US pre-open: Indices to move lower for third day
After two days of losses, US indices are expected to cower lower on Thursday in fear of a bearing US non-farm payrolls report on Friday.
Dow Jones I.A.
38,675.68
04:30 15/10/20
Nasdaq 100
17,890.79
12:15 03/05/24
With US economic growth slackening in the first quarter, and Wednesday's weak ADP payrolls report, all eyes are already on Friday's release due to connection with US interest rate expectations for the rest of this year.
With retail sales, durable goods and personal spending data for the last few months all worryingly weak, despite a pickup in personal incomes and lower gas prices, the ADP report appeared to suggest that the US labour market was entering a slowdown.
"This makes tomorrow’s main US payrolls report that much more important in the context of US rate expectations for the rest of this year, irrespective of where today’s weekly jobless claims numbers come in," said CMC's Michael Hewson.
The analyst suggested that the payrolls number drops sharply from last month's 295,000, below the 200,000 level, then there could be "a sharp unwind in US dollar long positions, as any remaining rate hike expectations for June get a hefty shove further out into the back end of 2015£.
But conversely, analysts believe that a weak number could also help underpin the fragile equity markets on that same basis.
Thursday's US data included an improvement in initial jobless claims fell by 20,000 to a seasonally adjusted 268,000 in the seven days stretching from March 22 to March 28, the second lowest amount since the recession ended.
Meanwhile a Commerce Department update showed the US trade deficit declined 17% in February to the lowest level since 2009, mostly due to cheaper oil and a stronger dollar hitting exports.
The deficit shrank $7.2bn to $35.4bn in February from a revised $42.7bn in January.
Chris Beauchamp at IG said: "Today’s US unemployment claims are the unsatisfying filling between the two meaty employment data points of ADP payrolls yesterday and non-farms tomorrow, so we could well see a further struggle for direction going on in the US.
"Having failed to hold overnight highs, US futures are lower, and ahead of the open we expect to see the Dow open 37 points lower at 17,661."