While you were sleeping Solid US jobs data

Thursday 4th July 2013

Wall Street was mixed as better-than-anticipated US jobs data offset concern about political unrest in Egypt and ministerial resignations in Portugal.

In the US, private payrolls rose 188,000 in June, according to the ADP National Employment Report. That exceeded expectations for a gain of 160,000 jobs.

Separately, Jobless claims fell by 5,000 to 343,000 in the week ended June 29 from a revised 348,000 in the prior period that was higher than initially reported, according to the Labor Department.

"The [jobs] market is holding firm," Mark Zandi, chief economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters.

All eyes now are on Friday's government employment report as investors are looking to better pinpoint the timing of a Federal Reserve downgrade of its bond-buying program. Nonfarm payrolls are forecast to have increased 165,000 in June, according to a Reuters poll of economists, while the unemployment rate will fall to 7.5 percent.

"They [Fed policymakers] are happy with anything in the 150,000 to 200,000 range at this point as long things don't deteriorate," Jacob Oubina, senior US economist at RBC Capital Markets in New York, told Reuters. "There is nothing in the data that suggests we are going to switch pace, one way or the other."

To be sure, the Institute for Supply Management's index for the services sector unexpectedly fell to 52.2 from 53.7 in June, missing expectations.

The service slowdown is probably "the tail of the adjustment to fiscal drag," Ken Mayland, president of ClearView Economics in Pepper Pike, Ohio, told Bloomberg News before the report. "At some point you reach a new equilibrium, and that becomes a springboard for expansion."

In midday trading in New York, the Dow Jones Industrial Average rose 0.25 percent, while the Nasdaq Composite Index gained 0.14 percent. The Standard & Poor's 500 Index fell 0.26 percent

US markets will close early on Wednesday for Independence Day and are closed on Thursday. Trading will resume on Friday.

Oil prices continued their surge on concern that unrest in Egypt might spark a disruption in supply. Oil futures climbed as high as US$102.18 a barrel, the highest since May 2012.

In Europe, the benchmark Stoxx 600 Index ended the session with a 1.1 percent slide from the previous close. The UK's FTSE 100, France's CAC 40 and Germany's DAX all dropped 1.7 percent.

The resignation of two ministers, first the finance minister followed by the foreign minister, in Portugal renewed concern about the country's progress towards cutting down on spending to meet its international financial rescue conditions.

As a result, Portugal's 10-year bond yield surged above 8 percent for the first time since November.

BusinessDesk.co.nz

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