Investors optimistic ahead of US jobs data

Friday, February 07, 2014

US markets rebounded yesterday, spurred by a decline in initial jobless claims and better than expected corporate earnings. The 20K weekly decline in initial claims was slightly better than economists had forecast which helped both the S&P 500 and DJIA bounce back from the previous session’s weaker performance, gaining 1.24% and 1.22% respectively. Stronger earnings announcements from Walt Disney Co. and Akamai Technologies Inc. boosted investor confidence and encouraged activity back to the market. US markets were lifted higher despite a weaker than anticipated December trade balance figure, which saw a surprise increase in the trade deficit to $38.7bn from $34.6bn the previous month. Investor attention today will focus on the all-important non-farm payrolls and unemployment data for January which will hopefully reassure markets and cap off a strong end to the week after a shaky start which saw the largest one day decline in equity markets since June last year.

Chinese stocks edged higher overnight as markets reopened after the New Year holidays, carrying over positive investor sentiment from the US session. Both the CSI 300 and Shanghai Composite managed to add 0.46% and 0.56% respectively, encouraged by the better than expected jobless claims numbers in the US. However, gains were capped on a subdued HSBC/Markit services PMI reading which slipped to 50.7 from 50.9 the previous month, registering its lowest reading since the end of 2011. Japanese stocks managed to gain significant ground as the yen pushed past 102.00 against the dollar, supporting exporters and sending both the Nikkei and TOPIX 2.17% and 2.3% higher respectively.

The euro jumped towards 1.3620 yesterday after the ECB left monetary policy unchanged, much to the disappointment of investors who had hoped for further action as the threat of deflation loomed. The currency jumped to its highest level since the end of January with the ECB holding the benchmark rate at 0.25% as President Mario Draghi added that there was a need for more information before appropriate action could be taken. Draghi further stated that if a subsequent rates cut had little effect on falling inflation then potential options of bond and bank loan purchases to boost lending facilities could be used.

US trade deficit posts a larger than expected increase 

USTBTOT Index US Trade Balance 2014 02 07 07 57 49

Yen weakens above 102.00 against the dollar

JPY Curncy Japanese Yen Spot 2014 02 07 07 30 29

Euro spikes towards 1.3620 on ECB decision

EUR Curncy Euro Spot 5 Days 15 2014 02 07 07 34 58


Events for today: Friday, 7 February 2014

0500

JP

Jan

Leading Index

0700

DE

Dec

Trade Balance

0930

UK

Dec

Trade Bal & Non EU

1330

US

Jan

NF Payrolls & Unemployment

1500

UK

Jan

NIESR GDP Estimate

2000

US

Dec

Consumer Credit

 View Economic Market Calendar

 

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