unemployment rate for September: consensus estimate is calling for an increase of 850,000 jobs, down from 1.371 million added in August. If September jobs number comes in as expected, it will be a third month of consecutive decline in growth since July. The unemployment rate is expected to be at 8.2%, slightly better than July figure of 8.4%.

US factory orders for August; a weaker growth number is expected at 1.0% month-on-month which indicates a significant decline from July figure of 6.4%.

Chart of the day: WTI Crude (futures) to test 35.90 key support?

Source: CMC Markets

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