Image Source: Pixabay
 

Dow Jones slips as the debt bill passes the House vote, US jobs data beats forecasts and the Fed paints a mixed picture over the future path of rate hikes.

US futures

Dow futures -0.35% at 32820

S&P futures -0.01% at 4181

Nasdaq futures -0.05% at 14256

In Europe

FTSE +0.28% at 7450

Dax +0.65% at 15753

• The debt ceiling bill passes the vote in the House
• ADP payrolls & jobless claims beat forecasts
• EURUSD falls as EZ inflation cools
• Oil holds steady after 3-days of losses
   

Debt ceiling bill passes to the Senate

US stocks are heading for a modestly lower open as the debt ceiling bill passes the House of Representatives, fed speakers hint to a pause in June, but U.S. jobs data comes in stronger than expected.

The risks of the US debt default are fading after the House of Representatives passed the debt ceiling bill, with majority support from both Democrats and Republicans. The bill will now head to the Senate, which must enact the measure before a deadline on Monday when the US government is expected to run at money to pay its bills.

With the debt ceiling bill advancing as expected, attention is back on US economic data, which is proving to be stronger than expected. US ADP payrolls fell to 276k, from 296k. But this was still well ahead of forecasts of 170k. US jobless claims were also better than expected at 232k, missing forecasts of 235k. The data comes ahead of tomorrow's nonfarm payroll. Strong job data tomorrow could fuel Fed rate cut bets.

Meanwhile, Federal Reserve speakers have been raising doubts over whether The US central bank will raise interest rates again in June. Two officials, Philip Jefferson and Patrick Harker on Wednesday said that the Fed could skip a rate hike at the June meeting in order to see more data before potentially hiking again in July. The comments changed the market outlook on the probability of a June rate hike, with the odds of a pause rising to 68% against the 30% probability of a rate hike.

The mixed messages from the Fed highlight the fact that decisions are becoming less clear-cut. This is likely to be the case for the coming meetings.
 

Corporate news

Macy’s falls 10% on the day the department store missed the quarterly revenue forecast and downwardly revised its full-year outlook. The store is feeling a hit from consumers limiting discretionary spending owing to high inflation.

Salesforce falls 6% after the cloud-based software company posted an 11% jump in quarterly revenue which was its lowest pace in 13 years and as costs soared.
 

Dow Jones outlook – technical analysis

The Dow found the support of the 200 sma again yesterday, but the trend remains bearish. Sellers need to break below the 200 sma at 32765 to extend the bearish trend to support at 32700 the multi-month rising trendline and 32570 the May low. A break below here creates a lower low. Buyers need to rise above 33300 the weekly high, to bring 33665, last week’s high into play and 33950 the falling trend line resistance.

(Click on image to enlarge)

FX markets – USD holds steady, GBP rises

The USD is holding steady for a second day as Fed speakers give mixed messages and as US jobs data points to a resilient labor market.

EUR/USD is falling after eurozone inflation cooled by more than expected to 6.1% YoY from 7% in April. Expectations had been for 6.3%. With inflation cooling at a faster pace, pressure is easing on the ECB for aggressive rate hikes.

GBP/USD is rising after UK manufacturing PMI data was upwardly revised to 47.1 from 46.9 in the preliminary May reading. The pound is broadly supported by the idea that the BoE still has plenty of work to do to bring inflation lower.

EUR/USD -0.13% at 1.0730

GBP/USD +0.01% at 1.2365
 

Oil holds steady after 3-days of losses

Oil prices are holding steady after 3-days of losses as investors weigh up higher US inventory data against optimism surrounding the US debt ceiling bill.

The risk of a US debt default is fading as the debt ceiling bill clears the House of Representatives and heads to the Senate for a vote. As the risks of the US running out of money fade, the outlook for oil demand improves.

However, on the supply side, rising oil inventories are offsetting the demand optimism. According to the API, oil inventories rose by 5.2 million barrels last week. EIA data is due later today.

Looking ahead, attention is turning to the OPEC+ meeting this weekend. Members have been sending mixed signals. After surprising in the April meeting with an output cut, the group may well adopt a wait-and-see approach to this meeting.

WTI crude trades -0.4% at $67.62

Brent trades at -0.3% at $72.27

More By This Author:

Two Trades To Watch: EUR/USD, Oil - Thursday, June 1
Two Trades To Watch: DAX, USD/JPY - Wednesday, May 31
S&P 500 Outlook: Stocks Rise On Debt Ceiling Deal