By Geoffrey Smith
Investing.com -- The U.S. releases its official labor market report for June, hours after two leading Federal Reserve officials beat the drum for another 75 basis point hike in interest rates. Political violence returns to Japan with the assassination of former Prime Minister Shinzo Abe. Twitter falls on a fresh report about Elon Musk levering himself out of his expensive deal. Celsius Network is accused in a lawsuit of being a Ponzi scheme, and U.S. efforts to bend the oil market to its will ramp up with Janet Yellen's visit to Asia. Here's what you need to know in financial markets on Friday, July 8.
1. Payrolls due as Waller, Bullard call for another 75 bps in July
The Labor Department will announce how many jobs the U.S. economy created in June, in what promises to be a pivotal moment for the next month.
Anything less than a sharp slowdown in hiring is likely to nail down expectations of another 75 basis point hike in U.S. interest rates by the Federal Reserve at its next meeting: two voting officials on the policy-making council - governor Chris Waller and St. Louis Fed President James Bullard - both said they thought such a move was desirable late on Thursday.
Analysts expect nonfarm payrolls to have grown by 268,000, which would represent the slowest growth in jobs since November but still far from anything signaling a recession. Also of interest will be any further moderation in earnings growth. The jobless rate is expected to stay at 3.6%.
2. Twitter falls after WaPo report on Musk nearing pullout
Twitter (NYSE:TWTR) stock fell in premarket trading after the Washington Post reported that Elon Musk is closer to pulling his offer for the company.
Musk’s team has stopped most discussions around funding for the $44 billion, the Post’s sources said, on the grounds that it couldn’t verify the data sent by Twitter regarding spam and fake accounts.
Musk’s critics suspect him of using such arguments as a way to lever himself out of a deal that is looking expensive as the stock market comes under pressure from the Fed’s tightening cycle. Twitter has always said that it can’t exactly quantify the extent of such accounts, owing to data confidentiality rules and the speed at which new accounts can be created.
3. Stocks set to open higher, but may turn on a dime
U.S. stock markets are set to open cautiously higher, but are braced for volatility from the jobs report before the open.
By 06:30 AM ET, Dow Jones futures were up 54 points, or 0.2%, while S&P 500 futures were flat, and Nasdaq 100 futures were down 0.2%.
Aside from the jobs report, all eyes are on the foreign exchange market, where the euro continues to grind lower toward parity with the dollar and the yen was left stunned by the assassination of former Prime Minister Shinzo Abe.
Stocks likely to be in focus later include Spirit Airlines (NYSE:SAVE), which again postponed a shareholder vote on the rival merger offers from JetBlue (NASDAQ:JBLU) and Frontier Group (NASDAQ:ULCC).
4. Celsius Network accused in lawsuit of being a Ponzi scheme
A lawsuit accused the stricken crypto lending platform Celsius Network of being a Ponzi scheme.
The suit, filed by former investment manager Jason Stone, alleged that Celsius failed to carry out basic hedging and risk management strategies, ensuring that its only way to deliver the promised returns to existing investors was by funneling off deposits from new ones.
The suit, which Celsius said it will contest, also alleges that the crypto lender’s founder Alex Mashinsky used the setup to enrich himself financially.
Celsius halted all customer withdrawals last month, after the widespread sell-off in the crypto space caused its own CEL token’s value to collapse.
5. Oil steady as Yellen tries to sell Russian price cap idea
The U.S. is ramping up its diplomatic efforts to bend the global oil market to its will. Treasury Secretary Janet Yellen flies to Asia, aiming to persuade the governments of China and India not to undermine western plans to put a price cap on Russian oil.
Both countries have increased their imports from Russia as western sanctions have left it without buyers in North America and Europe.
Yellen’s efforts come ahead of an even more important visit by U.S. President Joe Biden to Saudi Arabia scheduled for next week.
By 06:30 AM ET, U.S. crude futures were flat at $102.72 a barrel, while Brent futures were up 0.2% at $104.90 a barrel. Baker Hughes’ weekly rig count and the CFTC’s positioning data round off the week.