Kristian Rouz — Equity markets have mostly rallied worldwide with investors expecting solid gains in US jobs in March, with the data expected to be published Friday by the Department of Labor.
In Asia-Pacific, Friday trades saw solid gains as expectations of stronger employment growth in the US suggest ideas of when the US Fed will hike its base interest rate. The MSCI’s broader index of Asia-Pacific outside Japan added some 0.4%, and Japan’s Nikkei 225 was 0.6% up at the close.
Thursday’s slight advances on Wall Street, ending two consecutive days of losses, had contributed to gains in Japan. The S&P 500 added 0.3%, the Dow rose 0.3% as well, while the Nasdaq slid 0.1%. US investors are cautious during the Easter week and trading volumes are thin as many market participants have abstained from betting, having opted to wait until the US employment data is announced. Also, weak corporate profits in Q1 rendered investors more data-sensitive.
Wall Street will be closed Friday when labor statistics are set to be announced, however, trading in futures will go on for 45 minutes after the data arrives, so the markets’ reaction will be clear.
Market volatility in the US fell this outgoing week, with the Chicago Board Options Exchange Volatility Index (widely known as VIX) decreasing 2.7%. During Q1 2015, VIX posted a 20% decline — its greatest in two years, signaling there’s less risk in US markets, and one-time extremely profitable speculative opportunities are fading away.
This week, US markets were driven by energy shares, as refineries and storage facilities are making solid profits amidst the oil oversupply. The energy sector added 1.5%, especially after US crude jumped Wednesday as oil production decreased. On the other side were the technology and biotech equities, with the Nasdaq Biotech Index having retreated 2.3%, with Biogen Inc. and Amgen Inc. both losing over 4%. However, the biotech shares have posted the greatest gains during Q1 since 2013, retreating only after March 20.
In Europe, most markets are closed for Easter holidays Friday through Monday, reopening Tuesday. Thursday’s trading saw most indices moving flat.
The FTSEurofirst Index of top European equities fell 0.2%, with the British retailer M&P posting gains of 5.2% after publishing optimistic sales data.
The US dollar was flat against the yen, at 119.67, while the euro added 0.1% to $1.0883. Such weak dynamics are a direct consequence of the sluggish pre-holiday markets’ activity, as well as the absence of any significant real economic events.
In commodities, oil retreated greatly, losing over 4% of its valuation as the US promised to lift sanctions off Iran after the Islamic Republic vowed to abstain from building an A-bomb. Brent crude fell to $56.23/bbl.
Gold was down at $1200.8/oz, after having moved flat for a week as investors are buying into the dollar.