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On 4 April 2019 - Global stocks steady ahead of US employment report

Anne D Picker

Anne D Picker - Econoday

US jobless claims fall but German data show further weakness in the manufacturing sector.

US markets

US stocks were mixed Thursday ahead of Friday’s employment report. The Dow rose 0.6 percent and the S&P closed up 0.2 percent, while the Nasdaq was unchanged on the day. Automaker Tesla fell heavily after reporting a sharp drop in deliveries of electric cars in the first quarter, with some analysts expressing concerns about the company’s cash flow.

US labour market data published Thursday were positive and suggest that the March employment report on Friday will show a strong rebound in payrolls growth after weakness in February. Initial jobless claims fell 10,000 to 202,000 in the March 23 week, below the consensus range, with the 4-week average also falling back to historic lows seen last October. Continuing claims also fell, while the unemployment rate for insured workers remains at 1.2 percent. The Challenger job-cut report showed a fall in lay-off announcements from 76,835 in February to 60,587 in March, though this is still above the monthly average for the second half of 2018 and, while unlikely to have a major impact on the March employment report, could indicate slower payrolls growth in future months.

These data reflect observations at 4:00 PM US ET. Gold rose US$2.30 to US$1,297.60 while dated Brent spot crude fell US$0.07 to US$69.24. The US dollar posted a solid gain against the pound but was flat or little changed against other major currencies. The yield on the US Treasury 30-year bond fell 1 basis point to 2.92 percent and the yield on the 10-year note fell 1 basis point to 2.51 percent.

European markets

European markets closed little changed Thursday. The FTSE fell 0.2 percent, the CAC closed down 0.1 percent, and the DAX advanced 0.3 percent. Commerzbank gained on reports that Italian bank UniCredit may be an alternative merger partner to Deutsche Bank.

Negotiations continued Thursday between the United Kingdom government and opposition in an attempt to secure bipartisan agreement for a deal that could break the Brexit stalemate. The UK has until April 12 to propose a withdrawal agreement to the European Union that would allow some further delay or else it will exit the EU on that day with no deal in place. Parliament late Wednesday narrowly approved legislation directing the government to request an extension of the delay beyond April 12 in order to avoid a no-deal withdrawal.

German manufacturers’ orders fell 4.2 percent on the month in February after a revised decline of 2.1 percent in January. This is much weaker than the consensus forecast for an increase of 0.3 percent, the third drop in the last four months, and the biggest decline since January 2017. Orders fell 7.3 percent on the year. Weakness was broad-based across categories and across both external and domestic demand. Average orders for the first two months of the year are down 3.9 percent from the average level for the fourth quarter of 2018, suggesting that this component will make a negative contribution to headline GDP growth this quarter.

The minutes to the March meeting of the European Central Bank confirm officials have become increasingly cautious about the near-term outlook and suggest that they may consider additional monetary accommodation in coming months. At this meeting officials agreed to extend forward guidance on policy rates to the end of 2019 and the minutes show that some members favoured extending this guidance to the first quarter of 2020. The minutes also show there was broad support for the decision to launch a new series of longer-term refinancing operations to ensure domestic banks are able to keep lending.

Asia Pacific Markets

Most Asian markets closed little changed Thursday, with small moves in US shares Wednesday and a light regional data calendar providing limited direction for trading. The Shanghai Composite index outperformed with an increase of 0.9 percent on the day, while Australia’s All Ordinaries index underperformed with a fall of 0.8 percent, but other regional indices traded in a narrow range.

The Reserve Bank of India cut policy rates by 25 basis points at its meeting Thursday, adding to the cut made at its last meeting in February and in line with consensus. Recent activity data have shown some weakness in industrial production, while headline inflation, though picking up from recent lows to 2.57 percent in February, remains well below the mid-point of the RBI's target range of 2.0 percent to 6.0 percent. Officials retained their forecast for GDP to grow by 7.4 percent over the next six months but lowered their near-term inflation forecasts in response to recent weakness in food and fuel prices and a moderation in household inflation expectations. For the first half of the fiscal year starting in April, officials now forecast inflation will be between 2.9 and 3.0 percent, down from the previous forecast of between 3.2 percent and 3.4 percent, and between 3.5 percent and 3.8 percent in the second half of the fiscal year. Further rate cuts will likely be considered if headline inflation remains below the mid-point of the RBI’s target range. The PMI survey for India’s services sector showed weaker conditions in March, in line with similar results from the manufacturing survey.

Looking forward

Japanese household spending data will be published shortly. German industrial production data, French trade data, and UK house price data are scheduled for release Friday followed by employment reports for the US and Canada.

Global Stock Markets

 

Index

4 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26384.63

166.50

0.6

 

NASDAQ

7891.78

-3.77

0.0

 

S&P 500

2879.39

5.99

0.2

Canada

S&P/TSX Comp

16311.61

31.75

0.2

Europe

 

 

 

 

UK

FTSE 100

7401.94

-16.34

-0.2

France

CAC

5463.8

-5.11

-0.1

Germany

XETRA DAX

11988.01

33.61

0.3

Italy

MIB

21705.6

-50.28

-0.2

Spain

Ibex 35

9534.1

46.30

0.5

Sweden

OMX Stockholm 30

1616.24

-6.14

-0.4

Switzerland

SMI

9563.71

-6.38

-0.1

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6320.4

-48.33

-0.8

Japan

Nikkei 225

21724.95

11.74

0.1

 

Topix

1620.05

-1.72

-0.1

Hong Kong

Hang Seng

29936.32

-50.07

-0.2

S. Korea

Kospi

2206.53

3.26

0.1

Singapore

STI

3316.21

4.94

0.1

China

Shanghai Comp

3246.57

30.27

0.9

Taiwan

TAIEX

*

*

*

India

Sensex 30

38684.72

-192.40

-0.5

Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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