U.S. equity futures traded mixed ahead of the July nonfarm payrolls report, with traders awaiting labor market signals to gauge the Federal Reserve’s next monetary policy steps. Nasdaq 100 contracts outperformed, while the Dow Jones lagged, as ongoing geopolitical issues lifted oil prices and kept investor sentiment cautious.
At 4:29 p.m. (Bangkok Time), Nasdaq 100 futures gained 0.47%, buoying broad tech sentiment, while S&P 500 futures edged 0.14% higher. In contrast, Dow Jones Industrial Average futures slipped by 28 points, or 0.05%. Traders grew increasingly cautious with the approach of the monthly U.S. payrolls release, seen as a key determinant for possible Fed policy adjustments.
Geopolitical tensions contributed to the risk backdrop. Concerns over the reopening of the Strait of Hormuz intensified after The Guardian reported Saudi Arabia would extend military action against the Iran-aligned Houthis following attacks near its southern border. Meanwhile, the Iranian parliament considered new measures that would ban U.S. and Israeli vessels, levy penalties on certain cargo, and keep trade restrictions in place until a U.S. blockade ends.
Crude prices responded to the heightened risk environment. On Friday, West Texas Intermediate futures advanced 0.49% to $77.67 per barrel, while Brent crude, the global benchmark, increased 0.47% to $82.88.
In Thursday’s regular session, sentiment weakened broadly across equities. The Dow fell 0.85%, the S&P 500 shed 0.18%, and the Nasdaq Composite slipped 0.06%. The downturn was attributed to a jump in oil prices prompting renewed inflation concerns and speculation of a potential near-term interest rate hike by the Fed. However, the CME FedWatch Tool reflected a decreased probability of a rate increase in September, with odds for a 25-basis-point move dropping to 54.5% from 67% the previous week.
Despite Thursday’s declines, major indices remained on track for a second consecutive weekly gain. The Nasdaq looked set to post its best week since May, underpinned by a strong rebound in semiconductor stocks. The iShares Semiconductor ETF climbed more than 5% this week, helping buoy overall tech sector performance. Improved corporate earnings further strengthened investor confidence after a sharp correction last month.
Looking ahead, investor focus has turned to the July jobs numbers, expected to show limited improvement. Forecasts suggest an 83,000 increase in nonfarm payrolls and an unchanged unemployment rate of 4.2%. Market participants are set to scrutinize wage and participation figures for insight into the health of the labor market.
