By Geoffrey Smith
Investing.com -- The U.S. releases the first of the week's big labor market indicators as markets start to see bad news as good news. Australia's central bank starts what may become a dovish pivot, while sterling extends its recovery as a chastened government reconsiders its fiscal plans. Elon Musk wades into the debate over war in Ukraine, and oil prices push higher ahead of U.S. inventory data later. Here's what you need to know in financial markets on Tuesday, 4th October.
1. JOLTS, Fed Speakers
The Labor Department will release its monthly survey on job openings and labor turnover at 10:00 ET (1400 GMT) into a market that appears ready to interpret bad news as good news.
Analysts’ estimates suggest that the figures will show a clear cooling off of the labor market in August, with a drop of nearly half a million in the number of vacancies to 10.775 million. That’s still a historically high number, although there have been mutterings that this year’s string of record highs has also owed something to the way the numbers have been collated since the pandemic.
Also on the data calendar are factory orders for August. Those hoping for hints of a dovish pivot from the Federal Reserve can tune in to hear New York’s John Williams and Cleveland’s Loretta Mester at 08:00 ET and 08:15 ET respectively. Governor Philip Jefferson at 10:45 ET and San Francisco’s Mary Daly, due at 12:00 ET, are the only scheduled speakers after the JOLTS data.
2. RBA starts to pivot; Sterling recovers as U.K. government reconsiders
Central bank pivots are in the air, it seems. The Reserve Bank of Australia raised its key rate by a smaller-than-expected 25 basis points, cautioning about the economic slowdown it sees coming.
The Aussie dollar slumped to start with but soon regained its footing, suggesting that the greenback is no longer gratuitously beating up any other currency that shows signs of weakness.
Sterling also recovered overnight to its highest since the “courageous” mini-budget attempted by the new government of Prime Minister Liz Truss (in U.K. lore, the difference between a “controversial” and a “courageous” policy is that a “controversial” one will lose you votes, while a “courageous” one will lose you the election).
That followed reports that Chancellor of the Exchequer Kwasi Kwarteng will bring forward the announcement of his spending plans, as well as the publication of an assessment from the Office of Budget Responsibility.
3. Stocks set to extend gains at open; Porsche (F:P911_p) back above IPO price
U.S. stock markets are poised to open at their highest in nearly two weeks after opening the quarter in style on Monday, with a rally that suggested that many think there is enough bad news priced in to justify buying the dip. Whether that thesis can withstand the upcoming earnings season will be clear soon enough.
By 6:20 ET, Dow Jones futures were up another 447 points, or 1.5%, while S&P 500 futures were up 1.8% and Nasdaq 100 futures were up 2.2%. All three of the major cash indices had gained over 2% on Monday.
Stocks likely to be in focus later include the insurance sector as the cost of Hurricane Ian rises to an estimated $57 billion. Meanwhile in Germany, Porsche nudged back above its IPO price after strong U.S. sales numbers in the third quarter.
Acuity Brands (NYSE:AYI) heads a sparse earnings calendar.
4. Zelensky rejects talks with Russia as Musk calls for peace
Ukrainian President Volodymyr Zelensky rejected suggestions of peace talks as his troops extended their advance into areas notionally annexed last week by Russia.
Ukrainian officials – and citizens – responded with anger to suggestions by Elon Musk on his favorite social media site that the country should cede Crimea, accept permanent neutrality and re-run last week's referenda in areas controlled by Russia under UN supervision, rather than continue the war and risk the nuclear escalation that Vladimir Putin has repeatedly threatened.
The Kremlin welcomed Musk’s proposals, calling them “a positive step”. One Ukrainian respondent asked whether his relatives in Donbas, killed by a Russian missile strike earlier in the war, would be allowed to vote.
Zelensky issued his own online poll asking users whether they preferred an Elon Musk that supports Ukraine or one that supports Russia.
5. Oil pushes higher ahead of API, OPEC+
Crude oil prices extended their recovery in line with other risk assets, still enjoying support from reports that OPEC and its allies will cut production sharply at its meeting on Wednesday.
By 06:40 ET, U.S. futures were up 0.8% at $84.26 a barrel, while Brent crude was up 0.9% at $89.69 a barrel.
The American Petroleum Institute will release its weekly inventory estimates at 16:30 ET as usual. Crude stocks have risen for the last five weeks in a row since Labor Day signalled the end of the summer driving season.
Meanwhile in Europe, Eurozone finance ministers are squabbling over the splintered response to the natural gas crisis, with many critical of Germany’s ‘go it alone’ 200 billion euro package, announced last week, as skewing the continent’s level playing field.