Inside Financial Markets



SYDNEY, April 4 (Reuters) – Asian markets put discretion before valour on Friday as investors counted down the final hours to the U.S. jobs report, while the euro nursed a grudge after the European Central Bank opened the door to more aggressive easing, albeit not just yet.

With virtually no major data of note due in Asia, moves were minor across the region. Australia’s share market inched up 0.2 percent  .AXJO, while MSCI’s broadest index of Asia-Pacific shares outside Japan  .MIAPJ0000PUS barely budged.

Japan’s Nikkei  .N225 eased a fraction, with a softer yen providing some support, while Shanghai  .SSEC rose 0.2 percent.

Wall Street had been no livelier, with the Dow  .DJI ending flat and the S&P 500  .SPX off 0.11 percent. On Friday, the S&P 500 E-Mini contract  ESc1 was just a whisker firmer.

The March U.S. payrolls report looms as a major test to the argument that the economic weakness of January and February was due to bad weather and the recovery is still on track.

Median forecasts are for a rise of 200,000 in payrolls, though dealers say the whisper number in markets is now something nearer 220,000. A result around there should reassure the optimists and tend to underpin the dollar and stocks.

Perversely a much stronger read might not be so positive for shares since it could reignite speculation of an earlier rate hike from the Federal Reserve.

Likewise, a weak number would likely hurt the dollar and boost Treasuries, but the impact on equities might be tempered by expectations monetary policy would stay loose for longer.

Thursday’s U.S. numbers were too mixed to draw any conclusions on the outlook for policy.

The ISM measure of service sector activity bounced to 53.1 in March, and while it was slightly below forecasts it did show a welcome recovery in employment intentions.  TOP/CEN

However, data also showed an unexpected widening of the U.S. trade deficit which implied net exports were a much bigger drag on the economy last quarter than first thought. Indeed, RBS halved their forecast for growth to just 0.6 percent annualised.



In Europe, the ECB took no new action, as was widely expected, but President Mario Draghi was at pains to emphasise the central bank’s willingness to act if inflation stayed low.

Crucially, Draghi declared the policy making council was “unanimous” on using unconventional easing if needed. That marked a major change as some countries, notably Germany, have long opposed steps such as quantitative easing. (Full Story)

European bond yields fell as a result and even Greek 30-year bond yields  GR30YT=RR slipped below 6 percent for the first time since the global financial crisis.

That in turn dragged down the euro to a five-week trough at $1.3698  EUR=, and left it at $1.3708 on Friday.

The setback in the euro saw the dollar index  .DXY climb to its highest level since Feb 27. The greenback also extended gains on the yen, popping above 104.00  JPY= for the first time since Jan 23. It last traded at 103.90 yen.

In commodities markets, one of the few movers was aluminium  CMAL3 which was on track for its biggest weekly gain in more than eight months as a series of capacity cutbacks by top producers underpinned the market.

Spot gold  XAU= was pinned at $1,286.89 an ounce, and still uncomfortably close to the two-month trough of $1,277 touched early this week.

Brent  LCOc1 steadied at $106.19 a barrel after a bounce of 1.4 percent on Thursday, while U.S. crude  CLc1 added 15 cents to $100.44 a barrel.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)