US stocks, dollar gain on strong private jobs reports; Europe flat

Oil hits one-month high near $55 a barrel

NEW YORK, April 5, (RTRS): US stocks rose on Wednesday, with the Nasdaq hitting a fresh alltime high on strong US private sector-jobs data, which also lifted the dollar as it backed forecasts for at least two more interest rate hikes by the Federal Reserve this year.

US companies added 263,000 workers in March, the most since December 2014, pointing to further tightening of the labor market, payrolls processor ADP said.

The report easily beat the median forecast, among economists surveyed by Reuters, of a 187,000 increase.

The US dollar gained against the Japanese yen for the first time in four days after the report, which supported forecasts for at least two more rate hikes by the Fed this year.

The dollar index rose 0.12 percent, with the euro down 0.17 percent to $1.0654. The yen weakened 0.44 percent versus the greenback to 111.23 per dollar.

The jobs data brought investors back into the market even as concerns about US President Donald Trump’s ability to deliver on his pro-growth policy plans persist after a recent legislative setback.

On Wall Street, the Dow Jones Industrial Average was on track for its best day since March 1 in a broad rally.

The Dow rose 141.19 points, or 0.68 percent, to 20,830.43. The S&P 500 gained 13.06 points, or 0.55 percent, to 2,373.22 and the Nasdaq Composite added 26.87 points, or 0.46 percent, at 5,925.48.

European stocks rose on the ADP report but pared gains to close flat. The pan-European FTSEurofirst 300 index fell 0.01 percent to close at a provisional 1,497.68, while the STOXX Europe 600 Index, a broad mix of companies from 17 regional countries, rose 0.02 percent.

MSCI’s all-country world index of stocks from 46 countries gained 0.31 percent.

Oil prices rose on an outage at the largest UK North Sea oil field, but gains were tempered by a surprise increase in US crude inventories to a record high.

Prices rose early and then seesawed after the US government reported a weekly rise in crude inventories of 1.6 million barrels.

US

US stocks rose on Wednesday in a broad-based rally, spurred by a blowout private employment data that reinforced the strength of the economy.

US companies added 263,000 workers in March, the most since December 2014 and well above economists expectations of 187,000.

The report by payrolls processor ADP acts as a precursor to the Friday’s nonfarm payrolls data that includes hiring in both the public and private sectors.

All the 11 major S&P 500 sectors were up, with financials and technology giving the biggest boost.

The Nasdaq hit an all-time high, buoyed by Amazon. Microsoft and Apple touching record highs.

At 12:33 pm ET (1633 GMT), the Dow Jones Industrial Average was up 152.3 points, or 0.74 percent, at 20,841.54, the S&P 500 was up 14.66 points, or 0.62 percent, at 2,374.82.

The Nasdaq Composite was up 30.62 points, or 0.52 percent, at 5,929.23. It hit a record of 5,933.77.

The ADP report drew investors back into the market after a period of rangebound trading amid worries about President Donald Trump’s ability to deliver on his policy plans after recent setbacks in Congress.

However, investors are cautiously awaiting a meeting between Trump and Chinese President Xi Jinping that starts on Thursday.

The meeting, which Trump expects will be a “very difficult one”, is likely to focus on North Korea’s arms program and China-US trade.

Lofty market valuations — in the wake of the post-election rally — will be tested when the first-quarter earnings season starts next week.

“Valuations from a historical standpoint are in the high end but as long as earnings growth and GDP continue to do well, there is argument that they are justified,” Clouston said.

Panera Bread jumped nearly 14 percent to $311.96 after JAB Holdings said it would buy the bakery chain for $7.16 billion.

The Federal Reserve will release the minutes of its March policy meeting at 2:00 pm ET (1800 GMT).

Advancing issues outnumbered decliners on the NYSE by 1,865 to 966. On the Nasdaq, 1,532 issues rose and 1,203 fell.

The S&P 500 index showed 34 52week highs and three lows, while the Nasdaq recorded 62 highs and 35 lows.

Europe

European shares ended little changed on Wednesday, as gains in commodity stocks were offset by weaker autos, but investors remained upbeat about prospects for the region’s equities following solid economic data.

The pan-European STOXX 600 index ended at 380 points after moving in an out of positive territory throughout the session. UK’s FTSE added 0.1 percent and Germany’s DAX slipped 0.5 percent.

Euro zone businesses had their best quarter in six years, construction purchasing managers’ indexes showed, with individual countries’ data also improving, indicating broad-based growth in economies across Europe.

Though major indexes were little changed after the data, it added to an improving picture for investors looking at European equities.

Draghi has been ECB president since November 2011.

In a further sign of growing confidence, Citi upgraded continental European stocks to overweight, predicting that the STOXX 600 index would rise another 8 percent by year-end.

Meanwhile merger and acquisitions activity continued to drive price action on Wednesday.

Syngenta rose 0.9 percent after ChemChina won conditional EU antitrust approval for its $43 billion bid for the Swiss pesticides and seeds group.

Danish business support services firm ISS rose 4 percent after agreeing to buy US catering firm Guckenheimer for 1.5 billion Danish crowns ($222 million).

Oil services groups Wood Group rose 2.7 percent after saying it expected about 36 percent more cost savings from its deal to buy Amec Foster Wheeler for 2.2 billion pounds. Amec rose 2.2 percent.

Petrofac lagged a positive oil sector, down 3.5 percent after downgrades from Deutsche Bank and Bernstein.

Autos stocks were the worst-performing sector for the second straight day, down 1.1 percent to their lowest closing level in nearly 8 weeks.

Asia

Chinese stocks rose on Wednesday led by the Shanghai benchmark posting its best day in eight months, as investors cheered Beijing’s decision to launch a new economic zone in Hebei province, sending shares of several related firms surging by the daily limit of 10 percent.

The blue-chip CSI300 index rose 1.4 percent to 3,503.89 points, while the Shanghai Composite Index gained 1.5 percent to 3,270.31 points.

China on Saturday approved a new special economic zone, described as “a thousand year project”, in the heavily polluted province of Hebei, to focus on building clusters of high-tech and innovative businesses and take over some “non-capital functions” from Beijing.

Tian identified several sectors aside from property that would benefit from the plan, including environmental and infrastructure stocks.

“This time the momentum is more sustainable because it’s boosted not simply by the housing market, which holds lots of uncertainty at the moment,” Tian said.

An index tracking major developers added 1.6 percent, despite Beijing’s ban on property sales to contain speculators after a sudden housing boom in the new economic zone.

The central bank injected 618.99 billion yuan ($89.86 billion) into the financial system via short- and mediumterm liquidity tools in March, up nearly 50 percent from the previous month.

Sectors rallied across the board, led by infrastructure and material stocks, seen benefiting greatly from the development of the new zone.

Shares of more than 30 companies related to the new economic zone shot up by the maximum allowed 10 percent, including developer BBMG Corp, cement maker Jidong Cement and harbour operator Tianjin Port.

Hong Kong stocks eked out marginal gains on Wednesday, drawing inspiration from a mainland rally, but gains were limited as investors were cautious before a highly-anticipated meeting between US President Donald Trump and his Chinese counterpart Xi Jinping later this week.

Oil

Oil hit a one-month high near $55 a barrel on Wednesday as a fall in US crude inventories raised hopes OPECled supply cuts were clearing a glut, while an outage at the largest UK North Sea oilfield lent support.

US crude inventories fell by a morethan-expected 1.8 million barrels last week, American Petroleum Institute data showed on Tuesday. The focus is now on whether the government’s supply report on Wednesday confirms the decline.

“Should it confirm that US crude stocks did indeed fall for what would only be the second time this year, it will mark the start of a sustained tightening in US crude supplies,” said Stephen Brennock of oil broker PVM.

Global benchmark Brent crude was up 70 cents at $54.87 a barrel by 1334 GMT. It reached $54.95 intraday, the highest since March 8. US crude gained 68 cents to$51.71.

Oil also rose after an outage at the 180,000-barrels-per-day Buzzard field in the North Sea. Buzzard is the largest field contributing to Forties, the most important of the four crude streams underpinning Brent.

“This outage more than offsets the increase in oil production in Libya,” said Carsten Fritsch of Commerzbank, referring to the recovery in output at Libya’s Sharara field.

An output cut from Jan. 1 led by the Organization of the Petroleum Exporting Countries has helped Brent recover from a 12-year low near $27 last year, although rising US output and stubbornly high stocks have limited the rally.

Gold

Gold fell from one-month highs on Wednesday after better-than-expected US jobs data boosted US bond yields and the dollar, but safe-haven demand ahead of a meeting of US and Chinese leaders limited losses.

A stronger dollar makes gold more expensive for holders of other currencies, while higher bond yields dampen demand for non-yielding bullion.

Spot gold was down 0.8 percent at $1,245.63 an ounce at 1400 GMT, while US gold futures were 0.8 percent lower at $1,248.40 an ounce.

Gold touched $1,261.15, its highest since Feb. 27, on Tuesday but failed to close above its 200-day moving average, currently at $1,258, for the third time in less than six weeks.