After one of the biggest one-day sell-offs in over a year, U.S. equity futures rebounded in early trading after funding fears eased in Europe. The move proved short-lived, however, as S&P futures gave up seven points and are indicating a flat open after the ADP report came in worse than expected, increasing concerns for the second half growth outlook.The ADP National Employment report, which is a precursor to Friday's nonfarm payroll report, came in under expectations. The report, a measure of private employment, came in up 13,000, below the 61,000 Briefing.com consensus estimate. The prior reading was 57,000. The number clearly sets a bad tone for Friday's report.
Given the volatility in the reading, we would not read too much into the number itself. However, the direction will feed into concerns of a jobless recovery. This plays into the second half economic growth outlook given the lack of a pickup in the labor market. There is some net job creation, but it's simply not enough.
This reality plays into the underlying concerns that the European debt crisis and China's growth curbs will suppress the global economic recovery. The net result has been risk aversion. Commodity prices have been hard hit from copper to crude. Prices had been rebounding this morning, but reversed following the ADP report.
The June PMI reported is released at 9:45 a.m. ET.
On the corporate front, there was a major deal in the biotech space with Celgene (CELG) buying Abraxis (ABII) for $2.9 bln in cash. Boeing (BA) also announced it's acquiring Argon (STST) for $775 mln.
Seed giant, Monsanto (MON), meanwhile, reported a penny beat on a 6% drop in revenue. General Mills (GIS) had an in-line report, but issued downside EPS guidance after yesterday's close.There is good news to focus on out of Europe this morning. Concerns of funding stresses in the bank industry had been escalating ahead of Thursday's expiration of a 12-month liquidity facility. Euro-region banks need to repay 442 bln euros ($540 bln) in loans the European Central Bank lent them a year-ago during the financial crisis.
Those concerns proved overdone. The ECB announced today it will lend banks 131.9 bln euros ($161.5 bln) for 3-months. The amount is being taking as a positive as some put the worse-case scenario at the 440 bln euros taken in the tender. The euro rebounded as did bank stocks across Europe
Those concerns proved overdone. The ECB announced today it will lend banks 131.9 bln euros ($161.5 bln) for 3-months. The amount is being taking as a positive as some put the worse-case scenario at the 440 bln euros taken in the tender. The euro rebounded as did bank stocks across Europe
Fueling a decline in Asia was the worse-than-expected consumer confidence reading Wednesday, which fueled global growth concerns. The Nikkei fell 1.96%, the Hang Seng dipped -0.59%, and Taiwanese and Australian indices lost over 1% each. Chinese Premier Jiabao said China would adhere to its current policy course and that the country is headed in the right direction.
The standouts in the region were the Indian bourses, which gained 1%, assisted by oil companies after a government official said the removal of fuel-price caps would cut company losses in half.
No comments:
Post a Comment