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U.S. businesses added 263,000 jobs in March

06 Apr 2017

Asia and Australia
Asia: markets lower following largest turnaround in US stocks for 14 months. Overnight US stocks started strong, however FED minutes showed there was a real discussion happening around the FED's $4.5t balance sheet, and statement said stocks are "quite high". SPX futures have now been trading below the psychological 21-day exponential average, which implies further weakness. Trading volumes in Asia are higher but we haven't seen the sellers coming in yet. Nikkei -1% and back to January lows. Financials and Utilities lead losses. Shanghai, flat and holds onto yesterday's best day of the year. FT article suggest further upside as earnings beating and dividend policy improving.Best Sectors Property, Utilities and Pharma. Worst Sectors Banks, Materials, and Tech.
U.S Equities:  A big rally in U.S. stocks evaporated Wednesday as the Federal Reserve appeared to struggle with questions related to inflation and government policy and suggested it might start trimming its balance sheet later in the year. The S&P index shed 7.21 points, or 0.3percent, to 2,352.95. The Dow dropped 41.09 points, or 0.2percent, to 20,648.15. The Nasdaq skidded 34.13 points, or 0.6percent, to 5,864.48. Stocks had jumped early on after payroll processor ADP said private U.S. businesses added 263,000 jobs in March, which was more than analysts expected. The Dow Jones industrial average rose as much as 198 points, and the Nasdaq composite reached an all-time intraday high. Industrial and energy companies made some of the largest gains. But stocks halted their advance and started falling at 2 p.m. Eastern, when the Fed disclosed the minutes from its policy meeting last month. The minutes showed Fed officials discussing plans to reduce the Fed's bond holdings later this year and disagreeing over whether it would be safe to let inflation rise faster and how to deal with the economic impact of President Donald Trump's stimulus ideas. Banks made strong gains in early trading but they wound up with much bigger losses than the rest of the market. For the last couple of months, it seemed investors and the Fed understood each other well, as the central bank indicated it intended to keep raising interest rates gradually assuming the economy continued to grow at a steady clip. It raised rates in December and March. The uncertainty reflected in the Fed's March meeting may challenge that understanding. Potential that Fed will halt reinvestments sooner than expected, as well as continued discord in Washington, weighing on investors. Private payrolls climbed by 263,000 (forecast was 185,000) on solid gains in construction and manufacturing and at small businesses.
Currencies & Commodities

USD/RUB    56.32    GBP/ZAR    17.2694    EUR/USD    1.0674    YEN/USD    110.5
Gold    1253.66    Platinum    958    Crude    53.23    Copper    267.15

Oil:  U.S. crude supplies are again haunting oil prices, chilling optimism over a possible extension of OPEC-led output cuts that helped drive a rally over the past week.

Gold: steady as investors weigh minutes from Federal Reserve’s last meeting in mid-March showing that officials favour shrinking bank’s balance sheet later this year. 

Metals: Copper holds gains on speculation that China’s plan to develop new economic zone near Beijing will boost demand, and as Southern Copper faces strike at Peruvian mine. Nickel retreats from 1-month high.
OUR VIEW: We remain bullish on Gold, the Russian Rubel and Japanese Yen and negative on US markets.

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