Futures point higher, ADP data ahead, Samsung shares jump - what's moving markets

Investing.com -- U.S. stock futures point higher following a positive session on Tuesday, as markets digested data indicating a slowdown in labor demand in the world's largest economy. Samsung shares surge as comments from Nvidia (NASDAQ:NVDA)'s Chief Executive fuel hopes that the Korean firm will begin to supply the artificial intelligence chipmaker.

1. Futures higher

U.S. stock futures edged higher on Wednesday, as investors looked ahead to more key labor market data this week.

By 03:31 ET (07:31 GMT), the Dow futures contract had gained 67 points or 0.2%, S&P 500 futures had inched up by 3 points or 0.1%, and Nasdaq 100 futures had advanced by 20 points or 0.1%.

The main averages on Wall Street climbed in the prior session, boosted by data showing that job openings slipped to their lowest level in over three years in April.

The softer-than-anticipated readings pointed to an easing in labor demand, fortifying projections that the Federal Reserve will choose to slash interest rates later this year. In theory, a slowdown in the jobs market could relieve some upward pressure on wages and, by extension, inflation.

2. ADP private payrolls report ahead

Traders will have the chance to parse through more employment figures this week, including the all-important nonfarm payrolls report on Friday.

Prior to this crucial release, U.S. private payrolls data is set to be published on Wednesday.

Economists estimate the numbers from payrolls processor ADP will show that private employers hired 173,000 workers in May, down from 192,000 in the previous month. It would be a fresh sign that the U.S. jobs market is cooling in the aftermath of a sharp spike in interest rates from the Fed since March 2022.

There is now a roughly 65% chance the Fed will roll out a 25 basis-point reduction in September, according to CME's closely-watched FedWatch Tool. Last week, the probability was below 50%.

3. Samsung shares spikes on hopes of supplying Nvidia

Shares in Samsung Electronics (KS:005930) jumped on Wednesday, fueled by expectations that the Korean firm will soon begin to supply artificial intelligence chipmaker Nvidia.

On Tuesday, Nvidia Chief Executive Jensen Huang told reporters that the California-based company is working to certify Samsung's high-bandwidth memory chips. A certification would allow Samsung to begin to supply Nvidia, the semiconductor giant whose products have become synonymous with the boom in enthusiasm around the applications of AI.

Huang said Samsung's HBM chips still require more engineering work, but had not failed Nvidia's qualification tests.

The comment came as Samsung has been racing to catch up to rival SK Hynix in the race to mass produce HBM chips needed to train AI models such as OpenAI's ChatGPT.

Samsung dismissed the head of its semiconductor division last month in response to what it described as a "chip crisis," while SK Hynix recently posted its fastest revenue growth since 2010.

4. Chinese services activity grows by more than expected in May - Caixin PMI

China’s services sector grew more than expected in May, private purchasing managers' index data showed on Wednesday, as persistent stimulus measures from Beijing benefited some facets of the economy.

The Caixin services PMI rose to 54.0 in May, above estimates of 52.6 and higher than the 52.5 reading in April.

New business, which increased thanks to improving local and overseas demand, was a key boost to the services industry. Wednesday’s reading showed the services PMI expanding for a 17th consecutive month.

The Caixin data contrasted with official PMI data released last week, which showed that non-manufacturing activity rose at a slower pace in May compared to April.

But the Caixin PMI survey differs from the official survey in its scope and areas covered. The Caixin survey covers smaller, private businesses in southern China, while the official figure focuses on larger, state-run companies in the north.

5. Oil prices choppy

Crude prices were choppy on Wednesday after industry data pointed to a bumper build in U.S. inventories.

By 03:26 ET, U.S. crude futures (WTI) were mostly unchanged at $73.28 per barrel, while the Brent contract inched up 0.1% to $77.57 a barrel. Oil prices slipped on Tuesday, extending losses from a four-month low touched earlier in the week.

Data from the American Petroleum Institute showed U.S. crude inventories saw a build of about 4 million barrels in the week to May 31. Gasoline and distillate inventories also registered increases, raising concerns around demand in the world’s biggest fuel consumer despite the start of the travel-heavy summer season.

Meanwhile, the crude market has seen weakness after a weekend meeting of the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+. The oil group left open the possibility that voluntary cuts by eight of its members could be gradually unwound from October onward, exacerbating worries about oversupply in an environment where elevated interest rates are threatening to dent broader demand.

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