Fewer Americans filed for unemployment benefits last week

U.S stock indexes rose yesterday after data showed fewer Americans filed for unemployment benefits last week, while a decline in shares of health insurer Cigna dragged healthcare stocks lower. 

Initial claims for state unemployment benefits fell by 14,000 to 385,000 in the week ended July 31, while layoffs dropped to their lowest level in more than 21 years last month as companies held on to their workers amid a labor shortage, the Labor Department's report showed. Investors are appreciating the fact that it is unlikely for the U.S to go into another shutdown and with economic growth in full steam and interest rates at such lows interest towards equities seems intact. Focus now shifts to the jobs report today.

Analysts say a disappointing number might raise questions about an economic recovery, but it could also lead the Federal Reserve to remain accommodative. Concerns about the pace of economic growth and higher inflation have pressured the S&P 500 index, but stellar corporate earnings so far have put it on track to end the week higher.

Dow Jones Industrial Average 

The Dow Jones Industrial Average rose 0.78%. The biggest gainers of the session on the Dow Jones Industrial Average were Salesforce.com Inc., which rose 2.64% or 6.44 points to trade at 250.61 at the close. Amgen Inc. added 2.49% or 5.68 points to end at 233.99 and Walt Disney Company was up 2.40% or 4.15 points to 176.73 in late trade. The biggest losers included UnitedHealth Group Incorporated, which lost 2.44% or 10.28 points to trade at 411.26 in late trade. Verizon Communications Inc. declined 0.13% or 0.07 points to end at 55.30 and Dow Inc. shed 0.02% or 0.01 points to 60.98.

NASDAQ 100

The NASDAQ index gained 0.78%. The top performers on the NASDAQ Composite were Score Media and Gaming Inc. which rose 79.69% to 32.59, Zymergen Inc. which was up 75.88% to settle at 14.51 and Sitime Corporation which gained 30.95% to close at 184.63. The worst performers were Robinhood Markets Inc. which was down 27.55% to 51.00 in late trade, Inogen Inc. which lost 26.77% to settle at 60.24 and Itron Inc. which was down 26.50% to 71.78 at the close.

Oil

Oil prices rose more than 1% yesterday on increasing Middle East tensions, but gains were capped as fresh restrictions to counter a surge in COVID-19 cases threatened the global energy demand recovery. U.S West Texas Intermediate (WTI) crude futures rose 94 cents, or 1.4%, to settle at $69.09 a barrel. Israeli jets struck what its military said were rocket launch sites in Lebanon early yesterday in response to two rockets fired towards Israel from Lebanese territory, in an escalation of cross-border hostilities amid heightened tensions with Iran. 

The exchange came after an attack on a tanker off the coast of Oman last Thursday, which Israel blamed on Iran. Two crew members, a Briton and a Romanian were killed. Iran denied any involvement. The growing tensions come as nuclear talks between Iran and Western powers that would ease sanctions on Tehran's oil exports appear to have stalled. Offsetting the geopolitical tensions, concerns over the recovery of global oil demand grew amid a surge in coronavirus cases.

Precious and Base Metals

Gold edged down today, lingering near the key level of $1,800 an ounce, pressured by a stronger dollar as investors eyed a U.S. jobs report for cues on the Federal Reserve’s future policy stance. Spot gold fell 0.3% to $1,799.46 per ounce, set for its worst weekly performance since mid-June. If we get a combination of really solid payroll numbers coming on the back of hawkish rhetoric by the Fed, it’ll spook any interest-rate-sensitive markets like gold. 

However, a complete meltdown in gold is highly unlikely and support of $1,790 should hold. Jitters around tapering set in after Fed Vice Chair Richard Clarida said conditions for a rate hike could be met in late 2022, and the central bank could start scaling back on its asset purchase program this year. Fed Governor Christopher Waller also saw the possibility of reducing accommodative policy sooner than some expected, given the progress in economic recovery and improving the labor market. 

Higher interest rates raise the opportunity cost of holding non-interest-bearing gold. The dollar index was up 0.1%, making gold less appealing for holders of other currencies. The U.S non-farm payrolls report is due later today. Indicative of sentiment, holdings in SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell to 1,027.61 tonnes on Thursday.

Silver was steady at $25.12 per ounce and was down about 1.4% for the week. Platinum fell 0.4% to $1,001.66 and was on track for its biggest weekly fall since June. Palladium rose 0.2% to $2,652.93. Copper fell for a fifth consecutive day yesterday as concerns over the demand outlook from top consumer China pulled prices further from an all-time peak reached earlier this year. Copper is used in power and construction and many analysts expect demand to grow and supply to run short as the world swaps fossil fuels for electrification.

Traditional Agricultures

Corn and soybeans climbed yesterday on stronger export sales, though gains were capped by rainfall across parts of the U.S Midwest. Wheat traded near even before ending slightly lower, supported by firmer grains complex and distressed crops across North America. Soybeans were also supported by a daily sales notification of 300,000 tonnes of soybeans.

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