U.S. markets were slightly lower and the S&P finishing virtually flat. Investors were only slightly happy with a strong service sector report, but the private ADP jobs report missed the mark.
Private employers added only 175,000 jobs in January. We had expected them to add 180,000 new jobs. Decembers report was adjusted lower from 238,000 to 237,000. We are now waiting for the non-farm payroll report due out Friday. In other data released yesterday, the U.S. reported its Supply Management non-manufacturing index for January. This number came in better than expected at 54.0.
STOCKS
The DJIA recovered from an early 104 point drop to finish lower by 5 points at 15,440.23. The S&P 500 was pretty much flat, finishing down 3.56 points to end the day at 1,751.64. Telecommunications were hardest hit and technology stocks fared better on the day. The tech heavy Nasdaq Composite lost nearly twenty points to close at 4,011.55.
Japan’s benchmark, the Nikkei Index is adding to Wednesday’s one percent gain as it is currently up 0.30 percent. Investors are cheering a slightly weaker yen as it is moving back from 11 week high against both the Dollar and Euro. This is helping exporter stocks to recover. Yesterday, the index fell below 14,000 for a brief period. This was its lowest level since October 9, 2013.
China’s markets reopened today after being closed for the week long Lunar New Year. The Hang Sang Index has ended its three day skid and is up 0.47 percent. The Shanghai Composite remains weak and is trading 0.8 percent lower.
In Sydney, the ASX 200 has jumped one percent on positive economic data. The index is ending a three day losing kid. The AUD/USD has now touched a three week high near key resistance at 0.8980. December’s trade surplus came in at AUD$0.648 billion. We had expected a deficit of AUD$0.2 billion. Retail sales beat estimates rising 0.5 percent.
CURRENCIES
EUR/USD (1.3522) has formed a bearish flag near 1.3540/1.3550 resistance area. This could indicate a dip ahead targeting 1.33 on a break below 1.35. Selling pressures could bring this market to 1.31.
USD/JPY (101.60) is still trading at the key support turned resistance level of 101.60. While below this level we are bearish, and more so below 102.50. We need a break above 103.50 for a rally. Till then we could dip to 98 in the coming days. AUD/USD (0.8961) we have seen a sharp recovery from 0.87/0.8670 area. While above 0.89, we could see a nice rally to 0.90 and maybe 0.9075.
COMMODITIES
Gold (1256.10) moved up sharply the failed at 1275 (at 1274.41) and fell sharply back to support near 1250. We are range bound now. A break above 1275 targets 1295 and then 1300. Silver (19.895) has moved above 19.50 and can now target 20. A break higher can test 20.50. Copper (3.203) has moved up from 3.17/3.15 support area. We can now target 3.30 while above 3.20. We need to clear 3.25 first, however.
TODAY’S OUTLOOK
Markets are event driven. The European Central Bank and Bank of England have their policy meetings today. We expect the ECB to cut rates to combat deflationary pressures. Tomorrow, is the all-important NFP jobs report.