Here are the top five things you need to know in financial markets on Friday, July 5:



1. Jobs report to factor into Fed policy decision

The June employment report is due at 8:30 AM ET (1230 GMT) and is likely to cement expectations for an interest rate cut at the Federal Reserve’s policy decision at the July 30-31 meeting.

Nonfarm payrolls are expected to rebound from a meager 75,000 in May, with the creation of 160,000 jobs, while the unemployment rate is expected to stick at a 50-year low of 3.6%.

Weaker-than-expected data may actually be well received by markets as it would strengthen the case for more policy easing. Markets already think a quarter-point reduction in interest rates at the end of the month is a given and estimate that the possibility of three cuts by the end of the year is more than 60%.


2. Samsung’s profit warning to pressure chipmakers

Samsung Electronics (KS:005930) forecast a sharp plunge in its second-quarter operating profit as the U.S.-China trade dispute hit its books.

Chip prices have dropped due to a supply glut and U.S. sanctions on Chinese telecom equipment maker Huawei Technologies, a key Samsung client.

The gloomy forecast sent waves through the European technology sector that will likely also be felt in the U.S.


3. German factory orders erase hopes for rebound

German factory orders fell a shocking 2.2% in May, much worse than the 0.1% drop expected. On an annual basis, orders plunged 8.6%, the worst reading since 2009.

Germany, traditionally the motor of the Eurozone economy, has seen a rough batch of data this week with the weakest June performance of its labor market since 2002, combined with disappointing retail sales for May.

With also Europe facing potential tariffs from the U.S., the weak readings provide support for the argument that the European Central Bank should step in with further stimulus. ECB governing council member Olli Rehn said in an interview Thursday that the downturn should no longer be considered "temporary" and said the bank is ready to act.


4. Wall Street dips after Fourth of July holiday

U.S. futures pointed a slightly lower open on Friday as Wall Street was set to reopen its doors after the Fourth of July holiday. Coming off Wednesday’s close at record highs, investors appeared reluctant to make big bets ahead of the employment report.

Dow futures fell 31 points, or 0.1%, by 5:21 AM ET (9:21 GMT), S&P 500 futuresdropped 4 points, or 0.2%, while Nasdaq 100 futures traded down 10 points, or 0.1%.

European shares were also subdued with some slight pressure coming from the weak German data and Samsung’s profit warning.

Asian stock markets were mixed, hovering near two-month highs, also largely in wait-and-see mode.


5. Oil slides more than 1% on economic worries

U.S. crude slumped more than 1% Friday as the German economic data added to a similar pattern of economic weakness seen in U.S. factory orders, increasing concerns that a slowing global economy could dent demand for oil.

West Texas Intermediate oil is on track for losses of more than 3% this week as U.S. inventory data also showed signs of feeble demand.

The sharp decline came despite the fact that OPEC and its allies extended their agreement to cut output for another nine months. It also came despite ongoing tension in the Middle East. British Royal Marines seized a giant Iranian oil tanker near Gibraltar on Thursday for trying to take oil to Syria in violation of EU and U.S. sanctions.


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