While you were sleeping: US jobs exceed estimates

Thursday 6th April 2017

Wall Street climbed, pushing the Nasdaq to a record high, as better-than-expected US jobs data bolstered optimism about the outlook for the US economy and corporate profits.

An ADP Research Institute report showed US companies added 263,000 workers in March, far exceeding economists' expectations for 185,000.

“Job growth is off to a strong start in 2017,” Mark Zandi, chief economist at Moody’s Analytics in West Chester, Pennsylvania, said in a statement, Bloomberg reported. Moody’s produces the figures with ADP.

“The gains are broad based but most notable in the goods-producing side of the economy including construction, manufacturing and mining,” according to Zandi.

The government's nonfarm payrolls report, slated for release on Friday, is expected to show US employers added 175,000 jobs in March.

Meanwhile Federal Reserve policy makers might begin easing the central bank’s balance sheet this year, according to minutes of the Federal Open Market Committee’s March 14-15 meeting released on Wednesday.

“Most participants anticipated that gradual increases in the federal funds rate would continue and judged that a change to the committee’s reinvestment policy would likely be appropriate later this year,” the minutes showed.

“Many participants emphasised that reducing the size of the balance sheet should be conducted in a passive and predictable manner,” according to the minutes.

Wall Street rallied. In 1.55pm trading in New York, the Dow Jones Industrial Average climbed 0.8 percent, while the Nasdaq Composite Index gained 0.6 percent. In 1.40pm trading, the Standard & Poor’s 500 Index rose 0.7 percent.

The better-than-expected jobs data underpinned other recent signs of optimism for the US economy.

"The GDP number was recently revised upward, jobs continue to look good, inflation is moving in the right direction," Myles Clouston, senior director at Nasdaq Advisory Services in New York, told Reuters. The ADP report “was just another piece of the puzzle that gives the market some confidence that we are still on track.”

Gains in shares of DuPont and those of Caterpillar, up 2 percent and 1.9 percent respectively, led the Dow higher. The only declining stocks in the Dow, as of early afternoon, were Cisco and Wal-Mart, down 0.3 percent and 0.1 percent respectively.

Panera Bread shares jumped, trading 13.8 percent higher at US$311.88 as of 12.57pm in New York. JAB Holdings, which owns a slew of coffee brands including Peet’s Coffee and Keurig Green Mountain, agreed to buy the bakery chain in a deal valued at about US$7.5 billion, including the assumption of about US$340 million of net debt.

JAB, which also owns Krispy Kreme Donuts, will pay US$315 per share in cash, the companies said in a joint statement. The deal is expected to close in the third quarter of this year.

"We view the acquisition as strategically compelling for JAB," Wedbush Securities analyst Nick Setyan said in a note, Reuters reported. “We view the acquisition price as high enough to preclude a competing financial suitor.”

In Europe, the Stoxx 600 Index eked out a gain of less than 0.1 percent advance from the previous close. The UK’s FTSE 100 Index gained 0.1 percent.

Meanwhile, France’s CAC40 Index slid 0.2 percent, while Germany’s DAX Index fell 0.5 percent.

European bonds slid after Bundesbank President and European Central Bank Governing Council member Jens Weidmann told Die Zeit the time was approaching for the ECB to ease monetary stimulus and that he would welcome a lower pace of ECB bond purchases in a year from now.

(BusinessDesk)

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