friday July 5th

5-07-2019

Dow futures fall 100 points after strong jobs report dampens hope of a Fed rate cut

U.S. stock index futures extended losses on Friday after the release of stronger jobs data dampened hope for easier Federal Reserve monetary policy. Dow Jones Industrial Average futures were down more than 100 points S&P 500 and Nasdaq 100 futures also slid. The 10-year Treasury yield jumped back above 2%. At these futures levels, the Dow was set to open down 107 points. The U.S. economy added 224,000 jobs in June. Economists had forecast the U.S. added 165,000 jobs in June, after a stunningly low 75,000 payrolls were created in May, according to Dow Jones. Treasury yields jumped on the data. The benchmark 10-year yield traded at 2%. The 2-year rate rose to 1.81%. Gold futures slid 1.5% to $1,399.40 per ounce. The dollar rose against a basket of currencies, gaining 0.4%. Investors were betting heavily on the Fed cutting rates later this month heading into Friday’s session. CME Group’s FedWatch tool showed expectations for a rate cut in July were at 100%. Last month, the Fed said it would “act as appropriate” to maintain the current U.S. economic expansion, which is the longest in history. Stocks in Asia were muted on Friday ahead of the release of the U.S. nonfarm payrolls report, which may provide clues as on whether the Federal Reservewill cut interest rates at its July monetary policy meeting. Mainland Chinese stocks were higher on the day, with the Shanghai compositeup 0.19% to about 3,011.06 and the Shenzhen component adding 0.8% to 9,443.22. The Shenzhen composite was higher by 0.626% to approximately 1,601.20. Over in Hong Kong, the Hang Seng index was 0.13% lower, as of its final hour of trading. In Japan, the Nikkei 225 added 0.2% to close at 21,746.38 and the Topix rose 0.18% to end its trading day at 1,592.58. Meanwhile, South Korea’s Kospi finished its trading day fractionally higher at 2,110.59. U.S. benchmark crude prices fell on weak economic indicators on Friday while Brent oil ticked higher, supported by tensions over Iran and this week’s decision by OPEC and its allies to extend a supply cut deal until next year. U.S. West Texas Intermediate (WTI) crude futures were down $0.48 at $56.86 per barrel by 1013 GMT. There was no settlement price on Thursday because of the Independence Day holiday in the United States. Front-month Brent crude futures were up $0.28 at $63.58 per barrel. Both benchmarks were set for their biggest weekly falls in five weeks.