Stay on top of Thursday’s top 5 market news By

Stay on top of Thursday’s top 5 market news By
Stay on top of Thursday’s top 5 market news By

By Geoffrey Smith and Ana Beatriz Bartolo – One of China’s biggest cities goes into lockdown due to a Covid-19 outbreak, sending commodities and stocks crashing across the world. US equities are set to fall for the fifth straight time ahead of the release of more labor market data and the ISM manufacturing survey. Brazil should disclose its 2Q22 GDP and expectations are positive.

Here’s what you need to know about the financial markets on Thursday, September 1st.

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1. China’s blockade drags commodities

Beijing’s Covid Zero policy returned to haunt commodity markets again overnight as the city of Chengdu – the capital of Sichuan province and home to 21 million people – went into lockdown.

The news particularly hit base metal prices, with copper, nickel and aluminum all down more than 2%, while zinc futures were down more than 6%. Mining stocks like BHP and Rio Tinto (LON:) also dropped sharply in London.

Although Chengdu does not have the direct importance to world markets that Shanghai does, it is still an important industrial center. Volvo Cars said its factory will be temporarily closed. Others will likely follow.

2. Applications for US unemployment benefits

The flow of US economic data continues strong and fast with Challenger’s August job cuts survey due at 8:30 am, the weekly orders release at 9:30 am and finally the Institute of Supply’s purchasing managers index. Management at 11 am.

The data will come in a market whose hopes for a quick end to the tightening monetary policy cycle have taken a series of blows over the past week, with the Cleveland president’s comments being the most recent on Wednesday. Mester poured cold water at the thought of a top-notch cut coming before 2024.

Challenger’s survey will likely confirm an increase in the pace of layoffs, but recent jobless claims figures – and the Labor Department’s survey on Tuesday suggested there are still plenty more jobs out there. Initial claims are expected to have climbed a little higher, to 248,000.

The ISM PMI may be more interesting in what it says about progress in overcoming supply chain bottlenecks. The payrolls report on Wednesday confirmed that net hiring in manufacturing has stopped, however.

3. US stocks set to open lower

US equity markets are not even trying their usual pre-market rally this morning as news from China takes another blow to sentiment on the economy without offering much in the way of lower inflationary pressures to offset.

At 8:15 am, futures for the US were down 0.55%, while the US and US 100 were down 0.63% and 0.90%, respectively. Major cash ratios were down for four straight days, losing between 0.6% and 0.9% on Wednesday.

Stocks likely to be in focus later on include Bed Bath & Beyond Inc (NASDAQ:), whose latest drastic cost-cutting measures did little to halt the stock’s slump even in after-hours trading on Wednesday, and Walt disney (NYSE:) (BVMF:), which the Wall Street Journal reported as planning a membership scheme similar to Amazon’s Prime service (NASDAQ:) (BVMF:).

4. Brazilian GDP in 2Q22

The Brazilian ) of the second quarter should be released this Thursday, by the Brazilian Institute of Geography and Statistics (IBGE). Analysts are optimistic for the result, despite the global slowdown and interest rate hikes.

The average of estimates compiled by is for a GDP of a quarterly increase of 0.9% between April and June of this year, against 1% in the first quarter compared to the last of 2021. For annual growth, the projection is 2 .8%, against 1.7% in the same comparison.

On the supply side, it is expected that the Services and Agriculture sectors have had good growth, while demand should have been stimulated by the improvement in the labor market and by the government’s income transfer programs.

At 08:19, the EWZ ETF was down 0.07% in the US premarket.

5. The falls

Crude oil prices also fell to a two-week low on bad news from China, which was not confined to Chengdu. The , an indicator of private sector manufacturing activity, slipped back into contraction territory last month at a worse-than-expected level of 49.5.

This is beating any short-lived support from a surprising 3.3 million barrel drop in US crude inventories last week.

At 8:20 am, U.S. crude futures were down 1.95% at $87.80 a barrel, while crude was down 1.96% at $93.77 a barrel.

The article is in Portuguese

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