US equity markets closed mostly lower for a third consecutive session as tumbling crude oil prices offset a much stronger than expected ADP jobs report (298K vs 190K). The Nasdaq outperformed, squeezing out a marginal 0.1% gain, while both the Dow Jones and S&P 500 suffering as Energy names weighed on both indices.
Accendo Markets Analyst, Mike Van Dulken commented – “while oil prices are off their worst levels, sentiment remains hindered with even more intense head-scratching about China as overnight inflation prints [surge in producer prices, plunge in consumer prices] added to yesterday’s surprise trade deficit. This could revive concern about its economic transition from exporter to consumer – and its debt mountain, stimulus efforts – especially ahead of next week’s probable Fed rate hike which is 100% priced in.”
FTSE sentiment is likely to be impacted by the oil price move as well as corporate results from the likes of Aviva, Old Mutual and Morrisons (profits at upper end of consensus; achieved £1bn cost savings; net debt lower; dividend +9%).
In focus today
The European Central Bank (ECB) is expected to maintain the status quo at today’s monetary policy meeting. The bank has already announced to reduce its monthly asset purchases from 80 billion to 60 billion euros starting from next month. The ECB will continue buying assets at least until the end of 2017.
LGC Analyst, Ipek Ozkardeskaya commented – “At his press conference, President Mario Draghi could hint at improved growth dynamics and rising inflation in the Eurozone economy, yet will likely remain supportive of loose monetary conditions due to rising French, Dutch and German election risks.
On the other hand, the recent rise in the headline inflation is mostly due to higher oil and commodity prices. The rising oil inventories in the US, which caused a sharp drop in energy prices yesterday, suggests a slippery path for energy prices moving forward, especially given the US’ will to decrease its energy dependency on the rest of the world under Donald Trump’s rule.”