Markets Rise on Better Than Expected Data

Published by Filipe R. Costa on Thu, 04/10/2012 - 11:05
Mario Draghi

Daily Market Commentary for October 4: US markets rose on encouraging economic data. The ADP employment report showed an improvement and investors are now waiting for a good payrolls report tomorrow.

Analysts were expecting private payrolls to rise 140,000 in September but the report showed a better than expected improvement, as employment rose 162,000. Although there is a noisy relation between the ADP report and the non-farm payrolls, investors upgraded their expectation for tomorrow’s numbers. Services data reported in the ISM non-manufacturing index also showed an improvement  from the prior report as the number came in at 55.1, above last month’s 53.7 and also above the expected 53.5.

Today all eyes are centred on the BOE and the ECB. Both aren’t expected to present any changes in their current policies but investors will be focused on Mario Draghi’s words for clues on the latest developments. It is also possible that the ECB decides to cut interest rates by 25 basis points, though unlikely.

US markets closed higher yesterday, with the Nasdaq leading with a 0.49% gain. The Dow was more resilient, edging up by just 0.09%. This morning equities continue their uptrend, with the Dow currently up more than 30 points, as pointed by futures. Yesterday markets also edged up but then lost some ground during the day. It seems that investors are still undecided on which direction to take. Concerns over Europe are still on the table. The Euro is rising this morning and currently trading at 1.2940. The Aussie is on a downtrend after the RBA cut its key rate and trade data showed a worse than expected scenario. With China slowing, the Australian economy may be in trouble.