US indices were virtually unchanged yesterday as the energy sector weighed on sentiment, while investors await today’s US jobs report. The Dow Jones closed just shy of breakeven with Caterpillar, Chevron and ExxonMobil contributing the most losses. Both the S&P500 and the Nasdaq, however, closed marginally higher, with Consumer Staples helping the S&P500 outperform its peers despite the Energy sector weakness.
Accendo Markets Analyst, Mike van Dulken commented – “Negative sentiment has perhaps been tempered by Trump claiming a small victory in getting his healthcare bill through the House of Representatives. While this is a step towards tax reform and other stimulus, Senate approval is sure to prove tricky and could prove a bridge too far in terms of concrete legislative approval for the new President”
In focus today is this afternoon’s US Jobs report and the eagerly anticipated US Non-Farm Payrolls print, considered a key barometer for US growth.
Mike van Dulken added – “Any upside or downside surprise for NFP, or indeed the unemployment rate or wages growth, could yet influence how many more US Fed rate hikes investors expect between now and year-end. This could impact share prices of Banks – beneficiaries of higher rates – and move the US Dollar, with a knock-on for commodity prices, the FTSE and DAX. Since Wednesday’s hawkish Fed update markets have already increased their certainty of a June hike to 90%.”
On the Non-Farm Payrolls likely affect on the US Dollar, LCG Analyst, Ipek Ozkardeskaya suggested – “A solid read could revive the short-term USD bulls, while a second month of disappointment should dent the USD appetite before the weekly closing bell. We warn that the hawkish Federal Reserve expectations may have shattered the upside potential in the greenback and the enthusiasm on an eventually strong read could be short-lived.”
Any more polling updates for Sunday’s French Presidential second round run-off between far-right Marine Le Pen and independent centrist Emmanuel Macron will offer a final chance for investors to position themselves. It’s worth noting that the result could prove as pivotal for Europe as last summer’s Brexit referendum, giving rise to some significant moves in currencies, equities, indices, commodities and bonds.