Stocks Rally After Weaker US Data – Dow up 0.35%
US stock markets rallied in trading yesterday after another weaker-than-expected jobs data print. The Dow gained 0.36%, the S&P 0.15% and the Nasdaq climbed 0.17% after JOLTS numbers failed to meet expectations. There was greater volatility in other products with US treasury yields experiencing a fourth day of losses, the benchmark 10-year losing another 7 basis points to trade down to 4.332% and the 2-year down 5 basis points to 4.773%. Currency markets saw plenty of volatility on the day with the Yen the shining light, gaining against the dollar and on the crosses after more comments from the BOJ regarding intervention. Oil took another step lower, its sixth day on the trot, as the market continued to price in lower production cuts later in the year, Brent dropping 1.07% to $77.52 a barrel and WTI losing 1.31% to $73.25 a barrel. Gold also lost ground on the day losing 0.9% to trade down to $2,329 an ounce.
BOJ Still has and Axe to Grind
Comments from Bank of Japan deputy governor Ryozo Himino pushed that Yen higher across the board yesterday as he advised the market that the bank must be very vigilant on the impact of Yens fluctuations on inflation. Traders are now looking for the BOJ to slow bond purchase plans at their meeting next week, which should push yields – and therefore the currency – higher. UsdJpy dropped 1.07% on the day with similar moves occurring on the crosses as carry trades were pulled back across the board. The market reaction proved that the BOJ still has plenty of punch and interest in the game at current levels and traders are preparing for more volatility in the days ahead.
Another Big Day Ahead for Traders
There was plenty of volatility in the market yesterday as data surprises and central bank updates saw moves across the sectors. Asian markets are expected to open with a cautious tone today after weaker US data led to a more subdued topside reaction from US stocks overnight. Australian markets will be in focus on the Asian open on Wednesday as the key Quarterly GDP data is due out early in the day with market expectations for a 0.2% increase. The European session has little to excite the market today with a raft of Final Services PMI data releases unlikely to cause too much movement. However, it is set to be a busy day in the North American session, the major focus will be on the Bank of Canada which is due to announce its latest rate decision early in the day with a 25-basis point cut firmly locked into market pricing. In the US we also have the ADP Non-Farms data and ISM Service PMI numbers due out which should see further volatility in US markets as traders look ahead to Friday’s key non-farm payroll update.
