US stocks gained amid soft labour-related metrics ahead of NFP - Newsquawk Asia-Pac Market Open

• US stocks closed in the green with outperformance in the Russell 2000 while T-Notes firmed across the curve with the Dollar posting marginal gains. The focus was largely on data and Fed speak ahead of NFP on Friday, in which Challenger Layoffs accelerated while the ADP National Employment print fell below analyst expectations. Initial Jobless Claims also continued to rise above analyst forecasts, although Continued Claims declined to 1.94mln, beneath forecasts. Unit Labour Cost revisions for Q2 were revised down, below forecasts, while productivity was revised up, above the consensus. Trade data saw a widening deficit, while the ISM Services PMI report beat forecasts, with prices paid and employment little changed, but business activity and new orders accelerated. Fed speak saw Williams lean dovish, noting he sees reduced upside risk to inflation from tariffs, and that balancing has moved a bit more towards the Fed's job mandate. However, he declined to comment when asked if market pricing for the September meeting is correct.
• USD was firmer despite a slew of data releases which were ultimately mixed, albeit with the job-related metrics mostly softer-than-expected including the miss on ADP Employment and a rise in Challenger Layoffs which comes ahead of Friday's Non-Farm Payrolls report, although ISM Non-Manufacturing topped forecasts. Nonetheless, the moves in the dollar were limited as attention was also on Miran’s Senate hearing and dovish comments from Fed Williams.
• Looking ahead, highlights include Japanese Household Spending, Labour Cash Earnings & Leading Index, Philippines CPI, Singapore Retail Sales, Comments from Fed's Goolsbee, Supply from Australia.

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LOOKING AHEAD

• Highlights include Japanese Household Spending, Labour Cash Earnings & Leading Index, Philippines CPI, Singapore Retail Sales, Comments from Fed's Goolsbee, Supply from Australia.
• Click for the Newsquawk Week Ahead.

US TRADE

• US stocks closed in the green with outperformance in the Russell 2000 while T-Notes firmed across the curve with the Dollar posting marginal gains. The focus was largely on data and Fed speak ahead of NFP on Friday, in which Challenger Layoffs accelerated while the ADP National Employment print fell below analyst expectations. Initial Jobless Claims also continued to rise above analyst forecasts, although Continued Claims declined to 1.94mln, beneath forecasts. Unit Labour Cost revisions for Q2 were revised down, below forecasts, while productivity was revised up, above the consensus. Trade data saw a widening deficit, while the ISM Services PMI report beat forecasts, with prices paid and employment little changed, but business activity and new orders accelerated. Fed speak saw Williams lean dovish, noting he sees reduced upside risk to inflation from tariffs, and that balancing has moved a bit more towards the Fed's job mandate. However, he declined to comment when asked if market pricing for the September meeting is correct.
• SPX +0.83% at 6,502, NDX +0.93% at 23,633, DJI +0.77% at 45,621, RUT +1.26% at 2,380.
• Click here for a detailed summary.

TARIFFS/TRADE

• Canada is reportedly still hoping for relief from US tariffs on steel, aluminium and autos, while work continues and they will have more announcements on supporting steel and aluminium sectors, according to the Industry Minister. Furthermore, Canada is seeking some common ground with the US when it comes to sectoral tariffs, while Canadian measures to support the steel and aluminium sectors will be made in the coming days.
• Mexican President Sheinbaum said Mexico is considering tariffs on imports from countries that do not have trade agreements, including China.
• Ecuador’s Foreign Minister said they are working towards a trade agreement with the US after meeting with US Secretary of State Rubio, while Rubio noted they have made much progress on tariff negotiations and hopes to have a positive announcement soon.
• Japan and the US are in the final stage of talks to implement lower tariffs on Japanese auto imports, according to Japanese sources cited by Reuters. Furthermore, the reductions could take effect within 10-14 days after the US presidential executive order, while Japan and the US are to issue a joint statement on the July trade accord and MoU on rules for Japan's investment package.

NOTABLE HEADLINES

• Fed’s Williams (voter) reiterated that he expects gradual interest rate cuts over time if the economy meets his forecasts. Williams also commented that they are always watching broader trends of data, not one report, and sees a gradual cooling in the job market. Williams sees reduced upside risk to inflation from tariffs and said it may take longer to gauge the full impact of tariffs in inflation data, while he added it is good to see tariffs not driving persistent inflation thus far, and he declined to comment if the market September rate cut view is correct.
• Fed Governor nominee Miran said the Fed does not control the long-end of the curve, and if confirmed, he will push back on the Fed straying from the mandate, while he declined to say he would advise Trump not to fire Fed members. Furthermore, Miran said no one in the Trump administration has asked him to lower interest rates and said he has not spoken with anyone at the White House about a possible nomination for a longer Fed term.
• US President Trump made a fresh plea for a ruling allowing him to oust Fed's Cook, according to Bloomberg.
• US Justice Department opened a criminal investigation into Fed's Cook and issued subpoenas as part of an inquiry into mortgage fraud, according to WSJ citing sources.

DATA RECAP

• US S&P Global Services PMI Final (Aug) 54.5 (Prev. 55.4)
• US S&P Global Composite PMI Final (Aug) 54.6 (Prev. 55.4)
• US ISM Non-Manufacturing PMI (Aug) 52.0 vs. Exp. 51.0 (Prev. 50.1)
• US ISM N-Mfg Employment Index (Aug) 46.5 (Prev. 46.4)
• US ISM N-Mfg New Orders Index (Aug) 56.0 (Prev. 50.3)
• US ISM N-Mfg Price Paid Index (Aug) 69.2 (Prev. 69.9)
• US International Trade (USD)(Jul) -78.3B vs. Exp. -75.7B (Prev. -60.2B, Rev. -59.1B)
• US Unit Labor Costs Revised (Q2) 1.0% vs. Exp. 1.2% (Prev. 1.6%)
• US Productivity Revised (Q2) 3.3% vs. Exp. 2.7% (Prev. 2.4%)
• US ADP National Employment (Aug) 54.0k vs. Exp. 65.0k (Prev. 104.0k, Rev. 106k)
• US Challenger Layoffs (Aug) 85.979k (Prev. 62.075k)
• US Initial Jobless Claims w/e 237.0k vs. Exp. 230.0k (Prev. 229.0k)
• US Continued Jobless Claims w/e 1.94M vs. Exp. 1.962M (Prev. 1.954M, Rev. 1.944M)
• Atlanta Fed Q3 GDPnow: 3.0% (prev. 3.0%)

FX

• USD was firmer despite a slew of data releases which were ultimately mixed, albeit with the job-related metrics mostly softer-than-expected including the miss on ADP Employment and a rise in Challenger Layoffs which comes ahead of Friday's Non-Farm Payrolls report, although ISM Non-Manufacturing topped forecasts. Nonetheless, the moves in the dollar were limited as attention was also on Miran’s Senate hearing and dovish comments from Fed Williams.
• EUR marginally softened but with price action kept to within a relatively tight range at the 1.1600 handle.
• GBP traded rangebound after having recently reclaimed the 1.3400 status and amid a lack of pertinent catalysts.
• JPY softened with USD/JPY gaining a firmer footing above the 148.00 level but is off intraday highs ahead of several data releases from Japan including the latest wages and household spending data.

FIXED INCOME

• T-notes caught a bid on dovish comments from Fed's Williams and mixed data ahead of NFP.

COMMODITIES

• Oil prices were lower and still weighed on by reports that suggested OPEC-8 are mulling another production hike at the meeting on Sunday.
• US EIA Weekly Crude Stocks w/e 2.415M vs. Exp. -2.031M (Prev. -2.392M).
• OPEC+ could weigh a 12-month phase-out of the cut, delegate sources told Argus, implying monthly increments of about 137k BPD and should this go ahead they expect a cautious approach, maintaining the flexibility to increase, pause, reduce or even reverse.
• Russian Deputy PM Novak said OPEC-8 are not discussing production increase now and no agenda has been set for the upcoming OPEC+ meeting yet, while he added that current market conditions and forecasts are to be considered. Novak also said the OPEC+ deal shows its effectiveness and the level of implementation of OPEC+ deal is 102% in January-August, according eInterfax.
• OPEC August Oil output +360k BPD from July to 27.84mln BPD, according to the Reuters survey.
• Qatar set October marine crude OSP at a USD 1.85 premium over Oman/Dubai and Land crude OSP was set at a USD 1.95 premium over Oman/Dubai, according to a pricing document cited by Reuters.
• Russia may extend the gasoline export ban for producers through October, according to RIA.
• Oil flows via the Druzhba pipeline to the German PCK refinery is to normalise by the end of this week following repairs, according to DPA.

GEOPOLITICAL

MIDDLE EAST

• IDF spokesperson said their forces are operating within Gaza City and currently control 40% of the city's territory, according to journalist Amichai Stein.
• White House envoy Witkoff met with Qatari officials in Paris and discussed with them efforts to reach a hostage deal that would end the war in Gaza, according to Axios' Ravid citing sources.

RUSSIA-UKRAINE

• Ukrainian President Zelensky said all parties agreed Russia rejects every peace initiative, while he noted there is an understanding on the general framework for security guarantees. It was also reported that Zelensky discussed pressure on Russia during the call with President Trump and said the US should be part of security guarantees.
• Russian Defence Ministry said Russian forces destroyed a training and launch site for long-range drones in Ukraine's Chernihiv region.
• US President Trump made it clear that he may contact Russian President Putin soon, according to Sky News Arabia citing White House sources.
• White House official said US President Trump told European leaders they must halt purchases of Russian oil and emphasised that European leaders must place economic pressure on China "for funding Russia's war efforts".
• EU's Costa said the coalition aims to bolster Ukraine's security across all domains including firepower, air defence, maritime capabilities and ground forces, while they will continue work on putting pressure on Russia via additional sanctions.
• US is to cut some security funds for European countries bordering Russia, as Washington pushes NATO allies to pay more towards their own defence, according to FT.

ASIA-PAC

NOTABLE HEADLINES

• China’s MIIT and market regulator on Thursday pledged to accelerate the enhancement of supply capabilities for next-gen equipment, promote technological breakthroughs in key 5G/6G components, chips and modules, and ramp up 6G tech research and innovation, according to Global Times.
• Chinese firms are reportedly still keen on NVIDIA (NVDA) AI chips despite government pressure not to purchase them, while NVIDIA's planned new China market chip is likely to be double the price of the H20, according to Reuters citing sources.
• China's DeepSeek is reportedly targeting AI agent release by year-end, according to Bloomberg.

EU/UK

NOTABLE HEADLINES

• BoE published a discussion paper on "enhancing the resilience of the gilt repo market" which noted the "purpose of this exploratory discussion paper (DP) is to probe the effectiveness and impact of a range of potential reforms to enhance the resilience of the gilt repo market".
• French President Macron is reportedly seeking to avoid snap legislative elections if PM Bayrou is brought down in a confidence vote, according to Bloomberg citing sources. Macron would instead seek to appoint a PM who could hold together the centrist bloc and court support from the left, while Macron has reportedly not ruled out dissolving the lower house and calling legislative elections.

DATA RECAP

• UK S&P Global Construction PMI (Aug) 45.5 (Prev. 44.3)
• German HCOB Construction PMI (Aug) 46.0 (Prev. 46.3)
• Italian HCOB Construction PMI (Aug) 47.7 (Prev. 48.3)
• French HCOB Construction PMI (Aug) 46.7 (Prev. 39.7)
• EU HCOB Construction PMI (Aug) 46.7 (Prev. 44.7)
• EU Retail Sales MM (Jul) -0.5% vs. Exp. -0.2% (Prev. 0.3%, Rev. 0.6%)
• EU Retail Sales YY (Jul) 2.2% vs. Exp. 2.4% (Prev. 3.1%, Rev. 3.5%)