US non-farm data sinks markets ahead of ECB conference tomorrow

The white knight of a strong US open bolted this afternoon after weak ADP non-farm employment change data.

The preliminary non-farm figure came in at 212k, missing forecasts by around 9,000 jobs and leaving the health of Friday’s government figure in doubt. The US markets fell into a dismal state following this news, as investors jumped ship for the second day in a row. However this dour ADP release comes with some caveats; firstly, January’s figure saw a robust revision, with 50,000 new jobs added; secondly, the ADP hasn’t been all that accurate with its initial estimates, i.e. pre-revisions, in the past 5 months, leaving the chance for yet another impressive non-farm release come the end of the week.

There was also good news elsewhere; after plaguing the European markets this morning, the USA’s own final services PMI marginally beat expectations, with similar gains made by the ISM non-manufacturing data. And whilst doubts have begun to creep in surrounding the sustainability of these market highs, there was no doubt over the strength of the US dollar, which chomped at the euro and the pound following the combination of ADP revisions and the weaker situation in Europe.

After a nightmare morning, the Eurozone indices were in marginally better health this afternoon, as they looked ahead to tomorrow’s momentous ECB conference. Draghi and co. will reveal the full extent of the European Central Bank’s quantitative easing plan, with the markets likely to benefit from this latest clarification. Whilst this stimulus is set to become clearer, there remains a murkiness surrounding the chances of a third Greek bailout; following more comments from the ever-chatty Spanish economy minister suggesting that a €30-€50 billion bailout is still on the table, the Germany finance ministry was adamant that a such a scheme will not be on the agenda at next week’s Eurogroup meeting.

The FTSE resembled the US rather than Eurozone markets this Wednesday, failing to escape the precipitous losses that began yesterday afternoon. With little on the cards tomorrow, bar what should be a predictable BoE interest rate vote, the UK index will be hoping to borrow the boost the Eurozone indices are likely to receive after Draghi’s QE statement. And after holding onto $60 per barrel despite the hostile trading environment, Brent Crude finally sunk below this figure after a 10.3 million barrel increase in US crude oil inventories.