Uncertainty returned to global equity markets overnight with the Nikkei positing a sharp decline and the rest of the world generally taking that negative lead. Australian and Russian stocks showed some positive action to partially countervail the prevailing risk-off tone. Some investors expressed concern about the return of Chinese problems early next week and it is also possible that some investors were simply exiting positions ahead of this morning’s US jobs release. Therefore the highlight of the economic calendar today will be the August US Non-Farm Payrolls that are forecast to be a tad higher than the 215,000 print from July. The unemployment rate is anticipated to have ticked lower than the 5.3% rate seen last month and that could be the key event of the session. A reading on Canada’s August unemployment rate is anticipated to hold steady at 6.8% while the Richmond Fed President Jeffrey Lacker gives a speech “The Case Against Further Delay” during the early US morning hours.
S&P 500: After the September S&P 500 climbed into a new three-day high (1972.50) yesterday the market was vulnerable to classic technical balancing this morning. Comments from European Central Bank President Mario Draghi indicated that they were open to pursuing easier monetary policy ahead if it was necessary and that prompted some bargain hunting buying yesterday. Unfortunately equities erased a portion of those gains during the afternoon hours yesterday, and the uncertainty into the US Payroll report later this morning has sparked a measure of fresh selling. One almost gets the impression that a payroll reading near last month’s result will leave rate hike fears in a front and center standing. Near term downside targeting in the September S&P is seen at 1927 and then down at 1920. Beware of a downtick in the US unemployment rate as that could put a September rate hike back into a front and center standing!
Other US Indexes: Fresh chart damage in the Mini Dow is seen down at 16,069 and the bear camp might remain in control as long as the September Mini Dow is below 16,218. Early indications of a triple digit lower opening in the Dow, suggests that some portion of a disappointing US payroll result might already be factored into prices. However with the uncertainty from China expected to return early next week, it could be difficult to attract sustained bargain hunting buying into stocks today. The September Nasdaq Mini has also suffered some fresh technical chart damage overnight and there might be little in the way of solid support seen until the 4150.75 level.
TODAY’S MARKET IDEAS: A negative track looks to remain in place despite the Non-farm payroll report release. If not now, then soon might explain the Fed’s stance especially if the unemployment rate notches downward later this morning. On the other hand, seeing a soft payroll result might foster fresh valuation concerns and the hope of a delay in hiking rates might not be the bullish tonic hoped for by many investors. Pushed into the market we favor downside action early.