U.S. Stocks Set To Open Lower Ahead Of U.S. PMI Data

Euro Area PMI Reports Disappoint Investors

Today, traders had a chance to evaluate Flash PMI data for the Euro Area. Manufacturing PMI decreased from 51.8 in July to 51.7 in August while analysts expected that it would grow to 52.9.

Meanwhile, Services PMI declined from 54.7 in July to 50.1 in August while analysts expected that it would decline to 54.5. Numbers below 50 show contraction so the Services PMI is very close to the negative territory.

Euro Area PMI reports were much worse than expected and provided significant support to the U.S. dollar which benefited from euro weakness.

The U.S. Dollar Index, which started the day near 92.60, is currently trying to get to the test of 93.50. Not surprisingly, the U.S. dollar strength put pressure on commodities like oil and copper. Precious metals, including gold and silver, are also deep in the red zone.

As a result, this trading session may prove to be challenging for commodity-related stocks. S&P 500 futures are losing ground in premarket trading.

U.S. PMI Reports In Focus

While the disappointing Euro Area PMI reports have provided major support to the U.S. dollar and put material pressure on commodity markets, the situation may quickly change after the release of U.S. PMI reports which are set to be published after the U.S. market open.

U.S. Manufacturing PMI is expected to grow from 50.9 in July to 51.9 in August while Services PMI is projected to increase from 50 to 51.

Services PMI data is especially interesting as the services sector is very sensitive to changes in consumer mood which may have worsened due to the continued spread of coronavirus.

In case U.S. PMI reports disappoint the market, the U.S. dollar will likely reverse course which would be bullish for precious metals.

Existing Home Sales Report Will Provide Additional Insight On The Health Of The Housing Market

Soon after the release of U.S. PMI reports, traders will have a chance to evaluate Existing Home Sales for July. Analysts expect that Existing Home Sales have increased by 14.7% on a month-over-month basis.

The reason for this optimism is the potential shift in consumer preferences which was caused by the pandemic. Currently, many analysts believe that consumers will search for bigger living space or a home outside of congested areas.

Strong Existing Home Sales may provide some support to stocks although the impact of PMI reports will be more significant.

For a look at all of today’s economic events, check out our economic calendar.