By Geoffrey Smith
Investing.com -- Stocks are set to open in muted style, with no noticeable bounce. Jobless claims are expected to fall again slightly, and new home sales will once again give bulls something to chew on. French and German business confidence improves despite fresh restrictions in Paris. And Donald Trump refuses to commit to a peaceful transition of power in November. Here's what you need to know in financial markets on Wednesday, September 24th.
1. Stocks set to open mixed; Nasdaq drifts lower again
U.S. stocks are set for a very modest bounce at opening after sliding again on Wednesday in response to repeatedly gloomy comments about the economy from Federal Reserve officials.
By 6:40 AM ET (1040 GMT), Dow futures contract and the S&P 500 futures contract were both up 0.1%, while Nasdaq futures, which underperformed sharply on Wednesday, were down another 0.2%.
Stocks likely to be in focus later include Accenture (NYSE:ACN), CarMax (NYSE:KMX), Darden Restaurants (NYSE:DRI) and FactSet Research, all of which report earnings.
More importantly, investors will be looking for signs of stabilization in some of the tech stocks that have lost their luster in recent days, most notably Tesla (NASDAQ:TSLA), which fell over 10% on Wednesday.
2. Jobless claims, new home sales due
In a week of growing fears about an economic slowdown, there may be more attention than usual on the week’s jobless claims data.
The expected picture is for another marginal improvement in the labor market, with initial jobless claims falling to 840,000 from 860,000 a week earlier, and continuing jobless claims (which come with a one-week time lag) having fallen to 12.30 million from 12.628 million a week earlier.
There will also be eyes on new home sales data, which are expected to confirm the ongoing strength of the housing market, while the Kansas City Fed business survey will be checked to see if it’s closer to the (upbeat) Richmond Fed survey earlier this week, or the (downbeat) IHSMarkit Purchasing Managers Index that was released on Wednesday.
3. Dollar weighs on commodities again
The dollar continued what many still believe to be an upward correction in an extensive bear trend, as risk aversion and the lack of any imminent further loosening of Federal Reserve policy both supported the greenback.
By 6:40 AM ET, the dollar index that tracks it against six developed-market currencies was at 94.523, just off its intraday high of 94.608, which represented a fresh two-month high. the euro drifted lower after an uneventful "TLTRO" refinancing operation from the European Central Bank. The dollar also hit another all-time high against the Turkish lira.
The dollar’s strength is continuing to put downward pressure on commodity prices, with U.S. crude oil prices still stuck below $40 a barrel and gold futures down 0.6% at $1,856.90, the latter having also posted a new two-month low earlier.
Silver futures were down 3.6% at $22.28 an ounce, while copper fell 1.3% to $2.95 a pound. Those who haven’t had enough of the Powell/Mnuchin show on Capitol Hill can tune in again from 10 AM, while the Chicago Fed’s Charles Evans is due to speak at 1 PM and New York Fed President John Williams takes the rostrum at 2 PM.
4. This is fine
President Donald Trump refused to commit to a peaceful transition of power following the election in November, arguing again – without presenting any evidence – that the widespread use of mail-in votes will result in electoral fraud.
The likely prospect of Trump issuing legal challenges to voting results in states that go against him in November has added further venom to the debate around his haste to fill the Supreme Court seat left vacant by the death of Ruth Bader Ginsburg at the weekend. Trump said on Wednesday that he wants nine justices on the Supreme Court before the election because he thinks it will end up deciding the winner.
Meanwhile in Louisville, Kentucky, protestors shot two police officers in unrest after a grand jury chose not to indict any of those involved in the shooting of health worker Breonna Taylor. The decision also triggered violent protests elsewhere, with Portland, Ore., witnessing yet more rioting.
5. France tightens restrictions as business confidence improves
European business sentiment continues to improve, but for how much longer.
Confidence surveys released for both France and Germany both pointed to an ongoing recovery especially in manufacturing, with the closely watched Ifo Business Climate index rising to 93.4 from 92.5. The French business confidence index meanwhile rose to 96 from 92.
Both figures were the best since March, but Germany’s fell short of expectations.
The French index bested forecasts, but came against the backdrop of fresh measures announced by the government to stop the spread of the Covid-19 virus. It’s the third European country this week to do so, following the U.K. and Belgium. U.K. treasury chief Rishi Sunak is due to outline fresh government spending to support the labor market later.