Macro Roundup (Aug 5)

SHANGHAI, Aug 5 (SMM) — This is a roundup of global macroeconomic news last night and what is expected today.

The dollar held gains on Wednesday after a quick recovery from an earlier fall as markets chose to focus on a suggestion from a top US Federal Reserve official that the central bank may reduce support for the improving economy more quickly than widely thought.

The bullish comments on the US economy, by Fed Vice Chair Richard Clarida, triggered a rebound in US Treasury yields and turned market attention away from the release two hours earlier of an unexpectedly weak private employment report that had driven the dollar down.

The dollar swung from being down 0.3% for the day to up 0.3% on the opposing clues on whether the United States will see strong economic growth and higher interest rates or a serious drag from the coronavirus pandemic.

The ADP National Employment Report was seen as possibly foreshadowing softness in July jobs data due on Friday. But there were doubts about its value as a predictor and another report showed US service industry activity jumping to a record high in July.

On Wall Street, Futures contracts tied to the major US equity indexes were little changed at the start of the overnight session Wednesday evening as Wall Street looked to improve upon a mixed week.

Dow futures rose 16 points, while S&P 500 and Nasdaq 100 futures each rose less than 0.1%.

The moves in the extended session came after a mostly lower regular session.

The Dow Jones Industrial Average shed 323.73 points, or 0.9%, and closed near its session low at 34,792.67. The S&P 500 slipped about 0.5% to finish at 4,402.66, while the Nasdaq Composite ticked up 0.1% to 14,780.53.

On Thursday investors will receive yet another update on the US employment situation with the Labor Department’s latest weekly update to initial jobless claims. Recent earnings and economic data have been strong overall, but some economists worry economic growth and employment gains will taper from here.

Oil prices fell for a third day in a row to a two-week low on Wednesday on a surprise build in US crude stockpiles and as the spread of the coronavirus Delta variant outweighed the impact of Mideast geopolitical tensions.

The US Energy Information Administration (EIA) said crude stockpiles rose 3.6 million barrels during the week ended July 30.

That compares with the 3.1-million barrel draw analysts forecast in a Reuters poll and the 0.9-million barrel decline the American Petroleum Institute (API) reported on Tuesday.

Brent futures fell $2.03, or 2.8%, to settle at $70.38 per barrel, while US West Texas Intermediate (WTI) crude settled $2.41, or 3.4%, lower at $68.15 per barrel.

That puts both benchmarks on track for their lowest since July 20. For Brent, it puts the contract down for a third day in a row for the first time since late May.

Gold gave up early gains on Wednesday as comments from a top US Federal Reserve official and record US services industry activity data shifted concerns back to the Federal Reserve potentially easing asset purchases later in the year.

Spot gold was up 0.1% at $1,811.38 per ounce by 2:11 p.m. EDT, while US gold futures settled little changed at $1,814.50. Prices jumped 1% earlier in the session on the back of weaker than expected ADP jobs data.

Offsetting the jobs data, was the Institute for Supply Management’s non-manufacturing PMI activity index, which raced to its highest reading in the series’ history last month.

Earnings continued to guide sentiment in Europe, with Commerzbank, Siemens Energy, Hugo Boss and Intesa Sanpaolo among the big names reporting Wednesday.

Final PMI (purchasing managers’ index) readings on Wednesday showed euro zone business activity surging in July to its fastest expansion in 15 years.