By Geoffrey Smith
Investing.com -- ADP (NASDAQ:ADP) updates on private-sector hiring in the U.S. in August, the warm-up act for Friday's labor market report. OPEC and its allies meet to decide on output levels for the coming months. China's private sector contracted in August, but the Eurozone's is chugging along nicely, according to European Central Bank officials. And the SEC's Gary Gensler repeats his warnings to cryptocurrency operators. Here's what you need to know in financial markets on Wednesday, 1st September.
1. ADP's payrolls hors d'oeuvre
The warm-up act for August’s labor market report is upon us. Payrolls processor ADP will publish its numbers for private-sector hiring in the month through mid-August at 8:15 AM ET (1215 GMT), into a market prepped for Federal Reserve action by the speech of Federal Reserve Chairman Jerome Powell last Friday.
The correlation between the ADP’s numbers and the government’s has weakened since the start of the pandemic, and last month’s big ADP shortfall was resoundingly contradicted by the government’s data two days later. Even so, a number higher than the 613,000 expected could be taken as advance warning of the kind of number that could trigger an immediate tapering of bond purchases. (The converse is also true, as my old math teacher loved to say.) Atlanta Fed President Raphael Bostic will chip in with his two cents’ worth at 12 PM ET.
The Institute of Supply Management’s manufacturing PMI is also due at 10 AM ET.
2. OPEC+ set to keep to output increase plan
The world’s biggest oil exporters are set to stick to their current course at meetings in Vienna later. Experts at the Organization of Petroleum Exporting Countries revised up its forecast for demand for both this year and next year on Wednesday, and now estimate crude demand to grow by 4.2 million barrels a day in 2022, nearly 1 million b/d higher than previously.
As such, analysts expect the cartel and its allies, led by Russia, to confirm that they will continue to add supply at a rate of 400,000 barrels a day each month, until all of last year’s emergency output cuts are reversed.
Doubts about the strength of demand from key importers in Asia have receded in recent days, after China said it had stopped community spread of Covid-19 and the pace of vaccination ramped up rapidly in India. Both of those developments should support consumption in those markets. Indonesia and Thailand are also both starting to relax some pandemic containment measures.
3. Stocks set to edge higher; Calvin Klein and Tommy Hilfiger owner shines
U.S. stocks are set to open modestly higher later, reversing the equally modest losses of Tuesday but essentially stuck in a holding pattern until Friday’s payrolls report.
By 6 AM ET, Dow Jones futures were up 95 points, or 0.3%. S&P 500 futures were up by a similar amount and Nasdaq 100 futures were up by 0.2%.
Stocks likely to be in focus later include fashion group PVH (NYSE:PVH), which surged in after-hours trading on Monday after stronger-than-expected earnings. Cybersecurity group Crowdstrike Holdings (NASDAQ:CRWD) also impressed with its update. Brown Forman (NYSE:BFb), Trip.com (NASDAQ:TCOM) and Campbell Soup (NYSE:CPB) head a short earnings roster.
4. ECB tapering edges onto radar screen, China's Caixin PMI disappoints
The chances of an early tapering of bond purchases by the ECB are starting to pick up, albeit few would expect it to make its move before the Fed does. Two of the ECB’s more hawkish policy-setters, Robert Holzmann and Klaas Knot, both called for the bank to start reducing its asset purchases in the current quarter over the past 24 hours.
Their voices have been marginalized for most of the last 18 months, but ECB vice-president Luis de Guindos said in an interview Tuesday that the Eurozone economy had been performing better than expected and hinted at the bank raising its growth forecasts when its meets next week. The accounts of the ECB’s last meeting noted for the first time since the pandemic that upside risks to its inflation forecasts needed to be taken seriously.
The Eurozone manufacturing PMI dipped in August but remained at historically high levels, while China’s Caixin PMI, which tracks private-sector manufacturing, fell below 50 for the first time since spring last year.
5. SEC's Gensler warns on crypto, again
U.S. Securities and Exchanges Commission head Gary Gensler repeated his warning that cryptocurrencies will need to accept tougher regulation, noting that they had become too large not to be properly governed.
“There are a lot of platforms that are in operation today that would do better engaging and instead there is a bit of . . . begging for forgiveness rather than asking for permission,” Gensler told the Financial Times in an interview.
“At about $2 trillion of value worldwide, it’s at the level and the nature that if it’s going to have any relevance five and 10 years from now, it’s going to be within a public policy framework,” he said.
After falling sharply during as the U.S. economy reopened, cryptocurrencies have recovered in the last month. Bitcoin was 0.5% higher at 6:15 AM ET, while Ethereum was up 5.9%, still profiting from a governance switch that is set to improve its environmental and operational performance.