Markets mixed ahead of US jobs report - 5.3.2015

US markets retreated for the second consecutive day on Wednesday as investors adopted a cautious stance ahead of Friday’s job report. S&P 500 pulled back to its lowest level in two weeks. ADP report on Wednesday indicated private sector employment grew in February but at a slower pace than in the prior month. ADP report is considered as a preview to the official jobs report on Friday, although its record in terms of predictive ability is far from perfect. The unexpected increase in ISM Non-Manufacturing Index indicated US service sector expanded at a slightly faster pace in February and boosted employment. The US dollar hit an 11-year high against the euro Wednesday as investors continued selling euros ahead of the start of the European Central Bank’s bond buying program. Today at 14:30 CET Initial Jobless Claims for the week ended February 27 and Continuing Claims for the week ended February 21 will be released in US. The tentative outlook is positive. And at 16:00 CET January Factory orders will be published. The tentative outlook is positive.

European stocks rallied on Wednesday as oil prices slumped and weaker euro boosted export oriented stocks following stronger than expected US ISM report. The Stoxx Europe 600 advanced 0.8%. Germany’s DAX 30 and France’s CAC 40 gained 1% each, while the UK’s FTSE 100 rose 0.4%. The STOXX 600 has risen 14 percent so far in 2015 as investors anticipate the boost to equity markets that the launch of the massive quantitative easing by the ECB will provide. Euro slipped to 11 year low against dollar. Today at 10:10 CET Retail PMI for euro zone will be published by Markit. At 13:00 CET Bank of England Monetary Policy Statement will be released. No interest rate or policy change is expected. And at 14:30 CET the ECB Press Conference will take place, investors will be watching for updates on the quantitative easing program and ECB’s assessment of euro zone economy.

Nikkei is rising today, boosted by the Bank of Japan’s purchases of exchange traded funds (ETFs), but gains were limited by investor caution ahead of US job report on Friday. For the first time in three weeks, the central bank purchased 35.2 billion yen ($293.90 million) of ETFs on Tuesday and Wednesday. Dollar inched higher against yen on the backdrop of Japan's weekly capital flows data released today, showing that Japanese investors bought a net 624.5 billion yen in overseas equities while foreign investors bought 350.5 billion yen in Japan’s equities the week ended February 27.

At China’s annual parliamentary meeting the economic growth target of around 7 percent for 2015 was announced. This is the lowest rate of expansion for the world's No.2 economy for a quarter of a century, and slowing Chinese growth will negatively impact commodity prices and global growth outlook.

US crude oil futures rose on Wednesday despite more than 10 million barrels build-up in US weekly crude supplies, while Brent declined. Market sentiment was boosted by Saudi Arabia’s decision to increase selling prices for its Arab Light crude oil for consumers in the US, Europe and Asia in April.

Gold prices fell the third session in a row as US dollar strengthened and investors looked ahead to the release of US jobs report on Friday.