For Immediate Release
Chicago, IL – October 2, 2018 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Acelor Mittal (MT - Free Report) , Archer Daniels Midland (ADM - Free Report) and Nucor (NUE - Free Report) .
Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.
Here are highlights from Monday’s Analyst Blog:
All About the Jobs Report: Global Week Ahead
ThisGlobal Week Ahead should key largely on a looming U.S. jobs report. Friday’s U.S. nonfarm payroll release for September may show us two things:
· One, expect wage growth to slow a little to about +2.8% y/y. Don’t read much into that.
· Second, look for decent September hiring activity despite Hurricane Florence’s landfall. Hurricane job effects are likely to be found next month, given the data collection period.
An updated NAFTA trade deal announced late on Sunday between Canada, Mexico and the USA got global stock markets lifted. Tesla got a settlement done with the SEC. And GE hired a new CEO who used to run Danaher.
It’s a positive start to the week ahead.
Next I pulled together five big Reuters in London themes. These are likely to dominate thinking of investors and traders alike in the coming week.
I have them in order of importance for equities.
(1) U.S. Nonfarm Jobs Numbers Arrive Friday
After the U.S. economy added 201,000 jobs in August, another 188,000 were likely created in September, thanks to a broad-based economic expansion fueled by tax cuts and consumer and business spending.
Next Friday’s update on the U.S. employment situation should show unemployment rates dropping back to 18-year lows of 3.8 percent.
But the headline numbers hide some interesting anomalies. For instance, one area of employment recovery that has lagged is the participation rate, which is stuck near a four-decade low. As large numbers of long-term unemployed Americans opt out of the workforce, the participation rate for Americans over the age of 16 has not topped 63 percent in more than four years. It was last measured at 62.7 percent.
But a critical slice of the workforce is growing again – so-called “prime-age workers” between 25 and 54 years old. That measure has regained the 82 percent level for the first time since 2010.
The male-female mix is changing too. Before the financial crisis, the prime-age male participation rate was never below 90 percent. Today it is 88.8 percent. But the prime-age female rate is up and at 75.3 percent is just two percentage points below record highs from 2000.
(2) The Fourth Quarter Begins to Tick for Financial Markets
The fourth quarter gets underway on Monday, the time of year when investors hope things quieted down and allow them to lock in the profits they’ve accrued throughout the year. That’s the theory, but in actual fact they’ll be acutely aware of the potential for turbulence.
Trade wars, emerging markets, liquidity, U.S. interest rates, the surging dollar — they are all real and present dangers. On top of that, Italian politics could get messier, throwing the Eurozone’s third largest economy (and largest debtor) into deeper financial uncertainty. That seems to be playing out already. And as of next week, the European Central Bank will cut back bond purchases and end them altogether by end-year.
It was a mixed Q3 for investors. Standouts were the S&P 500 and developed equities in general, lifting global stocks 4 percent. Not bad, but if you have been on the right side of oil since the start of the year you’ll be up a juicy 22 percent. Cash that in now, or bet on the rally continuing closer toward $100 a barrel?
Conversely, investors could be tempted back into Q3’s poorest performing markets: U.S. Treasuries, emerging markets, Chinese equities, copper and gold.
(3) The U.K.’s Conservative Party Kicks Off Annual Conference
A brief respite from market-moving Brexit headlines will almost certainly end next week for sterling traders, as Britain’s ruling Conservative Party kicks off its annual conference. Running from Sunday to Wednesday, the widely watched event could prove a make-or-break moment for Prime Minister Theresa May.
May is seeking to heal divisions within her party over her proposals for a trade agreement with the European Union.
May warned last week that talks with the EU had reached an impasse, sending sterling to its biggest one-day loss since 2016. But the pound has since limped higher, with the rhetoric from both London and Brussels more accommodating, May ruling out a snap election and traders confident a last-minute deal is within reach before Britain leaves on March 29, 2019.
Investors will be watching to see whether May can face down hardline Brexiteers in her party and form a united front before the final stages of EU-UK talks.
Sterling is trading near $1.31, with the prospect for a major rally or slide contingent on clinching a Brexit deal.
(4) The Paris Auto Show
The Paris auto show, or Mondial de l’Automobile, kicks off on Tuesday.
But the high-profile biennial gathering where carmakers show off their newest innovations will take place this year under a cloud — that of tariff threats and pressure to adapt to an electric future.
For all the polish and pizzazz, there are dents under the bonnet. The Paris show will not feature Volkswagen’s biggest brand, VW, likely for cost-cutting reasons. Some other big names — Ford, PSA Group’s Opel, Nissan Motor, Mazda and Volvo — will also be sitting this one out.
A profit warning from BMW has highlighted industry challenges. The company blamed trade wars and price competition following new emissions rules for the dent in its profits.
Threats of trade levies have also hit share valuations in the auto sector globally. This should remain the case until Washington decides on import tariffs — possibly in October.
(5) The Central Bank of India Meets
India has moved swiftly from being a favored and sheltered safe-haven to becoming Asia’s worst performing market.
One of its major shadow banks is in distress, money markets are in turmoil, oil prices have topped $80-a-barrel and the rupee is hitting record lows as it adds to this year’s 12% loss. But only a small majority of economists expects the Reserve Bank of India to raise rates on Oct 5.
All those problems will make the RBI careful about which battles it wants to pick. After all inflation is subdued, stock markets are well off record highs and bonds have sold off.
The RBI has been keeping a tight rein on short-term cash conditions with an eye on the currency and inflation, the latter being its prime mandate. Yet, with national elections due next year, the RBI can’t afford to let the funding crunches from India’s massive non-banking sector hit a fast-growing economy either.
Top Zacks Rank Stocks—
Acelor Mittal: Nice to see a #1 Zacks Rank here. It’s a huge global producer of steel. This is a Zacks A for Value and a B for Growth right now, too. Shares price at $31. However, share price momentum is negative this year.
Archer Daniels Midland:This Agricultural Operations conglomerate based in the USA is a #1 Zacks Rank stock now. There’s an A for Value and an A for Growth. Shares price at $51. A nice momentum pattern is on here.
Nucor: Another steel producer hits our #1 list this week. This one is an A for Value and an A for Growth, too. Shares price at $63 and change. Trading in the stock is range bound this year.
Key Global Macro—
To start the week, Eurozone unemployment came in at 8.1% after 8.2% in a prior reading. That was welcome news indeed. Germany is lowest at 3.4%. Greece is highest at 19.1%.
Monday has a number of PMI readings out across the globe.
On Friday, the key September U.S. non-farm payroll data hits.
On Monday, India’s manufacturing PMI came in at 52.2. This was stronger than the prior at 51.7 and better than the forecast at 51.5.
The German manufacturing PMI came in at 53.7, the same as the prior reading.
The Eurozone manufacturing PMI came in at 53.2, the same as the prior reading.
On Tuesday, the RBA sets the overnight rate in Australia. No change from 1.5% is what’s expected.
The Eurozone PPI comes out. It has been +4.0% y/y.
On Wednesday, the composite PMI for Japan comes out. It has been 51.5.
The Eurozone composite PMI comes out. It has been 54.2.
The U.S. ADP employment survey lands. Look for +180K, up from +163K in the prior reading. That makes sense.
On Thursday, the RBI (Reserve Bank of India) looks to move the repo rate from 6.5% to 6.75%. That’s one of their key monetary policy rates.
On Friday, the big trading catalyst for the week arrives. U.S. nonfarm payroll should be +180K, down from +204K in a prior reading.
The unemployment rate should fall from 3.9% to 3.8%.
Avg. hourly earnings should climb +0.2% m/m compared to +0.4% m/m prior. The latter data is likely the most important.
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