S&P 500 broad market index futures gained 0.84% to 6,513 this week after
touching a new all-time high of 6,521 points. Market
attention is firmly fixed on the upcoming U.S. labour market report for August,
a release seen as pivotal in shaping the Federal Reserve’s stance at its
meeting in just ten days. A
weaker-than-expected report would all but confirm 25 basis point interest rates cut, likely accompanied
by dovish commentary that could leave the door open for another cut in October.
In such a scenario, the S&P 500 would have scope to
extend its rally.
If, however, the data prove stronger than
expected, the focus will quickly shift to next Thursday’s inflation release.
Only the combination of jobs and inflation will allow investors to gauge the
Fed’s tone with confidence. That could range from neutral to slightly hawkish,
a mix that would raise the risk of a correction in the equity market. For now,
consensus points to a softer jobs report, with Nonfarm Payrolls expected at
78,000 and unemployment edging up to 4.3% from 4.2%. The latest JOLTS survey for July showed job openings at their lowest level since
early 2021, while ADP employment data revealed just 54,000 new jobs in August,
reinforcing the perception of a cooling labour market.
Still, expectations of a very weak print may
prove excessive. A more plausible range could be 78,000 to 95,000, and the
modest rise in initial jobless claims does not strongly support a higher unemployment
rate. Complicating the outlook is the recent leadership change at the Bureau of
Labor Statistics, where a new Trump appointee is now in charge. With the
administration openly advocating for lower rates, the possibility of a
politically influenced “cooler” report cannot be dismissed.
Positioning shows large investors are leaning
bullish, with $4.4 billion flowing into the SPDR S&P 500 ETF Trust (SPY)
this week after significant prior outflows. This reduces the likelihood of an
imminent correction from the 6,500–6,600 range, though seasonal September risks
and Friday’s data leave room for volatility. Technically, the index has
achieved its primary 6,500–6,600 target, with immediate resistance at
6,510–6,530. A breakout would open the way toward 6,610–6,630, from where the
market will decide whether to push toward the extreme 6,850–6,950 zone or
retreat into correction. Near-term support sits at 6,400–6,420.
In energy markets, Brent crude remains under
pressure, trading at $67.32 within the $66–$68 support zone. The backdrop is
unfavourable as OPEC+ raised output by 547,000 barrels per day in September and
could discuss further increases of up to 1.66 million bpd at its September 7
meeting. Resistance is at $76–$78, with the next support at $56–$58.
Gold has broken decisively higher, surpassing
$3,430–$3,450 resistance to reach a fresh record at $3,578. Prices are now
consolidating at $3,550 within the $3,500–$3,600 target area. A sustained move
above $3,530–$3,550 could extend the rally toward $3,630–$3,650.
The U.S. Dollar has
surrendered early-week gains, leaving the EURUSD back at the
1.17000 resistance. A confirmed break higher would unlock
the path toward 1.19500–1.20500, though the catalyst is likely to come from
Friday’s jobs report.