Clarida, Chinese Restrictions, Bank of England - What's Moving Markets

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Clarida, Chinese Restrictions, Bank of England - What's Moving Markets

By Peter Nurse  

Investing.com -- The U.S. looks set to ask foreign travellers to be fully vaccinated as China tightens travel restrictions to combat its latest Covid outbreak. Influential Fed member Richard Clarida sparks a tightening debate ahead of the release of the latest U.S. labor data, while the Bank of England holds its latest policy-setting meeting. Wall Street is set to open higher, but Uber (NYSE: UBER ), Roku (NASDAQ: ROKU ) and Etsy (NASDAQ: ETSY ) are weaker after results. Here's what you need to know in financial markets on Thursday, 5th August.

1. U.S. visitors to require vaccines; China tightens restrictions

The U.S. looks set to phase in a gradual re-opening for international visitors, eventually requiring all foreign travellers to be fully vaccinated before they are allowed entry.

The country has seen a rise in Covid-19 cases, particularly among the unvaccinated, amid the spread of the delta variant. Florida is at the heart of the latest outbreak, with the state registering 11,515 hospitalized patients on Tuesday, breaking last year’s record for the third straight day and up from just 1,000 in mid-June.

Elsewhere, China tightened travel restrictions in order to try and curtail the country’s worst Covid-19 outbreak in months, cancelling some domestic flights and suspending a number of rail lines.

On the flip side, the U.K. announced Thursday that fully-vaccinated passengers returning from France will no longer need to quarantine after Sunday, helping boost the travel industry which has been hit hard by the pandemic.

2. Fed's Clarida sparks tightening debate; Initial claims due

Richard Clarida sparked more debate about when the Federal Reserve will start reigning in its extraordinary monetary stimulus saying Wednesday that he’d be in favor of the Fed making an announcement later this year that it will begin to scale back its bond purchases.

He also noted that the “necessary conditions for raising the target range for the federal funds rate will have been met by year-end 2022.” 

Clarida, seen as one of the most influential members of the Federal Open Market Committee, was careful to add that growth must remain strong for these views to remain valid.

With this in mind, investors will be keeping a careful eye on the release of the weekly initial jobless claims data, at 8:30 AM ET (1230 GMT), ahead of Friday’s crucial nonfarm payrolls number.

The payrolls processor ADP reported that U.S. companies added far fewer jobs than expected in July, but the claims data is expected to show a gradual improvement, with 384,000 people seen seeking benefits, down from 400,000 last week.

3. Stocks set to open higher; Uber, Roku and Etsy under pressure

U.S. stocks are set to open marginally higher, with recent corporate earnings and economic data having been generally strong.

By 5:30 AM ET, Dow Jones futures were up 80 points, 0.2%, while S&P 500 futures were up 9 points, 0.2%, and Nasdaq 100 futures edged 22 points, 0.2%.

In terms of corporate earnings, Uber will be in the spotlight, with the ride-hailing firm’s stock lower premarket, after it reported widening losses after lifting drivers’ pay to seek their return to its platform.

Roku stock also slumped after revealing a dramatic drop in streaming viewers, while Etsy stock dropped sharply premarket after the e-commerce company provided third-quarter guidance that suggested a slowdown in sales.

Robinhood (NASDAQ: HOOD ) stock is also likely to see volatile trading after gaining over 50% on Wednesday, making up for lost time after its soft debut on Nasdaq last week.

4. Bank of England meets

The Bank of England meets later Thursday and could take a step closer to tightening monetary policy. 

The central bank is widely expected to keep interest rates on hold at 0.1%, but there is likely to be dissent within the nine-member Monetary Policy Committee over whether to continue its quantitative easing program at the current 895-billion-pound level.

The BoE is expected to be among the first of the world's main central banks to begin the process of weaning its economy off stimulus support, and policymakers Michael Saunders and Dave Ramsden have offered a relatively hawkish tone of late.

That said, the risks attached to the delta variant of the Covid-19 virus and the upcoming end of the employment furlough scheme in September may well stay the hand of the other MPC members.

5. Oil prices rebound on raised Middle East tensions

Oil prices gained Thursday, rebounding after recent losses amid heightened Middle East tensions, increasing the risk premium.

Israeli aircraft fired missiles at what the country's military said were rocket launch sites in south Lebanon early on Thursday, the day after the temporary seizure of the Asphalt Princess, a UAE-flagged tanker, in the Gulf of Oman by Iranians.

However, gains are limited after China tightened travel restrictions (see above) to try and contain its latest Covid-19 outbreak, increasing worries that fuel consumption will be hit in the world’s second-largest consumer.

Additionally, crude oil supply data from the U.S. Energy Information Administration on Wednesday showed a build of 3.64 million barrels last week, something of a surprise after the industry body, the American Petroleum Institute , reported a draw of 879,000 barrels on Tuesday.

By 5:15 AM ET, U.S. crude futures were up 0.8% at $68.69 a barrel, while Brent futures were up 0.5% at $70.74 a barrel. Both contracts have lost around 4% over the previous two sessions.

 

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