10th April 2017
Global equities ended the week flat after paring earlier gains.
Equity markets were initially bolstered by payroll processor ADP which said private US businesses added 263,000 jobs in March. This was more than economists expected and provided more evidence that hiring momentum is accelerating and eased concerns following earlier disappointing sales of cars and light trucks (which could negatively impact US consumer spending and Q1 GDP data).
Conversely, official Labor Department US payroll data released later in the week (Friday 7 April) came in weaker than expected with a 98,000 increase in March – the weakest payroll figures since last May (economists had expected an 180,000 advance). However, the miss was largely ignored as a March winter storm was seen as the cause. The unemployment rate fell to 4.5% from 4.7%, while wage growth slowed to 2.7% from 2.8%.
Unfortunately, Thursday’s (6 April 2017), first face-to-face meeting between Donald Trump and Xi Jinping, the Chinese President, was overshadowed by rising geopolitical tensions following the US missile attack on Syria. However, the meeting did produce an agreement for a 100-day plan to improve trade relations.
Oil prices firmed after the missile attack, with Brent crude ending the week $1.52 higher at $54.24.
This coming week, the UK consumer is back in the spotlight with CPI, unemployment and wage data. From the US we have: PPI, jobless claims, University of Michigan Consumer Sentiment, CPI and retail sales – and after this week’s disappointing auto sales we will be looking for signs of any broadening weakness. We also have the Chinese trade balance on Thursday (13 April).
Ian Copelin, Investment Director