Pre-Market Brief: Stocks Climb Ahead of Key U.S. Jobs Report

December S&P 500 futures (ESZ22) are trending up +0.68% this morning after three major US benchmark indices closed in the red for a fourth straight session as a hawkish Federal Reserve sapped risk appetites, while market participants look ahead to October’s nonfarm payrolls data set to be released later in the day. Three major U.S. stock indexes were weighted down primarily by losses in the Technology, Telecoms, and Financials sectors.

Economic data on Thursday indicated that a labor market remains robust, although a separate report showed growth in the services sector decelerated in October, keeping the Fed's aggressive interest rate hike policy unchanged.

"Years ago, the Fed’s job was to take away the punch bowl, and that balance is always a very difficult transition you want the economy to slow to keep inflation from getting out of hand, but you want enough earnings to support stock prices," said Rick Meckler, a partner at Cherry Lane Investments in New Vernon, New Jersey.

Meanwhile, U.S. rate futures have priced in a 44.8% chance of a 50 basis point rate increase and a 55.2% chance of a 75 basis point hike at December's monetary policy meeting. At the same time, the peak Fed funds rate is expected to be at least 5%, compared with a prior outlook of a rise to the 4.50%-4.75% range.

Today, all eyes are focused on U.S. Nonfarm Payrolls data in a couple of hours. Economists, on average, foresee that October Nonfarm Payrolls will stand at 200K compared to the previous value of 263K.

"Job openings increased last month, there are more companies looking for workers, so I don't see how that's going to be followed by a weak October jobs report as that would be inconsistent," said Eric Diton, a president and managing director at The Wealth Alliance.

Also, investors are likely to focus on the U.S. Average Hourly Earnings data, which was at +0.3% m/m and +5.0% y/y in September. Economists forecast the new numbers to be +0.3% m/m and +4.7% y/y.

U.S. Unemployment Rate data will be reported today as well. Economists estimate this figure to come in at 3.6% in October, compared to the previous figure of 3.5%.

In the bond markets, United States 10-Year rates are at 4.133%, up +0.22%.

The Euro Stoxx 50 futures are up +1.31% this morning as European equities have received a positive handover from Asia on China reopening speculation, ahead of the release of the widely-expected U.S. Nonfarm Payrolls report. On the ground of this, major European sectors opened in the green, with luxury and mining stocks advancing the most amid major exposure to China.

Germany Factory Orders, Spain Services PMI, Italy Services PMI, France Services PMI, Germany Services PMI, Eurozone S&P Global Composite PMI, Eurozone Services PMI, and U.K. Construction PMI data were released today.

The German September Factory Orders stood at -4.0% m/m, weaker than expectations of -0.5% m/m, as the Eurozone’s largest economy struggled with soaring energy prices.

The Spanish October Services PMI has been reported at 49.7, stronger than expectations of 48.3.

The Italian October Services PMI came in at 46.4, weaker than expectations of 48.5.

The French October Services PMI was at 51.7, stronger than expectations of 51.3.

The German October Services PMI stood at 46.5, stronger than expectations of 44.9.

Eurozone October S&P Global Composite PMI has been reported at 47.3, stronger than expectations of 47.1.

Eurozone October Services PMI came in at 48.6, stronger than expectations of 48.2.

U.K. October Construction PMI stood at 53.2, stronger than expectations of 50.5.

Asian stock markets today settled mixed. China’s Shanghai Composite Index (SHCOMP) closed up +2.43%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -1.68%.

China’s Shanghai Composite today closed sharply higher on renewed speculation over the potential lifting of COVID restrictions. However, Chinese authorities denied that they were considering the scaling back of COVID curbs, but fresh rumors circulated earlier Friday that this policy will soon have a substantial change. 

At the same time, Japan Nikkei 225 Stock Index dropped today, fueled by losses in the Power, Railway & Bus, and Precision Instruments sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed down 0.73% and hit a new 1-month low of 21.88.

The Japanese Services PMI stood at 53.2 in October, growing at its fastest pace in four months in October. 

Pre-Market U.S. Stock Movers

Atlassian Corp Plc (TEAM) tumbled over -22% in pre-market trading after the company delivered mixed Q1 results and a weak Q2 2023 outlook.

Block Inc (SQ) jumped more than +13% in pre-market trading after the company reported better-than-expected Q3 results.

PayPal Holdings Inc (PYPL) plunged about -7% in pre-market trading after the company reported upbeat Q3 earnings results but provided weak Q4 guidance.

Starbucks Corporation (SBUX) gained over +2% in pre-market trading after the company reported upbeat Q4 results. 

DoorDash Inc (DASH) climbed over +11% in pre-market trading despite reporting mixed Q3 earnings results.

Viavi Solutions Inc (VIAV) slid over -13% in pre-market trading after B. Riley downgraded the stock to neutral from buy.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Friday - November 4th

Alibaba ADR (BABA), Enbridge (ENB), Duke Energy (DUK), Dominion Energy (D), Hershey Co (HSY), Itochu ADR (ITOCY), Intesa Sanpaolo SpA PK (ISNPY), Amadeus IT Holding SA PK (AMADY), Cardinal Health (CAH), Telefonica ADR (TEF), Societe Generale ADR (SCGLY), Sumitomo ADR (SSUMY), Marubeni ADR (MARUY), Magna Intl (MGA), Ventas (VTR), Blue Owl Capital (OWL), Cboe Global (CBOE), Liberty Broadband Srs A (LBRDA), Liberty Broadband Srs C (LBRDK), Siemens Gamesa ADR (GCTAY), Erste Group Bank AG PK (EBKDY), Vistra Energy (VST), ARC Resources (AETUF), Lamar (LAMR), RBC Bearings (RBC), DraftKings (DKNG), Chord Energy (CHRD), TELUS International (TIXT), Spark New Zealand ADR (SPKKY), Elanco Animal Health (ELAN), DT Midstream (DTM), Huntsman (HUN), Grifols ADR (GIKLY), Grifols ADR (GRFS), Brookfield Infra (BIPC), Ricoh Company (RICOY), Andritz ADR (ADRZY), Fluor (FLR), Hawaiian Electric Industries (HE), MOL ADR (MGYOY), Madison Square Garden Sports (MSGS), Beacon Roofing (BECN), Adient (ADNT), Gates Industrial Corp (GTES), Alpha Metallurgical Resources (AMR), Northern Oil&Gas (NOG), Moog (MOGa), Moog B (MOGb), Crescent Energy (CRGY), Weis Markets (WMK), Digitalbridge Group (DBRG), Installed Building (IBP), Qurate Retail B (QRTEB), Embraer ADR (ERJ), Gray Television (GTNa), Liberty Media Braves C (BATRK), Liberty Media Braves A (BATRA), Immunovant (IMVT), Middlesex Water (MSEX), Bumi Resources ADR (PBMRY), Textainer (TGH), Cinemark (CNK), GrafTech (EAF), American Axle&Manufacturing (AXL), Gray Television (GTN), Ecovyst (ECVT), Perimeter Solutions (PRM), Moneygram (MGI), AdvanSix (ASIX).

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