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While you were sleeping: Solid US jobs, manufacturing data

Friday 16th March 2018

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Wall Street was mixed as solid US jobs and manufacturing data offset a drop in shares of pipeline companies such as Energy Transfer Partners and Williams Cos following a regulator ruling that no longer allows them to recover an important income-tax allowance.

In 1.37pm trading in New York, the Dow Jones Industrial Average rose 0.8 percent. However, the Nasdaq Composite Index inched 0.06 percent lower. In 1.22pm trading, the Standard & Poor’s 500 Index rose 0.1 percent.

The Dow rose as gains in shares of McDonald’s and those of UnitedHealth Group, recently up 2.3 percent and 1.6 percent respectively, outweighed declines in shares of Intel and those of DowDuPoint, down 1.2 percent and 0.8 percent respectively.

US Treasuries slipped, sending the yield on the 10-year note one basis point higher to 2.83 percent.

The latest US reports offered evidence of ongoing strength in the jobs market as well as upbeat manufacturing data as the Federal Open Market Committee is set to gather for its next two-day policy meeting starting on Tuesday.  

A Labour Department report showed that the number of Americans filing for unemployment benefits fell 4,000 to a seasonally adjusted 226,000 for the week ended March 10.

“The strong willingness of companies to hold onto labour is a strong signal of the difficulty of replacing workers,” John Ryding, chief economist at RDQ Economics in New York, told Reuters. “At this point we would expect another robust gain in jobs [in March] and a drop in the unemployment rate to 4.0 percent.”

Separately, a New York Fed report showed its Empire State index jumped to a higher-than-expected reading of 22.5 in March, up from 13.1 in February.

“The factory orders number in conjunction with the possibility of another round of tax cuts would bolster the somewhat weakening growth story we’ve seen the past two weeks,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, told Bloomberg.

Shares of Monsanto dropped, down 4 percent as of 1.33pm in New York, after Bloomberg reported, citing two people familiar with the matter, that Bayer’s plan to win antitrust approval for its takeover of the US company hasn’t satisfied US officials who are worried the merger could hurt competition.

The Justice Department’s antitrust division doesn’t think Bayer’s proposal to sell businesses goes far enough, said the people, according to Bloomberg. The government wants the German chemicals company to divest more assets to resolve its concerns, said one of the people, who asked not to be named because the investigation is confidential, Bloomberg reported.

In Europe, the Stoxx 600 Index ended the session with a 0.5 percent advance from the previous close. The UK’s FTSE 100 index rose 0.1 percent, while France’s CAC40 Index added 0.7 percent, and Germany’s DAX Index climbed 0.9 percent.

Even so, short-selling demand for European equities has continued to rise this year, with current short bets of US$188 billion just below the post-financial crisis high of US$193 billion seen on February 16, Bloomberg reported, citing IHS Markit.

Following February’s global market rout, the Stoxx 600 Index is still down 3.5 percent for the year, underperforming US and global gauges, according to Bloomberg.


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