Ritzau Scanpix Denmark/Reuters
- US markets were closed Thursday for the Fourth of July holiday.
- European stocks rose Wednesday as disappointing US employment and commercial data fueled anticipation of looser monetary policy.
- US hiring figures from the payment processor ADP missed market forecasts, while the ISM nonmanufacturing PMI survey delivered its lowest reading in nearly two years.
- “This host of reports again validates the slowdown in the US economy and explains why the Fed seems poised to start cutting interest rates as soon as possible,” said Konstantinos Anthis, the head of research at ADSS.
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European stocks rose Wednesday as disappointing US employment and commercial data fueled anticipation of looser monetary policy. Trading was light ahead of the Fourth of July holiday in the US, where markets were closed Thursday.
The payment processor ADP reported American companies hired 102,000 workers in June, below the 140,000 projected by a Reuters poll of economists. The ISM nonmanufacturing PMI also dropped to 55.1 last month, its lowest level in nearly two years, signaling slower growth across sectors such as real estate, retail, finance, and construction.
“This host of reports again validates the slowdown in the US economy and explains why the Fed seems poised to start cutting interest rates as soon as possible,” said Konstantinos Anthis, the head of research at ADSS.
The nomination of the International Monetary Fund’s chief, Christine Lagarde, to become the next president of the European Central Bank also fueled positive sentiment. The European Council’s support of Lagarde, who has praised the willingness of the ECB’s current president, Mario Draghi, to intervene in markets, raised traders’ hopes of lower interest rates as well.
“Lagarde’s nomination as Draghi’s replacement is hinting on a continued monetary loosening of ECB policy as a means to reinvigorate growth in the region, further underpinning the dovish sentiment,” Anthis said.
Market enthusiasm was tempered, however, by US President Donald Trump’s latest attacks on Europe and China.
“China and Europe playing big currency manipulation game and pumping money into their system in order to compete with USA,” Trump tweeted on Wednesday. “We should MATCH, or continue being the dummies who sit back and politely watch as other countries continue to play their games – as they have for many years!”
The president’s comments, together with America’s trade disputes with China and Europe and rising tensions with Iran, have concerned Michael Every, the senior Asia-Pacific strategist at Rabobank.
“When one looks at what looks like a fresh global easing cycle from already ridiculously low levels of rates,” he said, “and trade wars underway, and open calls to FX wars too, and fears of hot wars in several places, one really has to rain on this particular 4 July parade.”
Here’s the market roundup as of 9:30 a.m. in London (4:30 a.m. ET):
- Asian stocks were mixed, with Japan’s Nikkei up 0.3%, the Shanghai Composite down 0.3%, and Hong Kong’s Hang Seng down 0.2%.
- European equities jumped in morning trading, with the Euro Stoxx 50 up 0.2%, Germany’s DAX up 0.1%, and Britain’s FTSE 100 flat.
- Oil prices have slid, with West Texas Intermediate crude down 0.9% at $56.80 and Brent crude down 0.9% at $63.20.
- Gold has fallen 0.3% to $1,416.
- Bitcoin has rallied 3.8% to $11,730.