SCOREBOARD: Labour favour

A pretty basic session last night as it appears punters are waiting for the payrolls and ISM tonight. So literally, nothing happened. Well maybe not literally but there wasn't a lot of action.

On the data front the two key releases were initial jobless claims and factor orders. Jobless claims fell modestly to 388k in the week to March 26, from an upwardly revised 394k (was 382k) in the week prior. The fact that claims have remained below 400k now, on average, for the last month is a good sign that the labour market is improving, as you would expect given strong growth (the labour market is a lagging indicator remember). As for factory orders, they slipped 0.1 per cent in March after a 3.3 per cent lift in February to be a strong 10.1 per cent higher annually. Nevertheless, core orders (ex defence and transport) fell 0.7 per cent after a 5.7 per cent fall in February, suggesting that orders have slowed a bit. Shipments however rose 0.5 per cent.

Given these two pieces of information aren't really earth shattering, on Wall Street the S&P500 had a hard time deviating much from zero. Not so in European shares where the major indices were down between 0.2 per cent on the Dax and 0.95 per cent on the STXE600. But in the US, the S&P closed at -0.18 per cent (1325) hitting 0.2 per cent at the high and -0.2 per cent at the low. Financials, consumer services and tech stocks led the index lower. Conversely industrials, healthcare and basic materials posted modest positive gains. Otherwise the Dow was 30 points lower at 12,319, the Nasdaq was up 0.2 per cent (2781) while the SPI was up 0.04 per cent (4867).

On the debt side, bonds did little until the last half hour or so of trading where they seem to have undergone a bit of a spike. At the close, the 2-year yield was 2 basis points higher (from 1630) at 0.82 per cent, the 5-year was 5 basis points higher at 2.26 per cent and the 10-year was 3 basis points higher at 3.47 per cent. Aussie futures were little changed on a 5 tick range with the 3s at 94.92 and the 10s at 94.48.

Then in FX land, the US dollar was sold off against most currencies the notable exception being sterling. This fell 50 pips to 1.6045 after some scare mongering doing the rounds about rising mortgage defaults in the UK. As for the Australian dollar, it rose 20 pips to 1.0346, the euro was up 41 pips to 1.4178, while the yen was at 83.15 from 82.77. Other than that we generally saw commodities bounce – gold up $US7 to $1434, copper up 0.45 per cent and crude up 2.25 per cent on WTI ($106) and 1.8 per cent on brent ($117).

In terms of other data out last night, we saw German unemployment fall 55k in March with the unemployment rate down to 7.1 per cent from 7.3 per cent. UK house prices rose 0.5 per cent in March according to Nationwide (forecasts were for 0 per cent). In the US, the Chicago PMI fell to 70.6 in March from 71.2 but still at its highest since 1988. Then, the Milwaukie NAPM rose to 66 from 63 in March. Finally, Portugal has revealed that its budget deficit or 2010 was 8.6 per cent rather than the 7.3 per cent initially exported – elections have been called for June. Then in Ireland we found out after some additional stress tests that the banks need 24 billion euro to withstand further economic shocks.

There are a few bits and pieces in our zone today. We get NZ manufacturing activity at 0845 AEDT, then the Japanese Tankan at 1050. At 1200, the Chinese PMI gets updated and then we see the RBA's commodity price series (1630). Tonight, the headline of course will be payrolls and to a slightly lesser degree, the ISM index. The market is looking for a 190k increase in payrolls, while the unemployment rate is expected to remain unchanged at 8.9 per cent. As for the ISM, this is expected to remain at multi-decade highs in March (at 61 from 61.4).

Adam Carr is senior economist at ICAP Australia. See Business Spectator's glossary for definitions of technical terms used in SCOREBOARD articles.