Investors Await Jobs Report, Crude Oil Extended Weekly Losses

Barry Adams
05 Oct, 2023
New York City

Market indexes on Wall Street traded around flatline in cautious trading ahead nonfarm payrolls data on Friday. 

Stocks have been under pressure for three weeks in a row after Treasury yields suddenly began to rise, crude oil soared and fears of higher-for-longer drove market sentiment. 

The U.S. labor market is expected to add about 185,000 net new jobs in September, according to estimates of some economists tracked by Ticker.com. 

The U.S. economy is on track to add net new 2 million jobs in 2023, if the current pace of hiring continues in the fourth quarter. 

Initial claims of jobless benefits increased 2,000 to 207,000 in the week ending on September 30, the U.S. Department of Labor reported in its weekly update on Thursday. 

The jobless claims dropped near the seven-month low of 202,000 in March, suggesting that labor market conditions remain tight. 

Crude oil prices are on track to decline and extend weekly loss to more than 10%. 

West Texas Intermediate crude futures declined 7.5% in the week so-far and Brent crude prices are down 11% in the period. 

The sharp reversal in crude oil prices reflected change in market sentiment on the worries that the expected global demand growth is not likely to materialize on the ongoing uneven economic rebound in China. 

 

U.S. Trade Deficit Dropped to 3-year Low

The U.S. international goods and services deficit declined in August after exports expanded and imports shrank in the month. 

Export in the month rose 1.6% from the previous month to $256 billion and imports eased 0.7% to $314.3 billion, resulting in a 9.9% decline in trade deficit to $58.3 billion, the Bureau of Economic Analysis reported Thursday. 

From a year ago, the goods and services deficit decreased $137.6 billion, or 20.7%, from the same period in 2022, after exports increased 1.1% to $22 billion and Imports decreased 4.3% to $115.6 billion. 

Increases in sales of capital goods, consumer goods, automotive vehicles and crude oil led the increase in exports. 

Declines in purchases of cell phones, semiconductor chips and petroleum products led to the decline in imports. 

Politically sensitive trade deficit with China decreased $1.3 billion to a five-month low of $22.7 billion, after exports declined $0.2 billion to $10.9 billion and imports fell $1.4 billion to $33.7 billion. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 0.03% to 4,259.04 and the Nasdaq Composite fell 0.08% to 13,226.52. 

The yield on 2-year Treasury notes increased to 5.02%, 10-year Treasury notes inched lower to 4.72% and 30-year Treasury bonds edged down to 4.88%. 

The United States exported more natural gas in the first half of 2023 than it did in the same period of any previous year. 

Natural gas exports averaged 20.4 billion cubic feet per day, 4% more than in the previous year period, according to the released by the government agency U.S. Energy Information Administration. 

LNG exports averaged 11.6 Bcf/d in the first-half, making the United States the largest natural gas exporter.  

LNG exports in the first-half increased 4% compared with the same period in 2022, despite declining in May and June.

Crude oil decreased $1.99 to $82.23 a barrel and natural gas prices increased 2 cents to $3.18 a thermal unit. 

The dollar index edged lower to 106.35, the level last seen in November 2022 and extended gains from the low of 99.85 on July 13, 2023.  

 

U.S. Stock Movers 

Energy stocks continued to decline for the second day in a row. 

ExxonMobil, Chevron, Marathon Petroleum, Hess Corp and Occidental Petroleum declined between 1% and 2%. 

Rivian Automotive Inc dropped 16.5% to $19.78 after the company said it plans to raise $1.5 billion through the sale of convertible bonds. 

The electric vehicle maker also estimated third quarter sales between $1.29 billion and $1.31 billion and reported decline in cash and cash equivalent. 

Clorox Co dropped 7.6% to $121.69 after the company forecasted weaker-than-expected fiscal first quarter outlook. 

The consumer products maker said that the recent cyber attack costs outweighed benefits achieved through better pricing and supply chain improvements. 

On September 25, Clorox began the process of transitioning back to automated order processing, helping the company to increase its shipment and rebuild inventories for retailers. 

Net sales in the fiscal first quarter is expected to decline between 28% and 23% from a year ago and diluted loss per share between 75 cents and 35 cents. 

 

European Stocks Struggled and Bond Yields Advanced 

European markets lacked direction and investors reviewed economic data in the Euro Area. 

Market indexes in Frankfurt, Paris and London struggled to advance after a slow of mixed economic data added to market anxieties linked to economic growth worries and interest rate uncertainties.

Bond yields in the region also stayed elevated and currencies traded near six month lows after the dollar indexes edged higher.  

Spain's industrial output declined for the fifth month in a row in August to 3.4% and fell 0.8% from the previous month, the statistical agency INE reported Thursday. 

French industrial production declined 0.3% from the previous month in August and from the downwardly revised 0.5% increase in July, the statistical agency INSEE reported Thursday. 

Industrial production decreased 0.5% from the previous month and reversed 2.5% increase in the previous month. 

 

German Trade Surplus Widened In August 

Germany's trade surplus widened to Є16.6 billion in August from Є15.9 billion in the previous month, DeStatis reported Thursday. 

Calendar and seasonally adjusted exports decreased 1.2% to Є127.9 billion, the lowest in five months, and imports fell 0.4% to Є111.4 billion, the lowest since January 2022, 

Exports declined 5.8% and imports fell 16.8% and trade surplus soared from Є4.3 billion or calendar and seasonally adjusted Є2 billion from a year ago. 

 In August 2023, calendar and seasonally adjusted goods worth Є69.6 billion were exported to the member states of the European Union and goods worth Є60 billion euros were imported from the region. 

Compared to July 2023, calendar and seasonally adjusted exports to EU countries fell by 1.5% and imports increased by 1.9%.

Most exports outside the European Union went to the United States and most imports came from the People's Republic of China. 

Exports to the United States fell 1.3% to Є13.3 billion, to China increased 1.2% to Є8.4 billion, and to the United Kingdom fell 4.2% to Є6.0 billion.

Imports from China declined 2.0% to Є13.0 billion, from the U.S fell 13.1% to Є7.6 billion and the U.K. dropped to Є3.0 billion. 

In nominal terms, not calendar and seasonally adjusted, August exports were Є121.8 billion euros and imports Є107.4 billion. 

Exports fell by 5.8% and imports declined 16.7% from a year ago. 

The unadjusted foreign trade surplus soared to Є14.4 billion from Є0.4 billion a year ago. 

 

Europe Indexes & Yields

The DAX index decreased 0.2% to 15,070.22, the CAC-40 index fell 0.02% to 6,998.25 and the FTSE 100 index rose 0.5% to 7,451.54.

The yield on 10-year German bonds increased to 2.94%, French bonds traded higher to 3.52%, the UK gilts edged up to 4.64% and Italian bonds rose to 4.93%.

The euro edged lower to a three-month low to $1.051, the British pound to $1.213 and the U.S. dollar fetched 91.58 Swiss cents.

Brent crude decreased $1.73 to $84.08 a barrel and the Dutch TTF natural gas edged lower by €2.21 to €36.21 per MWh.

 

Europe Stock Movers 

Imperial Bands Plc rose 3.8% to 1,640.50 pence after the cigarettes maker reaffirmed annual outlook and announced a $1.3 billion of stock repurchase plan. 

RM plc soared 0..7% to 59.40 pence after the supplier of technology to education sector agreed to sell its intellectual property for $2.2 million to Hilco Streambank. 

Thales SA decreased 0.3% to €128.25 after the defense technology company signed a contract with Polska Grupa Zbrojeniowa, a Polish arms holding company, for the delivery of multiple combat systems for the Polish Navy. 

Nordex SE 1.7% to €10.13 after the wind energy company received an order for 45 MW wind turbines from Enerfin, a renewable energy division of Elecnor Group, the Spanish engineering company. 

Alstom SA plunged 37% to €13.54 after the rail transportation company lowered its free cash flow target because of higher production costs and delays in new orders. 

SMA Solar Technology AG rose 10% to €61.60 after the company lifted its annual outlook citing improvements in its large scale and commercial divisions.