HONG KONG – World stock markets were uneven Thursday as investors hesitated to take risky bets as they awaited a key U.S. jobs report following a batch of mixed economic data.
KEEPING SCORE: European markets opened modestly higher, with France’s CAC 40 up 0.1 per cent at 4,328.89 and Germany’s DAX up 0.3 per cent at 9,858.16. Britain’s FTSE 100 added 0.3 per cent to 6,132.67. U.S. stocks were poised to open higher, with Dow futures gaining 0.3 per cent to 17,634.00 and the broader S&P 500 futures rising 0.3 per cent to 2,053.30.
U.S. ECONOMY: Recent economic data gave mixed signals for the world’s No. 1 economy, leaving investors with no firm leads. A private survey by the Institute for Supply Management found growth at service economies in April accelerating to its high level this year. While this could be a sign that the broader economy is on an upswing, another survey by payroll processor ADP found that U.S. companies added jobs at the slowest pace in three years in April, indicating that slower growth and rocky financial markets might be weighing on hiring. Markets are now looking ahead to an official U.S. employment report on Friday that could give a clearer sign of economic growth and influence thinking on interest rates among Fed policymakers. Economists expect the report to show jobs grew by 200,000 last month while the unemployment rate stayed at 5 per cent.
MARKET INSIGHT: “Although it is not reflected yet in the Fed funds futures, some market participants may intend to position themselves for the prospect of further monetary policy tightening in the U.S.,” Piotr Matys of Rabobank said in a report. “The main focus is already on U.S. nonfarm payrolls due tomorrow, especially after the ADP surprised on the downside. Any figure close to market consensus of 200k would provide the U.S. dollar with further support.”
CHINA INDEX: The services industry expanded for a second month although at a slower rate in April, according to a survey of Chinese purchasing managers. The Caixin/Markit index fell to 51.8 last month from 52.2 the month before, based on a 100-point scale on which numbers below 50 indicate contraction. The results indicate that momentum is slowing in China’s service sector, which has been a bright spot for the country’s slowing economy as manufacturing remains weak.
ASIA’S DAY: Hong Kong’s Hang Seng slipped 0.4 per cent to close at 20,449.82 while the Shanghai Composite Index in mainland China edged up 0.2 per cent to end at 2,997.84. Australia’s S&P/ASX 200 crept up 0.2 per cent to 5,279.10. New Zealand’s benchmark rose, but those in Taiwan, Singapore, Malaysia and the Philippines lost ground. Trading in the region was thinner than usual because markets were closed in South Korea, Japan, Thailand and Indonesia for holidays.
ENERGY: Crude oil prices jumped, driven by what analysts said were concerns that output could be crimped after a massive fire swept through the Canadian oil sands hub of Fort McMurray, Alberta. Benchmark U.S. crude oil rose $1.37, or 3.2 per cent, to $45.15 a barrel in electronic trading on the New York Mercantile Exchange. The contract added 13 cents to close at $43.78 per barrel on Wednesday. Brent crude, used to price international oils, gained $1.03 to $45.65 a barrel in London.
CURRENCIES: The dollar rose to 107.32 yen from 106.95 yen late Wednesday. The euro fell to $1.1441 from $1.1494.
This story has been corrected to fix China PMI numbers.