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While you were sleeping: US jobs boost rate bets

Thursday 9th March 2017

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The US dollar strengthened as better-than-expected jobs data cemented bets Federal Reserve policy makers will lift interest rates next week. 

The ADP National Employment report, produced by the ADP Research Institute and Moody’s Analytics, showed US private payrolls rose by 298,000 jobs in February, the largest increase in nearly three years and far exceeding economists’ expectations.

"Powering job growth were the construction, mining and manufacturing industries," Mark Zandi, chief economist of Moody’s Analytics, said in the report. "Unseasonably mild winter weather undoubtedly played a role. But near record high job openings and record low layoffs underpin the entire job market.” 

The government’s nonfarm payrolls report is due on Friday. It’s expected to show employers added about 190,000 workers to payrolls, according to a Bloomberg poll of economists.

The Federal Open Market Committee begins its next two-day meeting on March 14. 

Wall Street was mixed. In 1.18pm trading in New York, the Dow Jones Industrial Average inched 0.02 percent lower. The Nasdaq Composite Index rose 0.4 percent. In 1.03pm trading, the Standard & Poor’s 500 Index eked out a 0.04 percent gain.

"Equities are at the crossroads of optimism and concern and are likely to go sideways until we get greater clarity from the Fed and legislative action," Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis, told Reuters.

In the Dow, slides in shares of Caterpillar and those of Exxon Mobil, recently down 1.8 percent and 1.5  percent respectively, outweighed advances in shares of DuPont and those of Microsoft, up 1.3 percent and 1 percent respectively. 

Shares of Caterpillar declined after the New York Times said it reviewed a report that accuses the heavy-equipment maker of carrying out tax and accounting fraud. 

“Caterpillar did not comply with either US tax law or US financial reporting rules,” wrote Leslie Robinson, an accounting professor at the Tuck School of Business at Dartmouth College and the author of the report, according to the New York Times.

“I believe that the company’s noncompliance with these rules was deliberate and primarily with the intention of maintaining a higher share price,” Robinson noted. “These actions were fraudulent rather than negligent.”

Shares of Exxon Mobil and those of Chevron, the latter down 1.4 percent recently, slid with oil prices after Energy Information Administration data showed crude oil inventories rose more than expected to another record high.

In Europe, the Stoxx 600 Index finished the day with an increase of 0.2 percent from the previous close. Germany’s DAX Index eked out a 0.01 percent gain, while France’s CAC 40 Index added 0.1 percent.

The UK’s FTSE 100 Index slipped 0.1 percent.

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