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Markets Mixed ahead of Tomorrow’s US NFP Data


Markets are showing a mixed performance for the most part today, as traders hold off from taking any deep positions with the ECB decision and meeting today, and with the key US non-farm payroll (NFP) numbers tomorrow.

The calendar today was kicked of at 0830EST by the weekly jobless claims figures which showed a 42,000 decrease to 415,000. Due up at 1000EST are the ISM non-manufacturing index numbers and factory orders, followed by the weekly EIA natural gas stocks data at 1030EST, the day capped by M2 money supply at 1630EST.

US stock futures are pointing to a slightly negative open on Wall St today, although seeing a lack of commitment as traders avoid getting hit on positions on the wrong side of tomorrow’s NFP data. The main corporate news is coming from Europe this morning, with the oil and financial sectors both seeing significant numbers from Shell and Santander respectively.

Shell reported a near doubling in full-year profits today, thanks to increased production and higher oil prices, up to $18.6 billion (on a current cost of supplies basis). Fourth quarter earnings were $4.1 billion compared with $2.8 billion in Q4 2009 although the company is maintaining the Q4 dividend at the same level as the previous year at $0.42 per ordinary share.

Santander on the other hand, reported net profits missed expectations and fell to €8.18 billion, compared with €8.94 the previous year, due in large part to bad loans in the Spanish property market. Specifically, the bank said profits would have fell by around 3%, compared with the current 8%, if it were not for the changes brought in real estate provisions by the Bank of Spain in Q3, which saw Santander see a net hit of €472 million. Amid ongoing calls from regulators to sore up their balance sheet, the bank also said it will be increasing its tire-1 capital ratio to 9% of risk weighted assets this year

Core sovereign debt has been seeing a weaker session generally today as European markets saw a broader consolidation of positions ahead of the ECB decision and press conference. It has emerged that the US Treasury was urged earlier in the week to begin selling ultra-long bonds, with maturities ranging from 50 to 100 years, in order to take advantage of the prevailing low yields to help lower the governments borrowing costs. A member of the Treasury Borrowing Advisory Committee, which consists of 13 senior executives from the larger US houses such as JP Morgan and Goldman Sachs, raised the issue in the regular quarterly meeting with the Treasury and New York Fed.

In the FX market, sterling which had been benefiting from significant strength following yesterday’s PMI data and buoyant manufacturing numbers Tuesday, today saw some strong selling pressure from Middle Eastern houses traders report. The dollar meanwhile, is stronger I most pairs as some confidence surrounding tomorrows NFP number helps bring in flows.

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