Morning Minutes

Stocks Pop On ADP Payrolls; Oil Rallies Ahead of OPEC+ Meeting



US index futures have clawed back nearly all of their overnight losses and jumped in the last few minutes on a better than expected ADP private sector payrolls report. The headline number showed a gain of 692K which was better than the 600K increase the street had expected. Investors appear to be discounting the downward revision of May payroll increases to 886K from 978K. This sets the stage for Friday’s US Nonfarm Payrolls report where an increase of 690K is widely expected.

Monthly PMI reports have also started off on a positive note with China reporting better than expected Manufacturing (50.9 vs street 50.8) and Non-Manufacturing PMI (53.5 vs street 52.7). US Chicago PMI is due at 9:45 am EDT today (street 70.0 vs previous 75.2) with the ISM Manufacturing PMI report due tomorrow at 10:00 am EDT (street 61.0 vs previous 61.2).

Ahead of tomorrow’s Canada Day Holiday, the country reported a slight drop of 0.3% in April GDP which was significantly less than the 0.8% drop the street had feared due to the imposition of spring lockdowns. Friday morning brings Canadian manufacturing PMI which was 57.0 last month, along with the monthly trade balance report.

WTI crude oil is up 1.5% today trading above $74.00/bbl after getting a boost from an 8.1 mmbbl drawdown in API oil inventories announced last night. Natural gas is up 2.6% as temperatures remain high across North America boosting cooling demand. Gasoline is up 0.3% as we head into a big summer travel weekend, particularly in the US and the parts of Canada which have fully reopened. Oil may remain active through tomorrow’s OPEC+ meeting where the cartel and its allies are expected to debate whether to continue restoring supply to the market, and if so, by how much and how quickly after the current arrangement wraps up in July.

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Colin Cieszynski, Chief Market Strategist

Colin Cieszynski, CFA, CMT
Chief Market Strategist
+1 (647) 282-4428

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