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Negatives turn into positives

Published Tuesday, April 7th, 2015

The recent batch of lacklustre US macro data ensured that global equities indices went into the Easter break on a subdued note with investors hoping that a robust non-farm jobs report would dampen fears of an economic slowdown. These expectations came to nothing after figures revealed a miserly 126,000 jobs were added in March, well below forecasts of +245,000, and the lowest for more than a year. The disappointing data which broke a run of 12 months of +200,000 additions was partly attributed to the effects of the strengthening dollar on domestic manufacturers and fuelled concerns of a soft 1Q GDP performance. The downbeat tone was echoed by an underwhelming ISM reading of US service sector activity which dipped to a three-month low of 56.5 in March.

The negatives however slowly turned into positives as signs of US economic weakness bolstered bets that the Fed would hold off from increasing rates in what was yet another classic example of ‘bad news is good news’. The upshot saw risk appetite return to the fore at the start of this week with US stocks bouncing at one point by 1% before easing back slightly. The feel good factor was mirrored on Asian bourses where figures pointing to slowing employment in China’s vast services sector reinforced hopes that its central bank will move to stoke growth. The buoyant mood looks set to be tracked by European indices returning from the long weekend with the Eurofirst 300 surging by more than 1% at the time of writing.

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Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.