S&P Futures Muted Ahead of U.S. ADP Jobs Report, Trade Deals in Focus

September S&P 500 E-Mini futures (ESU25) are trending down -0.01% this morning as investors await the U.S. ADP employment report and monitor developments in trade talks ahead of President Donald Trump’s July 9th deadline.

As the U.S. continues talks with major trading partners, President Trump has increased pressure on Japan and reiterated that he won’t extend his tariff deadline. Trump threatened to raise tariffs on Japan to “30%, 35% or whatever the number is that we determine, because we also have a very big trade deficit with Japan” — well above the 24% tariff rate he announced on April 2nd. Reuters reported that the Trump administration plans to prioritize securing trade deals with countries such as India before Japan in the days leading up to the July 9th deadline.

Trump’s tax-and-spending bill narrowly passed the Senate on Tuesday after Vice President JD Vance’s tie-breaking vote. House lawmakers are heading back to Washington from a holiday week, with a vote expected later today on the Senate version of the bill.

In yesterday’s trading session, Wall Street’s major indexes ended mixed. Tesla (TSLA) slumped over -5% as President Trump threatened to withdraw subsidies from Elon Musk’s companies and review the billionaire’s immigration status after Musk slammed Trump’s tax bill as “utterly insane and destructive.” Also, chip stocks lost ground, with Advanced Micro Devices (AMD) sliding more than -4% and Broadcom (AVGO) falling over -3%. In addition, AeroVironment (AVAV) plunged more than -11% after the defense tech firm announced plans to raise up to $1.35 billion through public offerings of stock and convertible debt. On the bullish side, U.S.-based casino operators climbed after Macau posted a rise in June gambling revenue, with Las Vegas Sands (LVS) and Wynn Resorts Ltd. (WYNN) gaining over +8%.

A Labor Department report released on Tuesday showed that U.S. JOLTs job openings unexpectedly rose to a 6-month high of 7.769M in May, stronger than expectations of 7.320M. Also, the U.S. June ISM manufacturing index rose to 49.0, stronger than expectations of 48.8. In addition, the U.S. June S&P Global manufacturing PMI was revised upward to 52.9, beating the consensus of 52.0. At the same time, U.S. construction spending fell -0.3% m/m in May, weaker than expectations of -0.2% m/m.

“As long as the labor market remains solid, the US economy can continue to chug ahead, while helping reduce the risk of stagflation. It would also buy the Fed more breathing room when it comes to interest rates,” said Bret Kenwell at eToro.

Speaking Tuesday at the European Central Bank’s annual Forum on Central Banking in Sintra, Portugal, Fed Chair Jerome Powell reiterated that the U.S. central bank likely would have lowered rates further this year if not for Trump’s expanded use of tariffs. Powell said he anticipates the impact of tariffs will show up in inflation data over the coming months, while acknowledging that uncertainties persist. Still, when asked whether July was too soon for a rate cut, the Fed chief did not dismiss the possibility. “I wouldn’t take any meeting off the table or put it directly on the table. It’s going to depend on how the data evolve,” he said.

Meanwhile, U.S. rate futures have priced in an 80.9% probability of no rate change and a 19.1% chance of a 25 basis point rate cut at the Fed’s monetary policy committee meeting later this month.

Today, investors will focus on the U.S. ADP Nonfarm Employment Change data, which is set to be released in a couple of hours. Economists, on average, forecast that the June ADP Nonfarm Employment Change will stand at 99K, compared to the May figure of 37K.

U.S. Crude Oil Inventories data will be released today as well. Economists expect this figure to be -3.500M, compared to last week’s value of -5.836M.

In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.281%, up +0.63%.

The Euro Stoxx 50 Index is up +0.54% this morning as investors appear increasingly optimistic about trade negotiations with the U.S. Bank and mining stocks led the gains on Wednesday. Renewable energy stocks also advanced after the U.S. Senate passed a revised budget bill that was more favorable for the wind industry than a previous version. Data from Eurostat released on Wednesday showed that the Eurozone’s unemployment rate unexpectedly edged up in May, reflecting caution among European companies amid economic uncertainty surrounding U.S. tariffs and geopolitical tensions. Meanwhile, U.S. President Donald Trump held firm on a July 9th deadline on tariffs as talks continue between the U.S. and key trading partners, including the European Union. The European Union’s top trade official, Maros Sefcovic, is expected to hold trade talks in Washington this week as Brussels officials rush to finalize a deal before the key deadline lapses next week. Investor focus also remains on the European Central Bank’s forum in Sintra, Portugal, with President Christine Lagarde set to speak later in the day. In corporate news, Avanza Bank Holding AB (AZA.S.DX) climbed over +6% following a report that the Swedish financial group’s founder is weighing a move to take the company private. Also, Banco DE Sabadell (SAB.E.DX) rose more than +4% after Santander reached an agreement to acquire its British unit TSB.

Eurozone’s Unemployment Rate was released today.

The Eurozone May Unemployment Rate was 6.3%, weaker than expectations of 6.2%.

Asian stock markets today settled in the red. China’s Shanghai Composite Index (SHCOMP) closed down -0.09%, and Japan’s Nikkei 225 Stock Index (NIK) closed down -0.56%.

China’s Shanghai Composite Index ended slightly lower today as investors stayed cautious amid ongoing global trade tensions. Semiconductor and AI-related stocks slumped on Wednesday. Still, strength in defensive sectors such as banking and liquor distillers helped limit the benchmark index’s losses. Cautious sentiment prevailed across the region as investors awaited progress on U.S. trade talks, after President Trump said he was not considering an extension of his pause on reciprocal tariffs past the July 9th deadline. Meanwhile, China’s President Xi Jinping at a high-level meeting on Tuesday pledged to strengthen oversight of aggressive price-cutting by domestic firms amid rising concerns over persistent deflation, according to state news agency Xinhua. The commission, a key economic policy body, also emphasized the importance of building a unified national market to support high-quality development. Investors now look ahead to the July Politburo meeting, a key gathering to discuss the economy, though analysts say it is unlikely to result in major stimulus measures, as policymakers appear content with the economy’s performance so far this year. Investors also await the upcoming half-year earnings season, beginning this month, to assess whether corporate fundamentals are showing signs of improvement. In corporate news, casino stocks MGM China Holdings and Sands China climbed over +5% in Hong Kong after Macau posted a jump in gambling revenue in June.

Japan’s Nikkei 225 Stock Index closed lower today as U.S. President Donald Trump’s latest tariff threat weighed on sentiment. Video game and heavy-industry stocks led the declines on Wednesday. President Trump threatened to raise tariffs on Japan to “30%, 35% or whatever the number is that we determine, because we also have a very big trade deficit with Japan” — well above the 24% tariff rate he announced on April 2nd and subsequently paused. Trump described negotiations with Japan as “very tough,” intensifying criticism over the country’s reluctance to import U.S.-made cars and rice. “I’m not sure if we’re going to make a deal. I doubt it, with Japan,” Trump told reporters Tuesday. Reuters reported that the Trump administration plans to prioritize securing trade deals with countries such as India before Japan in the days leading up to a July 9th deadline when reciprocal tariffs take effect. Still, the benchmark index erased some of its earlier losses after Japanese Deputy Chief Cabinet Secretary Kazuhiko Aoki said at a news conference that the country will continue to pursue a win-win trade deal with the U.S. Broadcaster TV Asahi reported that Japan’s tariff negotiator, Ryosei Akazawa, is preparing for his eighth trip to the U.S. for trade talks as soon as this weekend. Analysts noted that the timing of the Bank of Japan’s next rate hike could be delayed even more following Trump’s latest tariff threat. BOJ Governor Kazuo Ueda said during a panel discussion at the ECB’s annual conference on Tuesday that underlying inflation is expected to rise gradually, and CBA’s Carol Kong noted that Ueda indicated “he is in no rush to raise interest rates.” The Nikkei Volatility Index, which takes into account the implied volatility of Nikkei 225 options, closed up +4.78% to 25.41.

Pre-Market U.S. Stock Movers

Verint Systems (VRNT) surged over +12% in pre-market trading after Bloomberg reported that private-equity firm Thoma Bravo is in talks to acquire the maker of call center software.

Apple (AAPL) gained about +0.7% in pre-market trading after Jefferies upgraded the stock to Hold from Underperform.

Greenbrier (GBX) jumped over +14% in pre-market trading after the railroad-equipment company posted better-than-expected FQ3 results and boosted its full-year aggregate gross margin and operating margin guidance.

Centene (CNC) plummeted more than -26% in pre-market trading after the health insurer withdrew its full-year profit guidance.

Adobe (ADBE) fell over -1% in pre-market trading after Rothschild & Co. Redburn downgraded the stock to Sell from Neutral with a price target of $280.

You can see more pre-market stock movers here

Today’s U.S. Earnings Spotlight: Wednesday - July 2nd

Unifirst (UNF), Franklin Covey (FC).