While you were sleeping: Solid US private payrolls

Thursday 4th December 2014

Wall Street moved higher, pushing the Dow to a record high, while the US dollar also strengthened in anticipation of fresh stimulus from the European Central Bank on Thursday and a key American jobs report on Friday.

The latest private payrolls data offered evidence on strength in the US labour market, bolstering optimism for Friday’s government report. Companies in the US added 208,000 workers in November, after a revised 233,000 increase in October, according to a report by ADP Research Institute on Wednesday.

“We’re going to have another 200,000 plus payroll number if ADP is any indication, and unit labour costs should stay low,” Jim Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg News. “Put those two together and you have real growth without inflation. That’s a recipe for a melt-up in the stock market.”

The US Federal Reserve is set to release its Beige Book later today.

In afternoon trading in New York, the Dow Jones Industrial Average added 0.08 percent, the Standard & Poor’s 500 Index advanced 0.22 percent, while the Nasdaq Composite Index gained 0.18 percent. Earlier in the session, the Dow touched a record high 17,905.33.

Gains in shares of Caterpillar and those of United Technologies, up 1.5 percent and 1.3 percent respectively, propelled the Dow higher, outweighing slides in shares of WalMart and American Express, each down 1.6 percent.

Energy shares rose in the US and Europe along with oil prices, through the latter remained near five year lows.

"Energy is the undervalued sector of the market, but trying to call the bottom of oil prices is like trying to catch a falling knife,” Joseph Quinlan, chief market strategist at US Trust, Bank of America Private Wealth Management in New York, told Reuters.

In Europe, the Stoxx 600 Index ended the day with a 0.6 percent increase from the previous close. France’s CAC 40 eked out a 0.1 percent gain, while Germany’s DAX Index rose 0.4 percent. The UK’s FTSE 100 Index slid 0.4 percent.

All eyes are on Thursday’s meeting of European Central Bank policy makers amid speculation they might announce a plan to start buying sovereign bonds in their efforts to help stoke inflation. Those bets weakened the euro, and helped underpin demand for the greenback.

"Investors are looking to increase their holdings of the [US] dollar and decrease the euro because they're anticipating further lower price action on the euro on the basis of further easing and stimulus from the ECB," Neil Jones, head of hedge fund FX sales at Mizuho Bank in London, told Reuters.

BusinessDesk.co.nz

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