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U.S. Stocks May Show A Lack Of Direction In Early Trading
US Market
The major U.S. index futures are currently pointing to a roughly flat open on Monday, with stocks likely to show a lack of direction after turning in a strong performance last week.
Traders may be reluctant to make significant moves as they look ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.
Economists currently expect employment to jump by 195,000 jobs in November after inching up by 12,000 jobs in October, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.
Reports on job openings, private sector employment, service sector activity and consumer sentiment are also likely to attract attention in the coming days.
Traders are also likely to keep an eye on remarks by several Federal Reserve officials, including Fed Chair Jerome Powell, as they look for additional clues about the outlook for interest rates.
CME Group’s FedWatch Tool is currently indicating a 65.4 percent chance the Fed will lower rates by another 25 basis points later this month but a 34.6 percent chance the central bank will leave rates unchanged.
Shortly after the start of trading, the Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of November.
The ISM’s manufacturing PMI is expected to tick up to 47.5 in November from 46.5 in October, but a reading below 50 would still indicate contraction.
Following the pullback seen during Wednesday’s session, stocks moved back to the upside on Friday as trading resumed following the Thanksgiving Day holiday on Thursday.
With the rebound, the major averages more than offset the previous session’s losses, lifting the Dow and the S&P 500 to new record closing highs.
The major averages pulled back off their best levels going into the close but remained firmly positive. The Dow rose 188.59 points or 0.4 percent to 44,910.65, the Nasdaq advanced 157.69 points or 0.8 percent to 19,218.17 and the S&P 500 climbed 33.64 points or 0.6 percent to 6,032.38.
For the holiday-interrupted week, the Nasdaq and the S&P 500 both jumped by 1.1 percent, while the narrower Dow surged by 1.4 percent.
The strength on Wall Street came as some traders looked to pick up stocks at relatively reduced levels following pullback seen on Wednesday.
Semiconductor stocks helped lead the rebound, with the Philadelphia Semiconductor Index climbing by 1.5 percent after hitting its lowest intraday level in over two months in the previous session.
The strength in the sector came as semiconductor equipment makers jumped after a report from Bloomberg said the Biden administration is weighing curbs on sales of semiconductor equipment and AI memory chips to China that stop short of stricter measures previously considered.
Most of the other major sectors showed more modest moves, however, as some traders remained away from their desks following the holiday on Thursday and ahead of the early close for the markets this afternoon.
A lack of major U.S. economic data may also have kept traders on the sidelines ahead of the release of several closely watched reports next week.
The Labor Department’s monthly jobs report is likely to be in focus next week, while traders are also likely to keep an eye on reports on manufacturing and service sector activity.
U.S. Economic News
The Institute for Supply Management is scheduled to release its report on manufacturing activity in the month of November at 10 am ET.
The ISM’s manufacturing PMI is expected to tick up to 47.5 in November from 46.5 in October, but a reading below 50 would still indicate contraction.
Also at 10 am ET, the Commerce Department is due to release its report on construction spending in the month of October. Construction spending is expected to rise by 0.2 percent in October after inching up by 0.1 percent in September.
Federal Reserve Board Governor Christopher Waller is scheduled to speak on the economic outlook before the American Institute for Economic Research Monetary Conference, “Building a Better Fed Framework,” at 3:15 pm ET.
At 4:30 pm ET, New York Federal Reserve President John Williams is due to participate in a conversation organized by the Queens Chamber of Commerce.
Europe
European stocks have struggled for direction on Monday and the euro has lost momentum against a strengthening dollar after a survey showed the Eurozone manufacturing PMI hit a two-month low of 45.2 in November.
Sentiment was also dented by U.S. President-elect Donald Trump’s threat of 100 percent tariff on BRICS countries if they pursue new currency alternatives to the U.S. dollar.
While the German DAX Index is up by 1.3 percent, the U.K.’s FTSE 100 Index is up by 0.5 percent and the French CAC 40 Index is up by 0.3 percent.
According to media reports, France’s far-right National Rally party will likely back a no-confidence motion against the government in the coming days unless the disputed draft budget meets the party’s demands.
Shares of auto giant Stellantis NV has plunged after chief executive Carlos Tavares on Sunday resigned “with immediate effect”.
Homebuilder Persimmon has tumbled and peer Taylor Wimpey has fallen after reports emerged that the government is set to go ahead with the Building Safety Levy, which would be charged as a percentage of the sales of value of new developments to fund safety works.
Delivery Hero SE shares have also slumped. Under pressure from the Spanish authorities and to avoid further legal uncertainties, the German food delivery company said that Glovo is moving from a freelance model to an employment model.
Meanwhile, consumer goods supplier Supreme has surged in London after it bought Typhoo Tea out of administration for £10.2 million in cash.
Asia
Asian stocks rose broadly on Monday after the release of robust Chinese factory activity data.
However, concerns over a broader trade war capped regional gains after U.S. President-elect Donald Trump demanded a commitment from the BRICS nations on using the dollar, warning they shouldn’t move to create a new currency or endorse any other currency to replace the dollar.
“The idea that the BRICS Countries are trying to move away from the dollar while we stand by and watch is OVER,” Trump said in a post on his Truth Social network on Saturday.
He has threatened a 100 percent tariff on the bloc of nine nations if they undercut the U.S. dollar.
China’s yuan fell to its lowest level since July 24 despite impressive PMI numbers.
Gold prices fell nearly 1 percent as Trump’s tariff threat bolstered the dollar. Oil ticked higher on improved Chinese data and as Israel resumed attacks on Lebanon despite a ceasefire pact, stoking tensions in the Middle East.
China’s Shanghai Composite Index rallied 1.1 percent to 3,363.98 after a private survey showed the manufacturing sector in the country expanded at a faster pace in November, with the corresponding PMI rising to 51.5 from 50.3 in October.
Hong Kong’s Hang Seng Index climbed 0.7 percent to 19,550.29.
Japanese markets logged strong gains, led by banks and technology stocks. The Nikkei 225 Index advanced 0.8 percent to 38,513.02, while the broader Topix Index settled 1.3 percent higher at 2,714.72.
Advantest, Screen Holdings, Sumitomo Mitsui Financial, Mizuho Financial and Mitsubishi UFJ Financial climbed 2-4 percent.
Seoul stocks ended on a flat note, with the Kospi finishing marginally lower at 2,454.48 after a choppy session. Tech stocks led losses, with heavyweight Samsung Electronics falling 1.1 percent.
Australian markets ended slightly higher, with technology and consumer discretionary stocks leading gains. Myer Holdings surged 12.3 percent after Australian retail sales for October beat forecasts.
The benchmark S&P/ASX 200 Index edged up by 0.1 percent to 8,447.90, while the broader All Ordinaries index ended little changed with a positive bias at 8,705.
Across the Tasman, New Zealand’s benchmark S&P/NZX-50 Index closed up 0.4 percent at 13,114.68.
Commodities
Crude oil futures are jumping $0.92 to $68.92 a barrel after falling $0.72 to $68 a barrel last Friday. Meanwhile, after climbing $16.20 to $2,681 an ounce in the previous session, gold futures are sliding $11.30 to $2,669.70 an ounce.
On the currency front, the U.S. dollar is trading at 150.25 yen versus the 149.74 yen it fetched at the close of New York trading on Friday. Against the euro, the dollar is trading at $1.0506 compared to last Friday’s $1.0577.
