In a relatively quiet day for market movement and momentum the main USA bourses closed up on extremely positive data concerning the USA factory orders and the ADP jobs print. U.S. companies increased payrolls by 191,000 last month, up from a revised 178,000, figures from the ADP Research Institute in Roseland, New Jersey, showed. The median forecast of 38 economists surveyed by Bloomberg called for a 195,000 advance. Estimates ranged from gains of 150,000 to 275,000.
Construction data for the UK came in below expectations and below the previous month’s reading but still at a level to convince Markit economics that the future looks bright for UK construction.
USA factory orders surged according to the latest data available. The Commerce Department said on Wednesday new orders for manufactured goods jumped 1.6 percent, the biggest rise since last September.
ADP: Private Sector Employment Increased by 191,000 Jobs in March
Private sector employment increased by 191,000 jobs from February to March according to the March ADP National Employment Report®. Broadly distributed to the public each month, free of charge, the ADP National Employment Report is produced by ADP®, a leading global provider of Human Capital Management (HCM) solutions, in collaboration with Moody’s Analytics. The report, which is derived from ADP’s actual payroll data, measures the change in total nonfarm private employment each month on a seasonally- adjusted basis. Goods-producing employment rose by 28,000 jobs in March, slightly faster than an upwardly revised pace of 25,000 in February.
Markit/CIPS UK Construction PMI
March data signalled a strong overall performance for the UK construction sector, with sharp rises in activity and employment maintained during the latest survey period. Although new business growth slipped to a six-month low, construction firms remain highly upbeat about the prospects for output over the year ahead. Reports of improving underlying demand and more favourable business conditions helped business optimism reach its highest level since January 2007. Adjusted for seasonal factors, the Markit/CIPS UK Construction Purchasing Managers’ Index® (PMI®) posted 62.5 in March, little changed from 62.6 in the previous month.
U.S. factory orders surge in February
New orders for U.S. factory goods rebounded more than expected in February, with shipments posting their biggest gain in seven months in a further sign the economy was regaining momentum after a recent weather-driven slowdown. The Commerce Department said on Wednesday new orders for manufactured goods jumped 1.6 percent, the biggest rise since last September. January’s orders were revised to show a larger 1.0 percent drop instead of the previously reported 0.7 percent fall. Economists polled by Reuters had forecast new orders received by factories rebounding 1.2 percent in February. Shipments of new orders increased 0.9 percent.
Market overview at 10:00 PM UK time
The DJIA closed up 0.29%, SPX up 0.20%, NASDAQ flat. Euro STOXX closed up 0.03%, CAC up 0.09%, DAX up 0.20%, FTSE up 0.10%. The DJIA equity index future is up 0.22%, SPX up 0.28% and the NASDAQ future is up 0.02%. Euro STOXX future is up 0.26%, DAX up 0.44%, CAC up 0.19%, FTSE future up 0.50%.
NYMEX WTI oil was down 0.07% at $99.67 per barrel, NYMEX nat gas was up 2.13% on the day at $4.37 per therm COMEX gold was up 0.75% at $1289.60 per ounce with silver up 1.0% at $19.95 per ounce.
Forex focus
The dollar climbed 0.2 percent to 103.82 yen early afternoon in New York after advancing to 103.94, the highest since Jan. 23rd. The U.S. currency added 0.2 percent to $1.3763 per euro. The yen rose 0.1 percent to 142.89 per euro. The dollar rose to a two-month high against the yen as gains in U.S. company hiring and factory orders supported the case for the Federal Reserve to raise interest rates. The Bloomberg Dollar Spot Index, which tracks the greenback against 10 major counterparts, rose 0.2 percent to 1,017.74.
The kiwi declined 1 percent to 85.55 U.S. cents after sliding 0.3 percent yesterday. New Zealand’s dollar fell for a second day after the weighted average price of nine products traded at the GlobalDairyTrade, a worldwide benchmark, slid 8.9 percent from two weeks ago to $4,124 a ton yesterday. The nation is home to the world’s biggest dairy exporter.
The euro has weakened 0.8 percent versus the dollar since ECB President Mario Draghi said on March 13 the exchange rate is “increasingly relevant in our assessment of price stability.”
The pound strengthened 0.1 percent to $1.6639 after rising to $1.6823 on Feb. 17th, the highest level since November 2009. Sterling appreciated 0.1 percent to 82.90 pence per euro.
The dollar has dropped 1.2 percent in the past three months, the worst performer after Canada’s 4.8 percent plunge among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro weakened 0.5 percent and the yen slid 0.1 percent.
Bonds briefing
The benchmark UK 10-year gilt yield climbed three basis points, or 0.03 percentage point, to 2.77 percent early afternoon London time. The 2.25 percent bond maturing in September 2023 fell 0.265, or 2.65 pounds per 1,000-pound ($1,664) face amount, to 95.75.
Germany’s 10-year yield rose three basis points to 1.60 percent. The extra yield investors demand to hold the U.K. securities increased to 117 basis points today after rising to 118 basis points on March 28, the highest since September 1998, based on closing prices.
Benchmark 10-year yields climbed five basis points, or 0.05 percentage point, to 2.80 percent at midday New York. They touched 2.81 percent, the highest since March 7th, when they reached 2.82 percent. The 2.75 percent security due in February 2024 dropped 13/32, or $4.06 per $1,000 face amount, to 99 18/32.
Treasuries fell, pushing 10-year yields to a three-week high, as gains in U.S. factory orders and company hiring fuelled bets the economy is improving enough for the Federal Reserve to raise interest rates next year.
Fundamental policy decisions and high impact news events for April 3rd
Thursday sees Australia publish its latest retail trade figures, expected to come in up 0.4% with the trade balance in Australia expected in at a positive $0.82 bn for the month. Later the RBA governor Stevens will speak. China will publish its non-manufacturing PMI.
From Europe we receive Spanish services PMI, expected in at 54.1, Italian services PMI expected in at 52.3. Europe’s PMI is expected in at 52.4, with the UK’s at 58.2. Europe’s ECB announces its base rate decision and will hold a press conference to explain the decision.
Canada’s trade balance is predicted to come in at $0.2 bn. The USA trade balance is expected in at -$38.3 bn for the month. Unemployment claims in the USA for the week are scheduled to come in at 317K, whilst the ISM PMI for manufacturing is expected in at 53.5.
