For the day ahead in markets I’ll be focused on the release of global service sector PMIs, weekly US jobless claims data and earnings from Broadcom and Campbell Soup.
It’s worth noting that these events are in the context of a pickup in the US dollar over the last 24 hours and a well overdue pullback in Apple and Tesla shares; which were probably the two central themes of trading over the summer.
These are the final figures for the service sector from Markit for the UK and Europe but the information from the Caixin for China and ISM for the US will be fresh. We’re looking at a steep drop back in China services, which should just about stay in expansion territory according to the consensus forecast of 50.4. That’s a negative for global growth prospects in my book. A more modest drop to 57 is expected in the US for ISM services in August. But maybe the more worrying forecast is the 31.9 average call on the ISM services employment, well down from 42.1 in July.
We also have jobless claims out today so perhaps putting it altogether - another initial claims print above 1 million, a weak ISM employment index and another big miss for ADP yesterday- is a rather bearish setup for non-farm payrolls on Friday. So why is the dollar rising? Well its been falling as US data surprised on the upside so it stands to reason.
Quickly on earnings, Broadcom is one of the clearest plays of the build towards 5G with all the need for chips that involves. Q2 looks like it will probably only be a setback amid medium-term rising semiconductor demand.
Campbell soup was a classic lockdown winner in Q1 with people stockpiling essentials but earnings growth is expected to continue into Q2 with the company getting more of its revenues now from its snacks business.
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