Global markets hesitant ahead of non-farm payrolls

Wall Street struggled to build on the week’s earlier gains as benchmark indices slipped slightly ahead of the non-farm payrolls numbers. Markets were encouraged by the positive Fed comments earlier this week but were shaken by the surprise decline in advanced Q1 GDP growth. Reinforcing the Fed’s views were the release of personal spending and ISM manufacturing data which both surprised slightly on the upside. Personal spending grew 0.9% m/m in March from 0.5% the previous month while the ISM manufacturing index rose to 54.9 in April, slightly higher than the 54.3 expected and a marked improvement from March’s reading of 53.7. 

Asian markets spent the overnight session swinging between gains and losses as nervous investors chewed over US macro data while Chinese markets remained closed, exacerbating the scant trading activity. A surprise rise in initial weekly jobless claims weighed on Japanese investor sentiment with the Nikkei and TOPIX both spending much of the session in negative territory. Market participants opted to stay side-lined ahead of the key non-farm payrolls data due later today although the yen showed some slight weakness against the dollar, trading towards 102.50 this morning. Currency volatility remains low with the yen trading in a tight band between 102.00 and 102.80 since the mid-April.

US non-farm payrolls and unemployment data will be the focus for today and will cap off a busy week on the US macro front. Market participants are hesitant to commit significant assets to risk assets after yesterday’s release of initial jobless claims saw a 14K increase on the previous week, 22K above expectations of 320K. Analysts polled by Bloomberg expect non-farm payrolls to add 218K jobs in April, an increase on the 192K jobs added in March. Ahead of the release of US data later this afternoon investors will have eurozone PMI figures to mull over as eurozone markets return to business as usual after the Labour Day holiday.

Personal spending rises in March on improving confidence

PCE CRCH Index US Personal Cons 2014 05 02 07 34 29

JPY trades rangebound as volatility drops 

JPY Curncy Japanese Yen Spot 2014 05 02 07 49 59

Events for today

CN Market Holiday 

0855

DE

Feb

Manufacturing PMI

0900

EZ

Feb

Manufacturing PMI

0930

EZ

Apr

Markit/CIPS Const

1000

UK

Mar

Unemployment Rate

1330

US

Apr

NF Payrolls & Unemployment

1500

US

Mar

Factory Orders

OE: 

Jun Cocoa (NYBOT)

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