Dow Jones Forecast: Stocks steady as US jobs market shows signs of cooling

US futures

Dow futures +0.21% at 34900

S&P futures +0.1% at 4500

Nasdaq futures +0.06% at 15383

In Europe

FTSE +0.30% at 7387

Dax -0.11% at 15925

• US ADP payrolls cool to 175k from 371k
• US Q2 GDP revised lower to 2.1%
• USD falls as bets rise that peak rates are near
• Oil rises after stockpile draw

ADP payrolls cool by more than forecast

US stocks are pointing to a flat open after strong gains in the previous session and as investors digest the last ADP private payrolls data.

The ADP payrolls showed that 177k private payrolls were added in August, less than the 195k that was forecast and down significantly from 371k added in July. These are the latest figures to suggest that the US labour market is cooling.

Yesterday JOLTS job openings fell below 9 million for the first time since March 2021 as the jobs market loses steam.

The news will be well received by the Federal Reserve as less demand for workers means that companies are less likely to offer big wages to attract talent, which puts less pressure on prices.

Therefore, recent data could suggest that the Federal Reserve is near its peak rate, which is pulling the USD lower while keeping US stocks buoyant.

Meanwhile, US Q2 GDP was also revised lower to 2.1% on an annualized basis amid more moderate business investment. The key inflation gauge, core personal consumption expenditure, was also revised lower to 3.7% in Q2, its slowest pace in 2 years.

Corporate news

HP falls over 8% pre-market after the technology firm lowered expectations for annual profit amid the ongoing slump in demand for personal computers and sluggish demand in China.

Coinbase falls -0.6% after rising 15% in the previous session after the stock benefitted from a landmark decision in the US appeals court, which has paved the way for a spot bitcoin ETF.

Nvidia rises, adding to yesterday’s gains of over 4% after announcing that it would be deepening its partnership with Google.

Dow Jones forecast – technical analysis

The Dow Jones rebounded off the multi-month rising trendline and 100 sma, pushing above the 50 sma to a two week high. The price is testing resistance at the 20 sma at 34850, which bulls need tyo overcome to extend the bullish run to 35000 ahead of the July high of 35690. On the downside, support can be seen at 34670 the 50 sma and 34580 the June high. A break below here bring 34170 the rising trendline support back into play.

FX markets – USD rises, GBP falls

The USD is falling after further signs that the US labour market is cooling, which could take pressure off the Federal Reserve to continue raising interest rates.

EURUSD has risen above 1.09 after German inflation cooled by less than forecast in August, easing to 6.1%, down from 6.2% but missing forecasts of 6%. The data comes after German wage data earlier in the week showed that wages rose at a record rate in Q2.

GBPUSD is rising, hitting a four-day peak on the upbeat market mood. Weak UK mortgage data has been brushed off by the pound. UKL mortgage approvals drop by 10% as interest rates rise, which could result in UK house prices falling further.

EUR/USD +0.30% at 1.0910

GBP/USD +0.50% at 1.27

Oil rises for a fifth day after stockpile draw

Oil is extending gains for a fifth straight session after data showed a larger than expected draw of crude oil inventories in the US and as a hurricane in the Gulf of Mexico unnerved the oil market.

According to API data US crude oil stockpiles fell by a larger than expected 11.5 million barrels in the week ending August 25^th. Suggest a large drop suggests that demand remains robust across the all-important US  driving season.

Separately, the market is keeping an eye on Hurricane Idalia as it moves over the Gulf of Mexico, close to a major US oil and gas producing region, a region that accounts for about 15% of US oil production.

Meanwhile, Saudi Arabia is expected to extend its voluntary output cut in October, keeping supply tight and the price of oil buoyant.

EIA data is due later today.

WTI crude trades +0.8% at $80.60

Brent trades  +0.8% at $82.84.56