Market Analysis

Beyond the Numbers

Futures Pointing To Initial Strength On Wall Street
9/1/2021 8:52 AM

The major U.S. index futures are currently pointing to a higher open on Wednesday, with stocks likely to move back to the upside after ending the previous session modestly lower.

Stocks appear poised to extend their recent upward move following the brief pause on Tuesday, which saw the Nasdaq and S&P 500 edge down slightly from Monday’s record closing highs.

Trading activity may remain somewhat subdued, however, as traders continue to look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 750,000 jobs in August after surging by 943,000 jobs in July. The unemployment rate is expected to dip to 5.2 percent from 5.4 percent.

Meanwhile, the futures did not show much reaction to a report from payroll processor ADP showing much weaker than expected private sector job growth in the month of August.

Stocks showed a lack of direction over the course of the trading session on Tuesday before ending the day modestly lower. Trading activity was relatively subdued, leading to the lackluster performance.

The major averages ended the day just below the unchanged line. The Dow slipped 39.11 points or 0.1 percent to 35,360.73, the Nasdaq edged down 6.66 points or less than a tenth of a percent to 15,259.24 and the S&P 500 dipped 6.11 points or 0.1 percent to 4,522.68.

Profit taking contributed to early weakness on Wall Street after the S&P 500 and the Nasdaq ended Monday's trading at new record closing highs.

Selling pressure waned over the course of the morning, however, as traders seemed worried about missing out on further upside.

Meanwhile, traders largely shrugged off a report from the Conference Board showing a substantial deterioration in U.S. consumer sentiment in the month of August.

The Conference Board said its consumer confidence index tumbled to 113.8 in August from a downwardly revised 125.1 in July.

Economists had expected the consumer confidence index to drop to 123.0 from the 129.1 originally reported for the previous month.

With the bigger than expected decrease, the index slumped to its lowest level since hitting 95.2 in February of 2021.

"Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a less favorable view of current economic conditions and short-term growth prospects," said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.

She added, "While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead."

Most of the major sectors ended the day showing only modest moves, contributing to the lackluster close by the broader markets.

Steel stocks showed a significant move to the downside, however, with the NYSE Arca Steel Index slumping by 1.6 percent.

Notable weakness was also visible among transportation stocks, as reflected by the 1.2 percent drop by the Dow Jones Transportation Average.

On the other hand, gold stocks moved sharply higher on the day, driving the NYSE Gold Bugs Index up by 1.5 percent.

The strength among gold stocks came amid an increase in the price of the precious metal, with gold for December delivery rising $5.90 to $1,818.10 an ounce.

Commodity, Currency Markets

Crude oil futures are rising $0.15 to $68.65 a barrel after sliding $0.71 to $68.50 a barrel on Tuesday. Meanwhile, an ounce of gold is unchanged compared to the previous session’s close of $1,818.10. On Tuesday, gold climbed $5.90.

On the currency front, the U.S. dollar is trading at 110.07 yen compared to the 110.02 yen it fetched at the close of New York trading on Tuesday. Against the euro, the dollar is trading at $1.1838 compared to yesterday’s $1.1809.


Asian stocks rose broadly on Wednesday in spite of signs that the region's factory activity lost momentum in August due to a resurgence in coronavirus cases.

Chinese shares advanced as weak data raised hopes for more policy support. The benchmark Shanghai Composite Index climbed 23.16 points, or 0.7 percent, to 3,567.10, while Hong Kong's Hang Seng Index ended up 149.30 points, or 0.6 percent, at 26,028.29.

The manufacturing sector in China fell into contraction in August, the latest survey from Caixin revealed, with a manufacturing PMI score of 49.2. That missed expectations for a score of 50.2 and was down from 50.3 in July.

China Evergrande Group shares tumbled 3 percent in Hong Kong after the property developer warned it could default on borrowings.

Japanese markets rallied amid bets Prime Minister Yoshihide Suga's maneuverings might help restore political stability.

Media reports suggest Suga intends to dissolve the lower house of parliament in mid-September and is considering holding the general election on October 17. However, Suga said he had no such plan.

The Nikkei 225 Index jumped 361.48 points, or 1.3 percent, to 28,451.02, a 1-1/2-month high. The broader Topix closed 1 percent higher at a five-month high of 1,980.79.

Construction equipment maker Komatsu soared 5.4 percent on a Bloomberg report that Cathie Wood's Ark Autonomous Technology and Robotics ETF has been buying the firm's American depository receipts almost daily since mid-August.

In economic news, the manufacturing sector in Japan continued to expand in August, albeit at a slower pace, the latest report from Jibun Bank showed earlier today, with a manufacturing PMI score of 52.7 - down from 53.0 in July.

Australian markets ended off their day's lows after data showed GDP grew a better-than-expected 9.6 percent year-on-year in the second quarter of 2021, helping quell fears of the nation recording its second recession in two years.

The country's current account surplus widened to a record high in the June quarter, while the manufacturing sector expanded at a slower pace in August, separate reports showed.

The benchmark S&P/ASX 200 Index slipped 7.80 points, or 0.1 percent, at 7,527.10 after reaching a two-week closing high the previous day. The broader All Ordinaries Index ended down 10.30 points, or 0.1 percent, at 7,813.

Mining heavyweights BHP and Rio Tinto fell 1.3 percent and 2.4 percent, respectively, weighed down by a drop iron ore prices, while lender NAB rallied 2.2 percent. The other three big banks rose between 0.4 percent and 0.9 percent.

Mesoblast slumped 5.7 percent to extend losses for a second day after the biotechnology company said its annual attributable loss widened to $98.8 million.

Seoul stocks rose for the fourth straight day after data showed the country's exports last month jumped 35 percent year-on-year, extending gains for the 10th month on the back of continued global demand for chips and autos. Investors shrugged off weak reports on manufacturing and the trade balance.

The benchmark Kospi edged up 7.75 points, or 0.2 percent, to 3,207.02. Chipmaker SK Hynix and internet portal operator Naver both rose around 1.4 percent, while chemical firm LG Chem plunged 4.9 percent.


European stocks have moved to the upside on Wednesday as weak factory activity data from Asia raised hopes for more policy support.

Closer to home, the Eurozone manufacturing PMI slipped to a six-month low in August but stood well above the historical average, IHS Markit said in a report.

British factory output grew at the weakest rate for six months in August, while Germany's retail sales declined more than expected in July after two straight months of growth, separate reports revealed.

While the French CAC 40 Index has surged up by 1.3 percent, the U.K.’s FTSE 100 Index is up by 0.7 percent and the German DAX Index is up by 0.3 percent.

Volvo has risen. The commercial vehicle manufacturer said it has received an order for 16 Volvo VNR Electric Class 8 trucks from Performance Team, affiliated to Maersk Co.

Utility National Grid has also moved higher after the competition regulator cleared its proposed acquisition of the United Kingdom's largest electricity distribution business.

French spirits maker Pernod Ricard has also jumped after is full-year 2021 results reflected a strong recovery.

Diagnostics specialist BioMerieux has also shown a strong move to the upside after confirming its full-year earnings target.

Meanwhile, WH Smith has slumped after the retailer warned that profitability for the year ending August 2022 will be at the lower end of market expectations.

Carrefour has also come under pressure as luxury goods billionaire Bernard Arnault sold the 5.7 percent stake he owned in the supermarket group.

Symrise AG has also fallen. The flavors and fragrances group announced the acquisition of a 25 percent minority interest in Kobo Products, Inc.

U.S. Economic Reports

Private sector employment in the U.S. increased by much less than expected in the month of August, according to a report released by payroll processor ADP on Wednesday.

ADP said private sector employment climbed by 374,000 jobs in August after rising by a downwardly revised 326,000 jobs in July.

Economists had expected employment to jump by 613,000 jobs compared to the addition of 330,000 jobs originally reported for the previous month.

At 10 am ET, the Institute for Supply Management is scheduled to release its report on activity in the manufacturing sector in the month of August.

The ISM’s manufacturing PMI is expected to slip to 58.6 in August from 59.5 in July, although a reading above 50 would still indicate growth in the sector.

The Commerce Department is also due to release its report on construction spending in the month of July at 10 am ET. Construction spending is expected to inch up by 0.2 percent.

At 10:30 am ET, the Energy Information Administration is scheduled to release its report on oil inventories in the week ended August 27th.

Crude oil inventories are expected to decreases by 3.1 million barrels after falling by 3.0 million barrels in the previous week.

Stocks In Focus

Shares of PVH Corp. (PVH) are moving sharply higher in pre-market trading after the clothing company reported better than expected second quarter results and raised its full-year guidance.

Chipmaker Ambarella (AMBA) is also likely to see initial strength after reporting fiscal second quarter results that exceeded analyst estimates on both the top and bottom lines.

On the other hand, shares of Nio (NIO) may come under pressure after the Chinese electric vehicle maker cut its third quarter deliveries outlook due to the continued uncertainty and volatility of semiconductor supply.
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