US stocks up despite investor concerns
Investors fear lacklustre data indicates a loss of momentum in US economy
US stocks rose as expectations that the Federal Reserve will push any interest rate increases further into the year offset concerns over faltering economic growth spurred by a surprisingly weak jobs report last week. Photograph: Andrew Harrer/Bloomberg
US stocks rose in early trading yesterday as expectations that the Federal Reserve will push any interest rate increases further into the year offset concerns over faltering economic growth spurred by a surprisingly weak jobs report on Friday.
Stock markets across Europe were closed for the Easter Monday bank holiday. The Irish Stock Exchange and the major European markets reopen today after a four-day break.
Labor department data showed US employers last month added 126,000 jobs, the lowest in more than a year and well below expectations.
Yesterday New York Fed president William Dudley said the central bank would need to determine whether that jobs report foreshadowed a more substantial slowing in the labour market, adding he expected the path of rate hikes to be “relatively shallow”.
“That’s why they took it as dovish,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, of the market reaction to Dudley’s words. “Traders are taking advantage of headlines to move the market around.”
In other economic news, ISM data showed the pace of growth in the US services sector fell in March to its lowest level in three months, while a measure from Markit showed the sector expanded in March at its fastest pace since August.
Investors are concerned that a recent spate of soft economic data, including jobs, factory activity and consumer spending, may point to more than a weather-related slowdown and could indicate a loss of momentum in the US economy.
Still, the lacklustre data also eased some concerns over the US dollar continuing to strengthen and put pressure on the earnings of companies with international exposure.
Utilities, preferred by safety-seeking investors when treasury yields fall, were the best performer of the 10 S&P 500 sectors. Energy followed, helped by a more than 5 per cent jump in oil futures after Saudi Arabia raised its price for sales to Asia and estimates for crude build-ups fell.
US-listed shares of Amsterdam-based Uniqure jumped 46.6 per cent to $33.51 after a deal with Bristol-Myers Squibb to develop gene therapies for cardiovascular diseases.
Tesla Motors, the electric car company co-founded by Elon Musk, added 7.5 per cent to $205.36 after it reported a 55 per cent increase in deliveries in the first quarter. Apple added 1.2 per cent, while Coca-Cola rose 1.9 per cent amid gains in consumer stocks, with beverage companies Dr Pepper Snapple Group and Monster Beverage also rising.
EMERGING MARKETSSamsung Electronics
Samsung rose 2.5 per cent in Seoul as a technology gauge headed for a record close. The company’s first-quarter operating profit likely rose more than 5 per cent from the fourth quarter, Korea Economic Daily reported. The company is due to report earnings today.
The Russian rouble advanced for a fourth day versus the dollar as Brent crude jumped 3 per cent, while Malaysia’s ringgit surged 1 per cent and South Korea’s won added 0.7 per cent. Markets in China, Hong Kong, Taiwan and Thailand were closed.
“Weakness in the US data is great for this region,” Mixo Das, a Singapore-based equity strategist at Nomura Holdings, told Bloomberg. It “encourages outflows from developed markets and makes emerging economies” relatively more attractive.
The developing-nation gauge has risen 4.8 per cent this year and trades at 12.1 times projected 12-month earnings, Bloomberg data shows.– (Additional reporting Reuters/ Bloomberg)