U.S. Stock Market

U.S. Stocks Set To Open Higher Despite Another Disappointing Employment Report

ADP Employment Report Shows A 20 Million Hit To Employment

This week will be full of employment data, and ADP Employment Change for April is the first report on this front. It showed a decline of 20.3 million compared to estimates which called for a decline of 20 million.

The news is hardly surprising given the previous U.S. Initial Jobless Claims reports but may still impact the market mood. On Thursday, a new Initial Jobless Claims report will be published. This time, it is expected to show that 3 million Americans filed for unemployment benefits last week.

On Friday, the market will digest the Non Farm Payrolls report for April which is expected to come at -21 million. Previously, the market mostly ignored bad employment data but it may become a more challenging task now as stocks have gone a long way from mid-March lows and trade at rather rich valuations.

Oil Corrects After The Recent Upside Move

Rising oil was a major supportive catalyst for the general market. The WTI June 2020 contract has recently traded close to $10 per barrel but has rallied off lows and even tested the $26 level.

Yesterday, API Crude Oil Stock Change report showed that oil inventories increased by 8.44 million barrels which was higher than analyst expectations. Initially, this report did not cause a sell-off since traders were hopeful that the gradual lifting of lockdown measures would boost oil demand.

However, it looks like oil has gone too far too fast, and it’s time for a technical correction. Oil stocks have done fairly well during the recent oil rally, and a correction on the oil price front might impact both the energy segment and the general market mood.

European Commission Expects That EU GDP Will Contract By 7.5% In 2020

European Commission has announced its first EU GDP forecast since the beginning of the crisis, calling for a contraction of 7.5% in 2020. This estimate is fully in line with the previously released estimate of the International Monetary Fund.

For the U.S., IMF expected a contraction of 5.9% in 2020. The recently announced European PMI numbers look grim, and even the traditionally strong Germany saw its Services PMI decline to new depths during the current crisis.

The weakness of the EU economy may at some point become a problem for U.S. multinationals but a lot will depend on the pace of the economic rebound both in the U.S. and the EU.