Markets take breather ahead of US jobs data

LONDON— Markets took a breather yesterday after solid gains in the previous session, as investors positioned themselves for crucial US jobs data that often set the tone for a week or two after their release.

A recent run of solid US economic news has reinforced hopes that today’s nonfarm payrolls data will provide further evidence that the world's largest economy is over its soft patch from last summer. The consensus in the markets is that the US economy generated around 170,000 jobs during January.  Though that is unspectacular for an economy recovering from its worst recession since World War II, the amount of jobs being created is up from levels seen just a few months ago.

 

The pickup in the US economic data, in general, has also helped support market sentiment at a time when there is a huge amount of uncertainty relating to Europe’s debt crisis, despite more successful bond auctions yesterday from France and Spain. Jobless claims figures released yesterday showing a 12,000 decline last week were met with some relief, as last week's figures had shown a bigger than anticipated 24,000 increase. “The trend remains friendly and supportive of further gains in hiring,” said Jennifer Lee, an analyst at BMO Capital Markets. A raft of earnings in Europe have also helped maintain trading activity, as has confirmation that mining company Xstrata PLC is in merger discussions with commodities trader Glencore International PLC. A deal would create a company with revenues of around US$175 billion and the news has helped both share prices rally in London.

 

The share price rises of both companies helped Britain’s FTSE 100 index of leading shares close 0.1 per cent higher at 5,796.07. Meanwhile, Germany’s DAX rose 0.6 per cent to 6,655.63 and the CAC-40 in France ended 0.3 per cent higher at 3,376.66. The euro was also subdued after recent gains, trading 0.1 per cent lower at $1.3143. Investors will also be monitoring comments later from Federal Reserve Chairman Ben Bernanke during testimony to lawmakers in Congress. In prepared testimony, he warned that developments in Europe or elsewhere could “worsen economic prospects at home.” (AP)