Asian Morning Briefing: S&P500 Rises Ahead of Jobs Report

 


LAST    CHANGE  % CHG 
DJIA                 17540.5  -10.22  -0.06% 
Nasdaq               5139.94    34.4   0.67% 
S&P 500              2099.84    6.52   0.31% 
Japan: Nikkei 225    20614.1    93.7   0.46% 
Hang Seng            24514.2  108.04   0.44% 
Shanghai Composite   3694.57  -61.97  -1.65% 
S&P BSE Sensex       28223.1  151.15   0.54% 
Australia: S&P/ASX      5674   -23.9  -0.42% 
UK: FTSE 100         6752.41   65.84   0.98% 
 
 
                    PRICE CHG  YIELD% 
U.S. 2 Year              0/32   0.728 
U.S. 5 Year             -5/32   1.645 
U.S. 10 Year           -13/32   2.271 
Australia 10 Year      -19/32   2.816 
China 10 Year            3/32    3.53 
India 10 Year            1/32    8.01 
Japan 10 Year           -3/32   0.401 
German 10 Year        -1 1/32   0.718 
 
 
                          LAST(MID)  CHANGE 
Australia $ (AUD/USD)        0.7358   0.0003 
Yen (USD/JPY)                124.87        0 
S. Korean Won (USD/KRW)     1173.82    -0.09 
Chinese Yuan (USD/CNY)        6.212   0.0009 
Euro (EUR/USD)               1.0904  -0.0002 
WSJ Dollar Index              89.15     0.01 
 
 
               LAST   CHANGE  % CHG 
Crude Oil      45.12   -0.62  -1.36% 
Brent Crude    49.62   -0.37  -0.74% 
Gold          1084.1    -6.6  -0.61% 
 

        MARKETS AT A GLANCE
        (Data as of approximately 5 p.m. ET)
        SNAPSHOT:
        The S&P 500 rose and U.S. Treasury bonds fell ahead of an employment report at the end of the week that is likely to shed light on whether the U.S. economy is ready for higher interest rates. The dollar advanced and gold prices slid on robust U.S. service-sector data. Oil prices fell after an inventory report showed an increase in crude production.
        OPENING CALL:
        Unemployment in Australia has fallen in recent months toward 6.0% defying the Reserve Bank of Australia's forecasts that it would head toward 6.5% this year and remain there for some time. The July jobs report, due out Thursday, is expected by economists to show unemployment rose slightly to 6.1% compared to June's reading of 6%. Australian central bank Gov. Glenn Stevens has welcomed recent signs of improvement in pockets of the economy, noting that business conditions had improved in industries beyond mining. Employment in the hard-hit mining sector in the June-ended quarter was down 13% from a year earlier, according to government figures. Australia's central bank left interest rates unchanged on Tuesday, as expected, while leaving the door open for a cut later in the year should the economy falter.
        EQUITIES:
        The S&P 500 rose, rebounding after three sessions of declines, ahead of a key report on the U.S. labor market.
        The Dow Jones Industrial Average fell slightly, dragged down by a tumble in Walt Disney Co. shares.
        Investors are looking ahead to the government's jobs report for July, due Friday, for more guidance on the timing of the first increase in interest rates in nearly a decade. The Federal Reserve considers employment and inflation data as it makes decisions on monetary policy. The Fed's low-rate policy has helped boost stocks since the financial crisis, raising some concerns among investors about how the market will react when rates begin to rise.
        Employers are forecast to have added 215,000 jobs in July, according to economists surveyed by The Wall Street Journal.
        Investors got an early look at the employment picture for July, with data showing the private sector added 185,000 jobs, fewer than the 215,000 jobs expected.
        Earnings reports prompted big swings. Disney slumped after it reported earnings, weighing on the blue-chip index. Disney said revenue fell short of forecasts amid slower growth at media networks and its park segment. Shares fell 9.2%.
        First Solar Inc. projected stronger-than-expected profit and sales for the year, as the company said its second-quarter profit surged. Shares rose 17%.
        Priceline Group Inc.'s hotel and car bookings picked up speed in the second quarter despite a strong dollar that sapped its earnings. Shares rose 5.2%.
        Asian shares rose modestly Wednesday after a gauge of China's service sector reached an 11-month high, outweighing concerns that a rise in U.S. interest rates could be getting closer.
        FOREX:
        The dollar edged higher broadly after a measure of the U.S. service sector surged in July, helping to reinforce recent signals from the Federal Reserve that borrowing costs could rise as early as September.
        Investors moved into the dollar after the Institute for Supply Management reported that the nonmanufacturing purchasing managers index rose to 60.3 in July from 56.0 in June. The number soared above economists' forecast of 56.1. A reading above 50 signifies an expansion in activity.
        In addition, the ISM employment index rose to 59.6 from 52.7, helping to offset a report by Automatic Data Processing and forecasting firm Moody's Analytics showing that private payrolls in the U.S. increased by a fewer-than-expected 185,000 jobs last month.
        Investors have been driving the dollar higher over much of the past year on wagers that the Fed will raise short-term interest rates for the first time since 2006 as the U.S. economy improves, a view supported by strong labor-market gains. Higher borrowing costs would boost the dollar's allure to investors searching for yield.
        But the dollar's advance has mostly been halting since March, as weaker data early in 2015 raised doubts about the timing of the central bank's move, pushing back market expectations toward the latter half of 2015 from midyear, and even into 2016.
        The market is looking to nonfarm payrolls numbers for July, which are released Friday morning, to provide more clarity on the state of the labor market and spark a renewed rally in the U.S. currency. Fed officials have recently communicated that the bar is low for a September rate increase, but a move still depends on a strong jobs reports underpinning investor conviction that U.S. labor market gains are holding.
        BONDS:
        U.S. Treasury bonds fell for a second consecutive session after an upbeat report on the service industry bolstered the case for the Federal Reserve to raise interest rates next month.
        The yield on the two-year note, among the most sensitive to changes in the outlook for the Fed's interest-rate policy, settled at nearly a two-month high and almost breached the highest level of 2015. Yields rise as prices fall.
        After a recent rally, the bond market has been pulling back since Federal Reserve Bank of Atlanta President Dennis Lockhart said in an interview with The Wall Street Journal on Tuesday that it would take a significant deterioration in the data to convince him not to move in September. Mr. Lockhart votes on interest-rate policy this year.
        Ultralow interest rates since the 2008 financial crisis have stoked a rally in the $12.7 trillion market for U.S. government bonds and other credit markets. Many investors are concerned that the start of a tightening cycle will send bond prices lower and yields higher. Higher rates make interest rates on existing bonds relatively unattractive.
        The monthly nonmanufacturing index rose to 60.3 last month from 56 in June. Both the new orders and employment components hit the strongest level since 2005.
        The odds of a rate increase at the September meeting were 50% Wednesday, which has jumped from 38% on Monday, according to Traders. The calculations are based on implied yields from Fed-funds futures which are used by investors and traders to place bets on central-bank policy.
        Bond yields had pared a rise earlier in the session after U.S. private-sector jobs growth last month fell below the 200,000 mark. But the private-sector jobs release hasn't been an accurate predictor of the nonfarm employment report due Friday, which include employment in both public and private sectors and a key data point to influence the Fed's interest-rate outlook.
        Economists expect Friday's nonfarm payrolls report to show that the U.S. economy has added 215,000 new jobs in July, following a net gain of 223,000 in June. The average hourly wage is forecast to have gained 0.2% last month after flat in June.
        COMMODITIES:
        Oil prices fell to new multi-month lows after weekly inventory data showed a small increase in U.S. crude production and President Barack Obama urged lawmakers to support the Iranian nuclear deal.
        Oil prices have slumped in recent weeks on concerns that persistently high production in the U.S. and elsewhere could keep the market oversupplied through the end of the year. Output remains near multiyear highs in the U.S., Saudi Arabia and Iraq, and the Iran nuclear deal could lift sanctions on Iranian crude exports, allowing the country to sell more oil onto the already-glutted market.
        In the U.S., government data show that production peaked in March before falling slightly in April and May. However, the latest weekly estimate for production released Wednesday showed that output rose by 52,000 barrels a day to 9.5 million barrels a day.
        U.S. crude-oil inventories fell more than expected last week, the U.S. Energy Information Administration said, as refineries ran at the highest rate in years to process the glut of crude oil into petroleum products. But stockpiles of gasoline and other fuels rose in the week, suggesting that consumption isn't high enough to absorb the oversupply in the market.
        "When the refiners run hard, don't they produce more product?" said Donald Morton, senior vice president at Herbert J. Sims & Co. "Even though demand is strong...the refiners are busier. We're producing more than we need."
        Gasoline stockpiles rose by 800,000 barrels, the EIA said. Analysts had predicted stockpiles would fall by 600,000 barrels.
        Distillate stocks, which include heating oil and diesel fuel, rose by 700,000 barrels. Analysts had expected a 1.6 million-barrel increase.
        (MORE TO FOLLOW) Dow Jones Newswires

        August 05, 2015 17:35 ET (21:35 GMT)

        Gold prices slid after robust U.S. service-sector data bolstered expectations that the Federal Reserve would soon raise interest rates.
        TODAY'S HEADLINES:
        Plane Debris Confirmed as MH370
        Malaysian Prime Minister Najib Razak confirmed that the aircraft debris found on Reunion Island came from Malaysia Airlines Flight 370, which disappeared over a year ago. The development marked the first concrete evidence of the missing plane but left unanswered why it crashed.
        Tesla's Losses Widened in Second Quarter
        Tesla Motors' losses grew as spending on the launch of its Model X SUV and battery factory offset higher sales.
        SEC Approves Final CEO Pay-Ratio Rule
        The rule requires companies to disclose median worker pay and compare it with CEO compensation.
        U.S. Service Sector Expands
        The U.S. service sector in July expanded at its fastest rate since the recession, according to data released Wednesday by the Institute for Supply Management.
        U.S. Trade Gap Expands 7%
        The strong dollar is pushing down demand for American-made goods overseas while giving foreign manufacturers an edge in the U.S., creating another hurdle for the U.S. economy.
        Fox Reports Better-Than-Expected Earnings
        21st Century Fox reported better-than-expected fourth-quarter earnings and a new $5 billion stock-buyback program following the media company's recent leadership transition.
        Time Warner Earnings Tops Views
        Time Warner's profit easily topped Wall Street expectations in the second quarter, as new videogame releases helped drive revenue higher in its Warner Bros. division.
        Fed's Powell: No Decision Yet on September Rate Move
        The Federal Reserve isn't certain to raise short-term interest rates at its September policy meeting, a senior policy maker said.
        Allergan Changes Deal for Kythera
        Allergan amended the terms of its pending $2.1 billion deal for double-chin treatment maker Kythera Biopharmaceuticals by agreeing to pay for it all in cash and dropping the stock component.
        ECB Leaves Emergency Lending to Greek Banks Unchanged
        The European Central Bank left the ceiling on emergency lending to Greek banks unchanged, a person familiar with the matter said. The Greek central bank didn't request an increase in the emergency lending, the person said.
        RECENT DJ EXCLUSIVES:
        France Looks to Broaden Its MH370 Probe Through Wreckage Analysis
        Deutsche Bank Fires Two Senior Trading Executives
        Morgan Stanley Hires John Shannon to Head Equity Sales, Trading in Canada
        J.P. Morgan to Move 2,150 Jobs From Manhattan to Jersey City
        Top Canaccord Genuity Investment Banker Joins Oxford Park Group
        TODAY'S CALENDAR:
        (All times GMT, followed by country and event)
        0130 AUS Jul Labor Force
        0200 JPN Jul Imported Vehicle Sales
        0500 JPN Jun Indexes of Business Conditions - Preliminary Release
        0600 GER Jun Manufacturing orders
        0700 UK Jul Halifax House Price Index
        0800 UK Jul UK monthly car registrations figures
        0810 EU Jul Eurozone Retail PMI
        0830 UK Jun UK monthly industrial production figures
        0900 SIN Jul Official Foreign Reserves
        0900 GER Q3 Ifo Economic Climate for the Euro Area
        1100 UK Aug Bank of England MPC meeting minutes
        1100 UK Bank of England inflation report
        1100 UK Aug UK interest rate decision
        1130 US Jul Challenger Job-Cut Report
        1215 CAN Jul Official International Reserves
        1230 US U.S. Weekly Export Sales
        1230 US 08/01 Unemployment Insurance Weekly Claims Report - Initial Claims
        1345 US Bloomberg Consumer Comfort Index
        1400 UK Jul NIESR Monthly GDP Estimates
        1430 US 07/31 EIA Weekly Natural Gas Storage Report
        1600 US Jul Monthly U.S. Retail Chain Store Sales Index
        2030 US Federal Discount Window Borrowings
        2030 US Foreign Central Bank Holdings
        2030 US Money Stock Measures
        2301 UK Jul REC and KPMG Report on Jobs
        2350 JPN Jul International Reserves / Foreign Currency
        2350 JPN Jul Provisional Trade Statistics for 1st 20 days of Month
        (END) Dow Jones Newswires

        August 05, 2015 17:35 ET (21:35 GMT)

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