Euro slides vs dollar as ECB seen signaling future easing
The euro weakened against the dollar on Wednesday, a day before a European Central Bank monetary policy meeting, pressured by expectations the bank may flag future interest-rate cuts.
The ECB is widely expected to keep policy unchanged at its meeting on Thursday, though President Mario Draghi may use the news conference afterwards to hint at future policy easing.
Projections for both growth and inflation in the euro zone are likely to be on the low side, giving the central bank room to cut rates in the coming months.
The dollar, meanwhile, extended gains against the euro and yen after a report showed U.S. private-sector employers added 198,000 jobs in February, another sign of improvement in the labor market.
Economists surveyed by Reuters had forecast the ADP National Employment Report would show a gain of 170,000 jobs. January's private payrolls were revised up to show an increase of 215,000 from the previously reported 192,000.
But while the ADP jobs data was important ahead of the U.S. non-farm payrolls report on Friday, investors remained focused on the ECB in the nearer term.
The euro <EUR=> was last down 0.5 percent at $1.2993 <EUR=>. It was the third time in four days that the euro has traded below the key $1.30 level. So far in 2013, the euro was down 1.6 percent.
Dow hits another record on ADP jobs data, S&P flat
The Dow hit another intraday record high on Wednesday on signs of improvement in the U.S. labor market, but the broader market was little changed as investors became cautious that the rally may soon run its course.
The stock market's rally this year has been fueled by signs of a strengthening U.S. economy, continued support from the Federal Reserve and fairly attractive equity valuations compared with other assets.
The S&P 500 index is trading at 13.6 times estimated 12-month earnings, compared with around 14.9 times in October 2007 when the index hit its intraday high, according to Thomson Reuters data. This suggests that stocks are still about 9 percent cheaper than they were at the 2007 peak.
Relative to junk bonds, the earnings yield on the S&P 500 - the inverse of the P/E ratio and used for valuation comparisons with bonds - is around 7.5 percent - above the yield to maturity on junk bonds, which is around 6.5 percent, data showed, indicating that stocks have a better value than the riskiest corporate bonds.
The Dow Jones industrial average <.DJI> rose 42.47 points, or 0.30 percent, to finish unofficially at 14,296.24. The Standard & Poor's 500 Index <.SPX> advanced 1.67 points, or 0.11 percent, to finish unofficially at 1,541.46. But the Nasdaq Composite Index <.IXIC> dipped 1.77 points, or 0.05 percent, to close unofficially at 3,222.36.
Gold up, faces headwind from Wall Street rally
Gold rose on Wednesday, but analysts expect the breakout in Wall Street stocks to new highs and data showing an improving U.S. economy to pressure the precious metal's safe-haven appeal.
News of another gold purchase by South Korea's central bank last month and hopes that outflow in gold-backed exchange-traded funds will peter out soon gave support. Bullion has now risen for a second day after its four-session losing streak.
The U.S. equities market resumed its climb into uncharted territory, with the Dow <.DJI> setting an intraday record for a second session on encouraging jobs and factory data. An extensive survey by the Federal Reserve's regional branches showing continued economic growth in January also boosted the stock market.
Spot gold <XAU=> was up 0.4 percent at $1,580.70 an ounce by 2:42 p.m. EST (1942 GMT), moving in a narrow range of less than $20.
Bullion prices are down nearly 6 percent so far this year and down about 18 percent from a record high of $1,920.30 an ounce hit in September 2011.
U.S. COMEX gold futures for April delivery <GCJ3> settled unchanged from Tuesday's close at $1,574.90, with trading volume about 20 percent below its 30-day average, preliminary Reuters data showed.
Oil Drops on Increase in U.S. Inventories
West Texas Intermediate oil fell for the fourth time in five days after a government report showed U.S. inventories increased more than forecast last week.
Prices dropped as much as 1.4 percent after the Energy Information Administration said supplies rose 3.83 million barrels, more than four times the 788,000-barrel median estimate in a Bloomberg survey of analysts. Refineries operated at the lowest rate in almost a year, reducing demand for crude to process into fuels. Venezuelan President Hugo Chavez died yesterday, and an election must be held within 30 days in OPEC’s fourth-biggest producer.
WTI for April delivery declined $1.13, or 1.2 percent, to $89.69 a barrel at 1:26 p.m. on the New York Mercantile Exchange. Futures dropped to as low as $89.55 a barrel from $90.16 after the report was released at 10:30 a.m. in Washington. Volume was 4.6 percent above the 100-day average for the time of day.
Brent for April settlement fell $1.01, or 0.9 percent, to $110.60 a barrel on the London-based ICE Futures Europe exchange. Volume was 32 percent above the 100-day average.
Nikkei set to rise above 12,000 on Wall Street gains
Japan's Nikkei share average is set to rise and trade above 12,000 on Thursday with sentiment strong after Wall Street ended at another record high, while the prospect of Japan soon adopting aggressively reflationary monetary policy is likely to support risk appetite.
Market players said the Nikkei <.N225> was likely to trade between 11,900 to 12,100 on Thursday after ending 2.1 percent higher at 11,932.27. If it trades above 12,000, it will be the first time since September 2008.
Nikkei futures in Chicago <0#NIY:> closed at 12,085, up 1.3 percent from the close in Osaka <JNIc1> of 11,930.
The Nikkei has gained about 15 percent this year, outperforming its global peers as the yen weakened on a determined monetary easing campaign by (now) Prime Minister Shinzo Abe.
Seoul shares seen extending gains on U.S. jobs data
Seoul shares are set to rise on Thursday, extending the previous day's gains as better-than-expected U.S. private payroll data supports increased risk appetite spurred by the Dow's record close.
The blue-chip Dow Jones index extended its record-breaking run on Wednesday and world stock markets edged higher as U.S. data showing a steady manufacturing sector and strong gains in private employment supported equity markets.
The benchmark Korea Composite Stock Price Index (KOSPI) <.KS11> closed up 0.2 percent at 2,020.74 points on Wednesday, edging closer to its near 2-month high reached on Feb. 28.
Hong Kong shares may see first loss in three days
Hong Kong shares may start lower on Thursday after two straight days of gains, with turnover likely subdued as investors await signs of more policy easing from Japan and Europe.
On Wednesday, the Hang Seng Index <.HSI> climbed 1 percent to 22,777.8, still some way off chart resistance at about 23,000, the top end of a narrow 500-point range the benchmark has traded in for more than two weeks.
Elsewhere in Asia, Japan's Nikkei <.N225> was up 0.9 percent, while South Korea's KOSPI <.KS11> was down 0.7 percent at 0100 GMT.
Source : Reuters
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