Article – BusinessDesk
March 10 (BusinessDesk) – Oil dropped amid intensifying concern about record US stockpiles, while the euro strengthened as European Central Bank President Mario Draghi said risks to the regions growth have become less pronounced.Friday 10 March 2017 09:04 AM
While you were sleeping: Oil sinks, euro rises
By Margreet Dietz
March 10 (BusinessDesk) – Oil dropped amid intensifying concern about record US stockpiles, while the euro strengthened as European Central Bank President Mario Draghi said risks to the region’s growth have become less pronounced.
West Texas Intermediate for April delivery dropped as low as US$48.79 a barrel in New York.
“People are nervous about the global supply-demand balance,” Adam Sieminski, a scholar at the Centre for Strategic and International Studies in Washington and former head of the Energy Information Administration, told Bloomberg. “Shale is coming back with $50 oil and there’s uncertainty about whether OPEC and its partners are going to roll-over the production agreement.”
Wall Street inched higher as investors eyed the latest US jobs data. A Labour Department report showed that initial claims for state unemployment benefits climbed 20,000 to a seasonally adjusted 243,000 for the week ended March 4.
“There is no evidence of a pickup in involuntary employment separations,”John Ryding, chief economist at RDQ Economics in New York, told Reuters. “We view this as evidence of a tight labour market.”
Indeed, the ADP National Employment report on Wednesday showed US private payrolls posted the largest jump in nearly three years, well above economists’ expectations.
The government’s nonfarm payrolls report, due on Friday, is expected to show that employers added about 200,000 jobs in February, according to a Bloomberg poll, while a Reuters survey predicts a gain of 190,000 jobs.
Fed Chair Janet Yellen last week signalled the central bank will raise interest rates next week. The Federal Open Market Committee begins its two-day meeting on March 14.
In 1pm trading in New York, the Dow Jones Industrial Average eked out a 0.03 percent gain, while the Nasdaq Composite Index added 0.13 percent. In 12.45pm trading, the Standard & Poor’s 500 Index rose 0.09 percent.
“The market is setting up for the two-part symphony we are going to see over the next four trading days, the first is tomorrow’s jobs number and then the Fed meeting, which is the real big event,” Joe Brusuelas, chief economist at RSM US in New York, told Reuters.
In the Dow, gains in shares of Johnson & Johnson and those of Intel, up 1.3 percent and 0.9 percent respectively, offset declines in shares of Caterpillar and those of IBM, down 1.8 percent and 1.4 percent respectively.
In Europe, the Stoxx 600 Index finished the day with a gain of less than of 0.1 percent from the previous close amid a more optimistic tone from the ECB’s Draghi.
“The risks surrounding the euro area growth outlook have become less pronounced, but remain tilted to the downside and relate predominantly to global factors,” Draghi said at the end of a policy meeting at which the central bank kept its asset purchase program and interest rate unchanged.
Germany’s DAX Index added 0.1 percent, while France’s CAC 40 Index rose 0.4 percent.
Quantitative easing “is here to stay in the euro zone, until at least the end of this year. However, more policy action is less likely because deflation risks have receded,” Kathleen Brooks, research director at City Index, wrote in a note, Bloomberg reported. “Reading between the lines suggests that the next change from the ECB will be towards removing accommodation and not adding it.”
The UK’s FTSE 100 Index fell 0.3 percent.
Shares of France’s Carrefour slid 4 percent after the world’s second-largest retailer posted results that disappointed investors “in a difficult competitive environment” in its home market.