Service PMI reports have been rolling out from around the world tonight and this morning and for the most part, the numbers have been better than expected and better than the manufacturing surveys which were released earlier this week. The UK and China did particularly well, while Continental Europe, Japan and Australia remain stuck below 50 in contraction territory. US S&P Global Service PMI (street 51.3) is due at 9:45 am EST.
Asia Pacific markets continued to struggle overnight coming off of yesterday’s US index losses of 0.7%-1.2%, but stocks appear to be stabilizing this morning. In Europe, the Dax is up 0.1% and the FTSE is up 0.2%. US index futures are mixed between a 0.25% gain for Dow Futures and a 0.25% loss for NASDAQ futures.
US ADP payrolls (164K vs street 115K) and weekly US initial jobless claims (202K vs street 216K) both came in much stronger than expected, indicating a robust US job market. Tomorrow morning, US nonfarm payrolls (street 170K vs previous 199K), and Canada jobs (street 13K vs previous 25K) are due. The wage inflation components US average hourly earnings (previous 4.0%), and Canada average hourly wages (previous 5.0%) may also attract scrutiny from investors.
Energy contracts are rallying this morning with Crude Oil up 1.1% and Natural Gas up 4.3%. Investors have responded positively to a big 7.4 mmbbl drawdown in US weekly API inventories which were released last night. Energy markets may remain active through the day with weekly EIA natural gas storage (street -40BCF) due at 10:30 am EST, followed by weekly DOE oil inventories (street -3.7 mmbbls) at 11:00 am. The first earnings report of the year has been a mixed bag. Drugstore chain Walgreens Boots beat the street on earnings ($0.66 vs street $0.62) but slashed its dividend nearly in half ($0.25 vs previous $0.48). Management blamed the dividend cut on a need to strengthen its balance sheet and cash position, an ominous sign about the state of the company’s finances. Still, Walgreens shares are up 2.4% in premarket trading this morning after falling 4.0% yesterday.