S&P 500 Futures ignore energy woes to print mild gains amid US/Canada holidays

• Market sentiment dwindles amid extended holidays in the US, Canada.
• Easing hawkish Fed bets post NFP seems favoring cautious optimism despite worsening recession woes.
• US-China jitters also acts as a risk-negative catalyst but lack of market participation probes bears.
• Yields dropped after Friday’s mixed US jobs report, DXY refreshes 20-year high.

Traders struggled for clear directions during early Monday as mildly positive stock futures contradict the risk-negatives catalysts concerning Europe, China and the US. Also challenging the market movement is the Labor Day holiday in the US and Canada.

While portraying the mood, the S&P 500 Futures print 0.22% intraday gains around 3,935, consolidating recent losses around a seven-week low. However, the US Dollar Index (DXY) refreshed the 20-year high to 110.03 even as there was no major move on the bond front.

It should be noted that the US 10-year Treasury yields marked a nearly 2.0% daily loss the previous day after the US employment data disappointed the greenback bulls. However, the fears relating to the US-China tussles and energy crisis in the bloc seem to exert downside pressure on the market’s movement.

US employment data marked mixed readings as the headline Nonfarm Payrolls (NFP) rose past 300K forecast to 315K, versus 526K prior, but the Unemployment Rate rose to 3.7% compared to 3.5% expected and prior. Further details reveal that the Average Hourly Earnings reprinted 5.2% growth for August, a bit lesser than the 5.3% market consensus. Also, Factory Orders dropped to -1.0% for July compared to 0.2% forecasts and 1.8% in previous readings.

On Friday, the Group of Seven (G7) nations agreed on capping the price of Russian oil in the international markets. However, it appeared to be a bad choice, even if its acceptance and implementation are still in limbo, as Moscow halted energy supplies to the European Union (EU) through Nord Stream 1 pipeline, citing a ‘leak’, during the weekend. It’s worth noting, however, that Politico ran a story mentioning that Russia’s Gazprom said on Saturday it would increase its shipments of gas to Europe via Ukraine, citing media reports.

In addition to the Russia-linked energy problems and a likely recession due to the same, a halt in the US-Iran nuclear talks also amplifies oil woes for the old continent. “Iran nuclear talks stall again after latest response from Tehran,” said Bloomberg.

US President Joe Biden’s administration poured cold water on the face of expectations that the US may ease/remove the Trump-era tariffs on China. “The Biden administration will allow Trump-era tariffs on hundreds of billions of dollars of Chinese merchandise imports to continue while it reviews the need for the duties,” said Bloomberg. The news magnifies the risk-off mood and exerts additional downside pressure on the market sentiment.

Moving on, chatters surrounding the energy crisis, the UK’s politics and the Sino-American tension may entertain traders ahead of the full markets.