Wall St inches higher ahead of monthly payrolls data

The ASX is set for a downbeat open after US stocks eked out a gain ahead of tonight’s closely watched jobs data.

The US share market started September with slight falls as traders waited for the closely watched payrolls data. Picture: AP Photo/Richard Drew.

Energy and financial shares fell overnight (AEST), but major US stock indexes were little changed as investors looked ahead to tonight’s jobs report.

European shares closed mixed, with Deutsche Bank gaining after reports of merger talks, although the main indices in London and Frankfurt declined, with Paris edging higher.

The Australian share market is set for modest falls this morning, with ASX futures 12 points lower at 6.28am (AEST).

The August US jobs data will be a factor for Federal Reserve officials as they contemplate further interest-rate increases.

The previous two jobs readings have been strong, but disappointing economic growth in the first half of the year and turmoil in overseas markets have kept the central bank on hold since it last raised rates in December.

The Dow Jones Industrial Average rose 18 points, or 0.1 per cent, to 18419. The S&P 500 was flat, and the Nasdaq Composite gained 0.3 per cent.

US crude oil fell 3.5 per cent to $US43.16 a barrel after losing 3.6 per cent in the previous session. US crude inventories exceeded market forecasts on Wednesday, adding to concerns about oversupply in the market. The energy sector of the S&P 500 declined 0.3 per cent Thursday and is down 1.4 per cent so far this week.

Bank shares, which have risen recently on heightened expectations the Fed was on track to raise interest rates this year, fell Thursday. Financial shares in the S&P 500 lost 0.4 per cent after finishing August as the best-performing sector of the month.

Bank of America declined 1 per cent, and Citigroup lost 0.8 per cent.

“The fever pitch of buying financials is being wound down today,” said R.J. Grant, director of equity trading at investment bank Keefe, Bruyette & Wood.

Weak economic readings like Thursday’s US manufacturing data could weigh on the Fed’s interest-rate plans, he said.

The Institute for Supply Management said its index of manufacturing activity decreased to 49.4 in August from 52.6 in July. The August reading was the first below 50 since February and the lowest since January.

Markets seem to want a middle-of-the-road figure on the jobs report, said Alexis Gray, economist at Vanguard. “They don’t want significantly higher interest rates, but they also don’t want a bad US economy,” she said.

Economists project the economy added 180,000 jobs last month and the unemployment rate dropped to 4.8 per cent from 4.9 per cent in July.

Earlier, data showed British manufacturing rebounded sharply in August after a steep decline, in the largest month-to-month jump in a quarter-century.

The pound rose 1 per cent against the dollar to $US1.3271.

IHS Markit said firms reported a revival in sales and orders in August after the initial shock from the UK referendum subsided, while exports benefited from a steep decline in the pound.

London’s FTSE 100 index fell 0.5 per cent, however, as the resurgent pound hurt shares of exporters and some investors perceived a diminished chance of further stimulus from the UK central bank. The Stoxx Europe 600 rose less than 0.1 per cent.

China’s official manufacturing purchasing managers’ index rose to its highest level since 2014, while a separate private gauge of manufacturing activity dropped slightly in August.

The Hang Seng gained 0.8 per cent and Japan’s Nikkei Stock Average rose 0.2 per cent after the data was released, although the Shanghai Composite Index closed 0.7 per cent lower.

The yield on the 10-year Treasury note was at 1.570 per cent, compared with 1.568 per cent Wednesday. Gold for September delivery rose 0.4 per cent to $US1,312.20 an ounce.

Dow Jones