Stocks firm ahead of Non-Farm Payrolls
Most major European stocks advanced in early morning trading, breaking the trend for the week as markets try to end the week on a positive note ahead of major economic news today from Europe and the US. US nonfarm payrolls, due out at 13:30GMT is expected to show that the recovery of the world’s largest economy is intact. This outlook has led the Cac40, Dax30 and Stoxx50 all into positive territory this morning despite the continuing fears over Europe’s financial problems.
This week has seen more uncertainty in Europe, extended by renewed pressure on Italian bonds which reflect the euro zone’s fear that the debt crises is spinning out of control. There are also fears that France will lose its triple-A rating that will pull Europe into another recession. The crisis has led IMF chairwomen to come out and defend the EURO, saying that the single currency is likely to stay intact in 2012.
On the FTSE exchange, financials were all up in early morning trading led by Barclays PLc up by over a percent. Vodafone, the world’s largest mobile-phone operator, also moved to the upside - up 2.1% after Goldman Sachs changed its rating from ‘neutral’ to a ‘buy’.
Other financial institutions were not fairing as well today as fears over the outlook for the single currency region's banks have grown since Italy's UniCredit was forced to offer deep price discounts to sell new shares to shore up its crisis ravaged balance sheet. UniCredit stock has fallen around 30% in the previous two sessions and opened on Friday down about 5 percent despite the bank splitting its stock over a week ago. The stock has been suspended briefly today as it trades on its downward limit.
EUR Hits New Lows
USD - Positive US Jobs Report sends USD bullishThe US dollar trended up, following a better than expected ADP Non-Farm Payrolls figure and Unemployment Claims report. The ADP figure came in at 325K, notably higher than the forecasted 176K. Today’s Non-Farm Payroll will measure the number of non-farm jobs added to US payrolls during the month of December. Analysts are predicting the Non-Farm Payroll number to come in at about 152K, a sizeable increase over November's 120K figure, although this figure is notoriously hard to predict.
EUR - Euro-Zone News Sends EUR Tumbling
The EUR hit a 16-month low against USD and GBP and hovered around an 11-year low against the JPY, and further declines have not yet been discounted for the battle scorn single currency.
Investors have growing concerns about the borrowing costs of Italy, which faces the daunting task of paying down 100 billion Euros in bond coupons and redemptions in the opening third of 2012 alone.
JPY - Yen Tumbles Against USD Following US Jobs Report
The JPY hit an 11-year high, largely due to the on-going string of negative news regarding the euro-zone debt crisis. At the same time, positive US jobs data sent the USD/JPY soaring above the 77.00 level.
Today’s Non-Farm Payrolls figure is likely to cause heavy volatility among yen pairs. Also notable was Japans purchase of €300m of EFSF bonds.
Investors should pay close attention to today’s US Non-Farm Payrolls figure due for release at 13:30 GMT. A positive figure is forecasted, however investors . Any further negative news out of the euro-zone will likely cause the euro to drop further.