Today, we learn about the health of the U.S. job market. The U.S. Non-farm Payrolls (NFP) data may fail to impress stock traders. If the number comes in weak, the dollar could tank, the Dow Jones, the S&P 500 and the Nasdaq could suffer massive losses. Stock traders are also on edge as Trump bans Tencent, WeChat, and TikTok.
The U.S. Jobs Reports
The mother of all economic data, the U.S. Non-farm Payrolls data will be released today, and this is going to keep the stock traders on edge. Both the Dow and the S&500 futures are trading on a cautious note today as the U.S. releases its job numbers.
Wall Street is looking for non-farm payrolls to increase by 1.48 million in July – not a significant increase on the June number, but the chief qualm is that companies may not have added many Americans to the payroll.
The emergence of the second coronavirus wave in some of the U.S. states has caused a tightening to lockdown restrictions because of the surge in coronavirus cases. This could have influenced the job growth adversely.
Dollar Could Tank
The stage is set for the dollar to tank today if the U.S. jobs data fails to impress the markets. This is because the Employment Component of services ISM fell to 42.1, a lower reading than the previous number of 43.1. The Challenger Reports 576% surge in layoffs, the last reading was 305.5%. The ADP report released on Wednesday was a massive disappointment, actual 167K, previous 4.3 million. The consumer confidence has declined to 92.6 from 98.3.
Dow Jones Could Rally
The Dow Jones could rally on the back of a favorable U.S. job number, and the support of a healthy number is in the Continuing Claims data, which fell to 16.1 million from 17.1 million this week. The four-week average of the Initial Jobless Claims has also dropped to 1.33M against the previous number of 1.435M.
Trump Widens China Attack
Trump has ranched up the U.S.-China tensions further today by signing a pair of executive orders. Trump has banned U.S. residents from holding any business relations with WeChat and TikTok.
Americans will not be able to do business with these companies in 45 days from now. For Trump, these companies impose a national security risk because the personal data of Americans is exposed. This is a significant escalation of tensions between Washington and Beijing. China is going to react, and the reaction is going to be equally harsh.
Given the fact that elections are only three months away, Trump has made China the central theme of his campaign, and he is determined to display himself as the toughest U.S. President when it comes to China.
This is the beginning of Washington and Beijing’s technology cold war. Trump is targeting the most popular companies in China, which are largely considered to be the soul of Chinese technology.
The Bottom Line
Traders are likely to remain cautious today, and the cocktail of today’s events is expected to shape the trading trend for the coming week as well.