Wall Street futures extended modest gains following the release of mixed economic data, which showed stronger-than-expected jobless claims but weaker manufacturing activity. The data, which included a 215,000 reading on initial jobless claims versus a forecast of 220,000, offset concerns about slowing industrial growth. However, the Institute for Supply Management’s manufacturing index fell to 48.7 in July, indicating contraction for the first time in over a year. The mixed signals have left investors cautiously optimistic about the Federal Reserve’s policy trajectory. The market reaction highlights the delicate balance between labor market resilience and sector-specific weaknesses. Traders are now recalibrating expectations for Fed rate cuts, with the probability of a 25-basis-point reduction in September rising to 70% on the CME FedWatch tool. Equity futures, particularly in the tech-heavy Nasdaq, have seen increased buying interest as investors bet on a dovish pivot. The dollar index, however, remains under pressure against majors like EUR/USD and GBP/USD due to reduced yield differentials. For global markets, the focus will shift to the upcoming Jackson Hole symposium and non-farm payrolls data in late August. Gulf investors should monitor how these developments impact risk-on sentiment and commodity prices, which have been volatile due to geopolitical tensions. The key assets to watch include the S&P 500 futures, EUR/USD, and Brent crude oil as they reflect broader macroeconomic trends.
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