S&P500 hits record high ahead of NFP report

Today’s headlines

What’s happening: The S&P500 surged to a record closing high on Thursday following the release of economic data.

What happened: President Donald Trump hosted the CEOs of the biggest tech companies for dinner at the White House on Thursday.

The latest data on initial jobless claims raised speculations of an interest rate cut by the Federal Reserve this month.

Why it matters: The dinner hosted by the US President was attended by Microsoft’s co-founder Bill Gates and CEO Satya Nadella, Apple’s Tim Cook, Meta Platforms CEO Mark Zuckerberg, Google’s Sundar Pichai, and Micron’s Sanjay Mehrotra. Not surprisingly, Tesla’s Elon Musk was not invited.

The discussions focused on the Trump administration’s AI policy, being shaped by Senior White House Policy Advisor on Artificial Intelligence, Sriram Krishnan. Trump also went around the table asking tech leaders about their planned investments in the US.

Shares of Amazon, Meta Platforms, Apple and Microsoft recorded gains ahead of the dinner.

Data released on Thursday showed that private payrolls rose by just 54,000 in August, below market expectations, while jobless claims climbed to their highest level since June, signalling a cooling labour market.

Initial jobless claims in the US rose by 8,000 to 237,000 in the latest week, above market estimates of 230,000. US private businesses added 54,000 jobs in August, compared to 106,000 in July. The figure also came in below market estimates of 65,000.

The tightening labour market supported speculations of an interest rate cut of at least 25 bps by the Fed in September.

Earnings releases also provided a boost to the overall market. Shares of American Eagle Outfitters jumped 38% after the apparel company reported better-than-expected second-quarter results and issued upbeat comparable sales forecast for the third quarter. Broadcom’s stock rose 4.6% in after-hours trading following the release of the company’s quarterly results.

The Dow Jones index jumped 350.06 points, or 0.77%, to close at 45,621.29 on Thursday, while the S&P 500 climbed 0.83% to settle at a record high of 6,502.08. The Nasdaq 100 rose 0.93% to close at 23,633.01.

What to watch: Investors await the release of the NFP (nonfarm payrolls) report (1630 UAE Time) from the US today. Analysts expect US nonfarm payrolls to rise by 75,000 jobs in August, compared to July’s 73,000 gain. The US unemployment rate, which rose to 4.2% in July from 4.1% in June, is projected to rise further to 4.3% in August. Average hourly earnings for all employees on private nonfarm payrolls are expected to grow by 0.3%.

The markets today

Crude oil in focus today ahead of the OPEC+ meeting

Context: Crude oil prices fell for the third straight session this morning as investors assessed the latest data on US inventories.

Details: The Organization of the Petroleum Exporting Countries and its allies (OPEC+) has been looking to further increase output to regain the market share it has lost to shale producers in the US. Expectations of higher production by members of the OPEC+ have sparked concerns around a global oil surplus.

Data released on Thursday showed US commercial crude inventories surged by 2.4 million barrels last week, which included a gain of 1.6 million barrels at Cushing, Oklahoma, indicating soft demand. Markets, on the other hand, were expecting a decline of 1.8 million barrels for the week.

Gasoline stockpiles declined by 3.795 million barrels, recording the sharpest drawdown since April, while stockpiles of distillate fuel surged by 1.681 million barrels, compared to market estimates of a decline of 0.5 million barrels.

US President Donald Trump has been urging Europe to halt oil imports from Russia, while slapping India with 50% tariffs.

Weakness in the US dollar lent some support to oil prices, as a softer greenback makes commodities cheaper for foreign currency holders. The US dollar index, which measures the greenback’s performance versus a basket of major peers, fell 0.3% to 98.10 this morning.

WTI crude oil prices fell 0.4% to $63.23 a barrel this morning, while Brent crude prices dipped 0.4% to $66.75 a barrel.

In other energy trading, gasoline fell 0.5% to $1.9992, while heating oil declined 0.4% to $2.3216. Natural gas bucked the trend and gained 0.4% to $3.087.

What to watch: Investors await the release of economic data on US Baker Hughes oil rig count (2100 UAE Time) and Baker Hughes total rigs count (2100 UAE Time) today. Crude oil rigs in the US rose to 412 in the August 29 week from 411 in the previous week, while total rigs fell to 536 from 538 in the previous week.

The US NFP report, details of the US-Japan trade deal and announcements of further tariffs by Trump will remain in focus.

Other Markets: European indices closed mostly higher on Wednesday, with the FTSE 100, DAX 40 and STOXX Europe 600 Index up by 0.42%, 0.74% and 0.61%, respectively. However, the CAC 40 fell 0.27%.

The news shaping the markets

France’s President Emmanuel Macron said 26 countries will provide post-war security guarantees to Ukraine. The news sent the RUB/USD pair lower in forex trading this morning.

Japan’s nominal wages climbed 4.1% year-over-year in July, the fastest pace in seven months. The latest reading coming in higher than market expectations of a 3% gain lent support to the JPY/USD forex pair.

Canada’s trade deficit narrowed to C$4.9 billion in July, from C$6.0 billion in June, which sent the CAD/USD pair higher in forex trading this morning.

Ireland’s economy expanded by 0.2% in the second quarter, topping the preliminary reading of a 1.0% decline and lending support to the EUR/USD forex pair.

Philippines’ annual inflation rate surged to 1.5% in August, from 0.9% in the previous month. The figure also surpassed market expectations of 1.3%. However, the PHP/USD pair rose in forex trading this morning.

What else to watch today

Italy’s retail sales (1200 UAE Time), Eurozone’s employment change (1300 UAE Time) and GDP growth rate (1300 UAE Time), India’s foreign exchange reserves (1530 UAE Time), Brazil’s PPI (1600 UAE Time), Canada’s unemployment rate (1630 UAE Time), employment change (1630 UAE Time), participation rate (1630 UAE Time), average hourly wages (1630 UAE Time) and Ivey PMI (1800 UAE Time), Russia’s foreign exchange reserves (1700 UAE Time), Brazil’s car production (1800 UAE Time) and new car registrations (1800 UAE Time), as well as Turkey’s Treasury cash balance (1830 UAE Time).