December S&P 500 futures (ESZ22) are trending down -0.30% this morning after three major US benchmark indices closed mixed on Friday as the November payrolls report fueled expectations the Federal Reserve would maintain its path of interest rate hikes to tame inflation. The S&P 500 and the NASDAQ Composite indexes were weighed down primarily by losses in the Oil & Gas, Technology, and Utilities sectors, while the Dow closed in the green mainly due to gains in the Basic Materials, Consumer Goods, and Industrials sectors.

The U.S. Labor Department’s report showed that nonfarm payrolls rose by 263,000 jobs last month, above economists' expectations of 200,000 jobs. In addition, average hourly earnings increased more than expected to 0.6% m/m, up from 0.5% m/m in October, bolstering inflation fears. At the same time, the U.S. unemployment rate remained steady at 3.7%.

“Wage growth has been in an uptrend since August. We will have to see that trend reverse for the Fed to be comfortable with a pause. Until then, they’ll continue to taper towards a pause,” said Brian Jacobsen, senior investment strategist at Allspring Global Investment in Menomonee Falls, Wisconsin.

After the payrolls report, U.S. rate futures have priced in an 81.8% chance of a 50 basis point rate increase and an 18.2% chance of a 75 basis point hike at December's monetary policy meeting.  

Chicago Federal Reserve Bank President Charles Evans said on Friday that the Fed would probably reach a slightly higher peak funds rate. Evans also added that the central bank would likely slow the rate hike pace from recent 75-basis-point increases.

In the coming week, U.S. PPI data for November will be the main highlight as investors look for further clues about how hawkish the central bank may be after four successive jumbo rate hikes. In addition, market participants will be eyeing a spate of economic data, including Exports, Imports, Nonfarm Productivity (preliminary), Crude Oil Inventories, Initial Jobless Claims, Core PPI, Michigan Consumer Sentiment (preliminary), and Michigan Consumer Expectations (preliminary).  

Today, all eyes are focused on the U.S. ISM Non-Manufacturing PMI data in a couple of hours. Economists, on average, forecast that November ISM Non-Manufacturing PMI will stand at 53.3, compared to the previous value of 54.4.

Also, investors are likely to focus on the U.S. Factory Orders data, which was at +0.3% m/m in September. Economists foresee the new figure to be +0.7% m/m.

U.S. S&P Global Composite PMI data will come in today. Economists expect November's figure to be 46.3, compared to the previous number of 48.2.

U.S. Services PMI data will be reported today as well. Economists foresee this figure to come in at 46.1 in November, compared to 47.8 in October.

In the bond markets, United States 10-Year rates are at 3.515%, up +0.35%.

The Euro Stoxx 50 futures are down -0.20% this morning as investors digested some relaxation of anti-COVID measures in China and a spate of important regional economic data. ECB President Christine Lagarde is to make two appearances this week. Investors will be looking for hints of a 50-basis point rate increase after data showed that Eurozone inflation fell more than expected in November. However, the ECB is widely expected to deliver another 75-basis point interest rate hike at its policy meeting on December 15th as inflation stands well above its 2% target.

Spain's Services PMI, Italy's Services PMI, France's Services PMI, Germany's Services PMI, Eurozone's S&P Global Composite PMI, Eurozone's Services PMI, U.K. Composite PMI,  U.K. Services PMI, and Eurozone's Retail Sales data were released today.

The Spanish November Services PMI stood at 51.2, stronger than expectations of 50.5.

The Italian November Services PMI came in at 49.5, stronger than expectations of 48.3.

The French November Services PMI was 49.3, weaker than expectations of 49.4.

The German November Services PMI stood at 46.1, weaker than expectations of 46.4.

Eurozone November S&P Global Composite PMI has been reported at 47.8, in line with expectations.

Eurozone November Services PMI was at 48.5, weaker than expectations of 48.6.

U.K. November Composite PMI came in at 48.2, weaker than expectations of 48.3.

U.K. November Services PMI stood at 48.8, in line with expectations.

Eurozone October Retail Sales data has been reported at -1.8% m/m and -2.7% y/y, weaker than expectations of -1.7% m/m and -2.6% y/y.

Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.76%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +0.15%.

China’s Shanghai Composite today closed higher after the government scaled back COVID restrictions in more cities. Several cities in China, including Beijing and Shanghai, eased some movement restrictions and testing mandates over the weekend amid rising public discontent with the country’s severe zero-COVID strategy. Also, reports suggest that China plans to ease more anti-COVID measures. However, analysts said COVID cases are likely to continue to increase, pressuring economic activity.

“While the easing of some restrictions does not equate to a wholesale shift away from the dynamic COVID zero strategy just yet, it is further evidence of a shifting approach, and financial markets look to be firmly focussed on the longer-term outlook over the near-term hit to activity as virus cases look set to continue,” said Taylor Nugent, an economist at NAB.

At the same time, Japan’s Nikkei 225 Stock Index closed slightly higher after data showed the country’s business activity shrank substantially in November. The index's upward momentum was fueled by gains in the Food, Gas & Water, and Finance & Investment sectors. The Nikkei Volatility, which takes into account the implied volatility of Nikkei 225 options, closed up 5.57% to 19.89.

Pre-Market U.S. Stock Movers

TherapeuticsMD Inc (TXMD) jumped over +6% in pre-market trading after the company announced that it had entered into agreements to license its products to an affiliate of Mayne Pharma for commercialization in the United States.

Iovance Biotherapeutics Inc (IOVA) climbed about +11% in pre-market trading, extending Friday's gains after the company's director Wayne Rothbaum bought $65M worth of shares.

Imperial Petroleum Inc (IMPP) slid more than -1% in pre-market trading after the company filed a $500M mixed securities shelf.

Clovis Oncology Inc (CLVS) plunged over -18% in pre-market trading on the news about near-term bankruptcy after the company elected not to make the interest payment regarding its 1.25% Convertible Senior Notes due 2025.

United Therapeutics Corporation (UTHR) dropped about -1% in pre-market trading after Goldman Sachs initiated coverage of the stock with a sell rating.

Starbucks Corporation (SBUX) slid over -1% in pre-market trading after Deutsche Bank downgraded the stock to hold from buy.

You can see more pre-market stock movershere

Today’s U.S. Earnings Spotlight: Monday - December 5th

Siemens Gamesa ADR (GCTAY), Gitlab (GTLB), Science Applications (SAIC), Coupa Software (COUP), GMS Inc (GMS), Eaton Vance Tax Managed Diversified (ETY), C3 Ai (AI), Zuora (ZUO), IDT (IDT), Domo (DOMO), Mitek (MITK), Veru (VERU), Oramed (ORMP), Powell Industries (POWL), Mesabi Trust (MSB), Joann (JOAN), DLH Holdings (DLHC), Avaya (AVYA).

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