Five things you need to know before the market opens on Wednesday July 5:
1. -- Stock Futures Slide On Growth Worries With Jobs Data On Deck
U.S. equity futures slumped lower Wednesday, while the dollar held gains on foreign exchange markets and Treasury yields nudged higher, as investors reacted to softer-than-expected growth figures from Europe and China and prepped for a key series of jobs data releases over the coming days.
China's normally resilient services sector expanded at its weakest face in five months over the month of June, according to private sector PMI data from Caixin, following on from a muted reading of manufacturing activity earlier in the week.
China's post-Covid weakness, alongside the hawkish signaling from western central banks, points to muted growth prospects over the second half of the year and could challenge the first half rally recorded by global stocks, and in the U.S. in particular, over the coming months.
In the near-term, U.S. investors will likely focus on a raft of jobs data that will test the market's recent acceptance of the Federal Reserve's rate path: the ADP jobs report will fall on Thursday, followed by weekly jobless claims and the May Job Openings and Labor Turnover Survey, or JOLTS, report.
The Labor Department will publish its June payroll report on Friday, with analyst looking for a headline gain of between 200,000 and 225,000, with the unemployment rate holding at 3.7%.
Benchmark 2-year note yields were marked modestly higher from Monday's muted closed to change hands at 4.886% in overnight trading, with 10-year notes pegged at 3.839%.The U.S. dollar index, which tracks the greenback against a basket of six global currencies, edged 0.03% higher to trade at 103.073.
On Wall Street, futures contracts tied to the S&P 500 were indicating a 21 point opening bell decline while those linked to the Dow Jones Industrial Average were priced for a 1545 point pullback. Nasdaq futures were down 93 points.
In overnight trading, the MSCI ex-Japan index fell 0.79% into the close of trading while Japan's Nikkei 225 ended the session down 0.25%.
The Europe-wide Stoxx 600 was marked fell 0.6% in early Frankfurt trading following data from S&P Global showing its HCOB PMI index slipped into contraction last month, suggesting a heightened risk of recession in the world's biggest economic bloc.
2. -- Fed Minutes In Focus Following June Rate Hike 'Pause'
The Federal Reserve will release minutes of its June policy meeting Wednesday, with investors likely to focus on the reasoning behind its decision to pause its run of interest rate hikes while simultaneously warning that at least two more increases will be needed in order to tame the current levels of inflation.
Bond and interest rate markets are only now coming to terms with the Fed's projections, which see a median Fed Funds rate of around 5.6% by December, with the CME Group's FedWatch pricing in an 87% chance of a 25 basis point in July, another pause in September and a final 25 basis point rate hike in November.
Inflation data, both in actual reported numbers and those gleaned from sentiment surveys, are trending quickly to the downside, with this week's ISM manufacturing survey showing a prices paid component that equates to a zero percent inflation rate and the PCE price index for May falling to the lowest level in more than two years.
3. -- Meta To Unveil Twitter Challenge As Musk Defends Platform Changes
Meta Platforms (META) shares edged lower in pre-market trading amid reports that the social media giant will launch a text-based rival to Twitter, expected to be called 'Threads' over the coming days.
The move follows a series of controversial changes to the Twitter website, unveiled over the weekend, that limit the number of Tweets both verified and unverified users can see each days as part of an effort lead by Elon Musk to counter what he called "extreme levels of data scraping & system manipulation" on the micro-blogging website.
Meta's Apple store listing for Threads suggests the platform will launch Thursday, and will allow users to keep their username and followers from their Instagram profile.
Earlier this spring, Meta said active users across its 'Family of Apps', which includes Facebook, Instagram and WhatsApp, rose 2% from last year to just under 3 billion, while daily active users were up 4% from last year at 2.03 billion.
Meta shares were marked 0.38% lower in pre-market trading, indicating an opening bell price of $284.94 each.
4. -- Nvidia Leads Chip Stocks Lower As China Limits Key Metals Exports
U.S. chipmakers moved lower in pre-market trading, lead by Nvidia (NVDA), following a move by China late Monday to restrict the export of two key components in the making of electric vehicles and semiconductors.
China's commerce ministry said it would limit exports of Gallium and germanium, metals which are crucial to chipmakers as well as EV producers, starting on August 1. The decision is the latest salvo in an ongoing tech trade war between Washington and Beijing, following the Biden Administration's recent ban on AI-focused chips and technologies.
"China is the world-leading producer of gallium and germanium so any restrictions on exports to the rest of the world will likely increase prices for manufacturers or slow down production," said ING commodities strategist Ewa Manthey."Both metals are on the European Union’s list of critical raw materials, deemed “crucial to Europe’s economy”.
Nvidia shares were marked 1.3% lower in pre-market trading to indicate an opening bell price of $418.74 each. AMD (AMD) shares slipped 1.14% to $114.50 each while Micron Technology (MU) fell 1% to $63.27 each.
5. -- Apple Supplier Foxconn Sees Firmer Q3 Sales Following Muted First Half
Apple (AAPL) supplier Foxconn forecast solid current quarter revenues Wednesday, following a muted closed to the first half of the year.
Taiwan-based Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments, said revenues over the three months ending in June fell 13.8% from last year to T$1.3 billion, or just under $42 billion, with sales over the month of June itself down nearly 20%.
"With the second half of the year peak season currently underway, operations will gradually ramp up," Foxconn said in a statement. "The outlook for the third quarter, which will be better than the second quarter, is expected to increase at an on quarter pace higher than seen in the previous two years."
"When compared to the pre-pandemic period, the growth rate is expected to be approximately on par," the statement added.
Apple shares were marked 0.64% lower in pre-market trading to indicate an opening bell price of $191.23 each.
