Investing.com - Risk is definitely back on the table, with investors turning their backs on fears of a crisis in the Middle East and displaying optimism over a potential U.S.-China trade deal. U.S. stock futures are pointing to a higher open on Wall Street, and this is on the back of all three major equity indexes posting record closes overnight. Here’s what you need to know to start your day.
1. It’s all about the jobs
The market tone is positive, but if there’s one economic indicator which has the ability to upset the apple cart it is the December jobs report, due at 8:30 AM ET (13:30 GMT).
This economic release has always been watched carefully by the market given the Federal Reserve’s dual mandate to consider both inflation and employment growth. And economists expect December’s employment report to show a solid pace of job growth and steady wage gains.
Nonfarm payrolls are expected to have risen by 164,000, according to economists’ forecasts compiled by Investing.com.
The unemployment rate is seen remaining at 3.5%, while average hourly earnings, an indicator of wage inflation, are forecast to have risen 0.3% for the month.
That said, there have been a number of strong economic signals leading into this release, including a pick-up in the U.S. service sector, falling joblessness claims and solid private hiring. Could November’s bumper 266,000 payroll additions be matched?
2. Boeing still under pressure
Shares in the aircraft manufacturer were hit hard following the crash of the Ukraine International Airlines Boeing 737 airliner on Wednesday which killed all 176 people aboard. The incident was initially put down to engine failure. However, there was a bounce when this version of events started to be questioned, with varying sources now suggesting a rogue missile attack as a possibility.
This could let the manufacturer off the hook for this incident, but Boeing (NYSE:BA) is still in hot water over the two crashes in 2018 and 2019 of its 737 Max planes which killed a combined 346 people.
Boeing sent more than 100 pages of internal emails Thursday to the House and Senate committees that have been investigating it in the wake of the two crashes. These haven't have painted the company in a positive light, with employees talking about fooling regulators and questioning the plane’s safety.
3. Looking at the oil rig count
Oil trading has been extremely volatile over the last week, as the tensions in the Middle East ramped up and then cooled. However, fundamental factors have also played their part, including the news from the Energy Information Administration that U.S. crude supplies edged up by a hefty 1.2 million barrels, instead of the expected drop of 3.6 million, for the week ended Jan. 3.
Later today there will be a look at what oil companies are planning amid high U.S. crude production and a build-up in inventories.
Baker Hughes releases its oil rig count at 1 PM ET (18:00 GMT).
The rig count came in at 670 last week and the trend has been down for the past year.
4. U.S.-China Trade Deal
One of the latest factors which has helped propel U.S. equities higher has been the expectation that China and the U.S. governments will finally end their trade spat, allowing the two economic powerhouses to trade relatively freely again.
This view has been helped by the news Chinese President Xi Jinping’s chief trade negotiator will travel to Washington early next week to sign a phase-one trade deal with the U.S.
U.S. President Donald Trump has indicated that the second part of the trade deal might not be ratified until after the 2020 election, but investors will be watching this space to see if any more news about this important deal emerges.
5. Equities keep pushing higher
All three of the senior equity indexes posted record closes on Wall Street overnight, and the U.S. equity futures point to more gains at the open today. At 05:50 ET (10:50 GMT), the S&P 500 Futures was up 7 points, or 0.2%, the Nasdaq 100 Futures up 33 points, or 0.4%, and Dow Jones 30 Futures up 61 points, or 0.2%.
There is event risk, with the official U.S. employment report due later for example, but there doesn't seem to be any stopping investors piling into equities.The Federal Reserve is taking an accommodative stance, Sino-U.S. relations appear to be thawing, employment growth has been strong to date, the Middle East appears to be settling down and analysts widely expect a solid recovery in profits for S&P 500 companies this year. What's not to like? A significant rotation into stocks from bonds may be on the way.