FYI | Oct 05 2007
By Rudi Filapek-Vandyck
As one would have expected trading activity remained muted on Wall Street on Thursday ahead of the all-important nonfarm payrolls data for September which will be released later today (early Saturday morning Sydney time).
The fact that another data release concerning the US labour market turned out worse than expected didn’t exactly increase investor confidence ahead of Friday’s event.
The US Labor Department announced initial jobless claims rose a greater-than-expected 16,000 to 317,000. Market consensus had been for initial jobless claims of 310,000 only.
The Dow Jones Industrial Average rose 6 points to 13,968, the S&P 500 added 3 points at 1543 and the Nasdaq Composite closed up 4 points at 2734.
Current market consensus is for Friday’s September nonfarm payrolls data to show the US economy added 100,000 jobs but investors still remember the expectations for last month were similar while the actual release showed 4,000 jobs were lost.
Doubts about US economic strength reportedly weighed on copper, though some commentators also mention profit taking after a three day winning streak. Base metals in general were weaker overnight, with the exception of lead which hit a new record high for the third straight day to $US3655 a tonne on continued concerns over tight supplies.
Next week is the annual LME week and that tends to bring out a positive mood for the metals spectrum. Already traders are mentioning everybody in the market appears to be long.
Gold managed to advance, while silver weakened, as the bounce of the US dollar stopped in the wake of an official policy change by the European Central Bank. The ECB declared it is now firmly on hold, with a small tightening bias in the event that inflation would become a problem. This killed off any market speculation the future might hold a European rate cut.
Currency traders have a lot to digest these days as some economists have started to question whether further rate cuts by the US Federal Reserve can be taken as a given. This would be in line with official statements made by several Fed officials over the past ten days suggesting the credit squeeze is improving. This would suggest the Fed may sit on the fence for a while and see how things develop. A negative report on Friday will put this scenario in the sin bin, however.
The British Central Bank decided not to change official interest rates either.
(Greg Peel will be back on Monday)
