U.S. shares rose on Wednesday despite ongoing concerns about global growth that have wreaked havoc in recent weeks. However, some analysts attribute yesterday’s gains to ADP’s employment survey. The report indicated that fewer jobs have been added to the U.S. labor market than previously expected, causing speculation that the Federal Reserve would be hesitant to raise interest rates this month. Higher interest rates put less money in the hands of borrowers, usually leading to diminished investment in the stock market. However, it is advised to wait for the official government reports on Friday as ADP’s survey sometimes fails to capture trends seen with the larger data sets available to the government. Wednesday’s trading volumes were particularly low, coming in at the lowest in the last two weeks. The market’s reaction to Friday’s nonfarm payrolls report could shed some light on the mixture of reasons that keep volatility in Wall Street so high. The Dow Jones Industrial Average broke a three-day losing streak as it gained 293 points, or 1.82%, to trade at 16,351.38. Out of the index’s sectors, technology and biotechnology showed the strongest gains. The S&P 500 index added 35 points, or 1.83%, to trade at 1948.86. The Nasdaq Composite gained 113.87 points, or 2.46%, to trade at 4,749.98 as its Biotech sector shows the strongest performance.
Major European benchmarks finished higher ahead of Today’s interest rate decision by the European Central Bank. Contrary to U.S.’s movement towards a tighter market, the central bank is likely to continue its expansion policy and will therefore not raise interest rates. Despite a choppy session, European stocks ended mostly higher. The STOXX 600 added 0.3% to trade at 353.86 after moving between gains and losses throughout the day. The German DAX added 0.3% to close the day at 10,048.05 and the French CAC 40 rose 0.3% as well to trade at 4,554.92. The UK’s FTSE 100 added 0.4% to trade at 6,083.31 despite energy-related shares weighing down on the market.
Oil prices fell in early Thursday trading after U.S. stockpiles grew and the dollar strengthened. Major oil producers have been outputting record amounts of oil in the recent months while China shows signs of slowing demand. Furthermore, the Federal Reserve’s intent on raising interest rates is strengthening the dollar against other currencies, making it less attractive to countries with low dollar supplies. Crude oil fell 19 cents, or 0.41%, to trade at $46.06 a barrel. Brent oil fell 31 cents to trade at $50.19 a barrel.
The European Central Bank will release its interest rate decision today. Expect a lot of additional data on the Eurozone’s growth prospects. In light of the possible U.S. interest rate hike this month, the main focus this week will be the release of nonfarm payrolls on Friday.