Top 5 Things to Know in the Market on Thursday, July 2nd

Top 5 Things to Know in the Market on Thursday, July 2nd  | Jul 02, 2020 11:35

Top 5 Things to Know in the Market on Thursday, July 2nd

By Geoffrey Smith -- There’s a double-whammy of U.S. jobs data due, with both the official labor market report for June and last week’s jobless claims numbers due at 8:30 AM ET (1230 GMT). The surge in U.S. coronavirus infections continues, with the country registering a record high of 52,000 new cases on Tuesday. U.S. stocks are set to open higher, as traders wait for validation of yesterday’s strong ADP (NASDAQ:ADP) payrolls report,  while Hong Kong’s and Russia’s jump in reaction to political faits accomplis. And oil prices are higher amid continuing confidence in the global market’s rebalancing story. Here’s what you need to know in financial markets on Thursday, July 2nd.

1 Jobs, jobs, jobs...and jobs

If you love jobs data, you’re going to love today. The Labor Department will release not only the weekly jobless claims numbers for the U.S., but also the monthly employment report for June. The latter has been moved up a day because of Friday’s public holiday.

The most up-to-date information will be from the weekly numbers, which are expected to show a further drop in the number of people filing initial claims for jobless benefits to 1.355 million from 1.48 million. Continuing claims, which come with a one-week time lag, are expected to fall to 19.0 million.

The more complete data, however, will be the monthly numbers. Nonfarm payrolls are expected to have grown by 3.000 million, but the number may have to be seen in the context of a big revision to May’s 2.509 million gain. The unemployment rate is expected to fall to 12.3% from 13.3% in May.

2. Reopening on hold as virus cases hit new record high

It’s worth noting that both sets of jobs data will predate the accelerating surge in Covid-19 cases across much of the U.S.  The country posted a new daily record of over 50,000 new infections on Tuesday, and hospitalizations are also on the rise, especially in California and Texas.

Apple (NASDAQ:AAPL) has now re-closed one-quarter of its U.S. stores, while McDonald’s is pausing its reopening schedule, according to an internal memo seen by The Wall Street Journal.

St. Louis Fed President James Bullard meanwhile issued a stark warning of what could happen if the country fails to bring the virus under control.

“The disease is still quite capable of surprising us,” Bullard told the Financial Times. “Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and [that] could feed into a financial crisis.”

3. Stocks set to open moderately higher; Musk overtakes Toyota

U.S. stock markets are set to open higher, as the strong rebound in ADP’s private payroll survey and in the Institute of Supply Management’s purchasing managers index on Wednesday outweigh concerns about the state of the medical emergency.

By 6:30 AM ET (1030 GMT), the Dow Jones 30 Futures contract was up 221 points, or 0.9%, while the S&P 500 Futures contract was up 0.6% and the Nasdaq 100 futures contract was up 0.4%.

The Nasdaq Composite closed at a new record high on Wednesday, while the Dow and S&P have essentially been in a holding pattern since the liquidity-driven rebound topped out in early June.

In the spotlight today will be Tesla (NASDAQ:TSLA), which has surpassed both Exxon Mobil (NYSE:XOM) and Toyota in market value in recent days, even though it produces only 4% of what Toyota produces.  Retail-focused stocks will also be sensitive to any further evidence of delayed reopening or closures.

4. Hong Kong, Russian markets shrug off political concerns

Hong Kong stocks rose 2.9%, shrugging off a House vote to impose fresh sanctions on banks that do business with Chinese officials linked to a new law that effectively ends the city’s autonomy.

The U.K. has offered a track to citizenship for 3 million Hong Kong residents, while Australian Prime Minister Scott Morrison said his cabinet would also soon consider proposals offering ‘safe haven’ to Hong Kong residents.

Meanwhile in Russia, the benchmark RTS index rose 2.6% and the ruble strengthened after citizens reportedly voted to endorse constitutional changes that allow President Vladimir Putin to stay in power until 2036.

5. Oil steadies above $40 on rebalancing evidence

Crude oil prices steadied above $40 after inventory data from the U.S. government showed a deeper-than-expected drop in inventories last week.

That suggests that falling production and rising demand are eating into the record stockpiles created during the second quarter at a faster rate than expected. Prices had dipped later amid concerns that the surge in virus cases could derail the reopening of the U.S. economy.

By 6:30 AM, U.S. crude futures were up 0.6% at $40.05 a barrel, while the international benchmark Brent futures contract was up 0.6% at $42.27 a barrel.  

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