Geoffrey Smith 

China’s power sector has been told by Beijing that it must keep the lights on at all cost. After resistance from progressive Democrats, the House of Representatives has stopped plans to vote on infrastructure. Despite buoyant earnings by Jefferies, an investment bank (NYSE:), stocks will start October on a low note. As well as August’s spending and personal income data, the ISM manufacturing survey for August and the Personal Consumer Expenditures Price Index for August will be available. Oil prices are still low despite hopes that OPEC will open its taps a little more next month. What you need to know on Friday, October 1st in the financial markets

1. “At all costs”

The Chinese government ordered the country’s utilities to ensure stable energy deliveries “at all costs”, effectively giving them the green light to ramp up the bidding war in the global market.

European gas futures rose to 100 Euros per megawatt-hour, before falling. However spot levels remain around $200/barrel oil prices.

Beijing’s action, which comes at a time when more than half the country’s regions are rationing power, relieves the pressure on energy-intensive industrial users who have had to curtail output in recent weeks. The state may need to recapitalize the energy sector in the future if the price regulation is not changed.

2. House postpones infrastructure vote again

The U.S. House of Representatives postponed a vote for the $1.2 billion infrastructure bill that was proposed by a bipartisan group, after left-wing members of the Democratic Party got in their heels.  

Congressmen, women and senators refused to approve it without their $3.5 trillion more comprehensive spending package for expanding social security net and financing the energy transition.

The fear of a shutdown in the government was extinguished, at most for a few more weeks, when President Joe Biden signed legislation that would have extended federal funding to December. 

3. Stocks set to extend losses; Jefferies rides M&A boom

October is set to start the way September ended in the stock market – full of fears about monetary tightening, a squeeze on incomes from rising energy prices, and an economic slowdown. While China’s news has helped to alleviate the danger of shortages in China, it seems that little else is happening.

At 6:15 am ET (1115 GMT) the point total was down 140 points or 0.4%. Meanwhile, contract prices were also lower by 0.4% and 0.3% respectively. These three contracts could see losses between 3.7% to 5% for the week.

Stocks likely to be in focus later include investment banks, after Jefferies – often seen as a bellwether for the sector – reported a strong quarter driven by record level of merger and acquisition activity. However, the stock rose 1.2% premarket to rival Goldman Sachs’ (NYSE:). Morgan Stanley (NYSE) did not realize any gains, as both fell over 1%.

4. Pricing, spending and personal income data for PCE are due

With the market in fragile mood, there could be better days for an update on the Federal Reserve’s preferred measure of inflation, the personal consumer expenditures basket.

With core prices increasing 0.2% against 0.3% in July’s July, the monthly dynamic will likely have declined slightly in August. The annual rate will remain at 3.6%. At 8:30 AM ET, personal income and expenditure data will be available.

Those data will be followed at 10 AM ET by the final update from the University of Michigan’s consumer sentiment index for September. That’s published at the same time as the Institute for Supply Management’s purchasing manager index for September, at the end of a week when Chinese and European PMIs have shown a clear slowdown in activity.

Five Crude stalls rise as OPEC hopes grow

Crude oil prices have failed to move further as it became clear that the Organization of Petroleum Exporting Countries (OPEC) may raise supplies more than the previously agreed 400,000 barrels per day in November. It will be meeting with key allies next Wednesday.

At 6:25 AM ET prices had fallen 0.8% to $74.44/barrel, and futures fell 0.6%, at $77.88/barrel.

Baker Hughes’ weekly oil rig count data will provide some insight into whether U.S.-based shale drilling companies are capable of meeting the rising global energy demand. After the extreme swings over the past 20 months, the rig count reached its highest point since April 2020. This is one indicator and asset price that are returning to their mean.

CFTC data are due on speculative Net Positioning.