Financial market focus shifted to the U.S. economy’s key services sector on Wednesday as European investors took stocks higher after five days of losses and oil clambered above $100 a barrel again.
The dollar gained against major world currencies ahead of the Institute of Supply Management’s index of service sector activity due later in the day.
The ISM’s non-manufacturing index is see rising above its record low in January but still staying within territory that suggests economic contraction rather than expansion.
A second month of shrinkage in the index would lend considerable support to analysts who say the United States is already in recession.
The report is also expected to consolidate investor views about U.S. jobs data to be released on Friday, a major indicator of likely interest rate moves.
“The Fed has signalled that it is very much in ‘data watch mode’ so expectations are swinging round potentially on the back of the numbers that come between now and their next meeting (on March 18),” said Adam Cole, global head of FX currency strategy at RBC Capital Markets.
Equity markets were mixed with Europe rising and Asia generally lower.
European shares gained in early trade, partly on the back of a report that bond insurer Ambac Financial Group was moving closer to a bail out, helping shares bounce back after five consecutive days of losses.
The FTSEurofirst300 index was up 0.7 percent.
Earlier, Japanese stocks ended slightly lower at a six-week closing low.
“Investors know shares are cheap but cannot bring themselves to actually buy them,” said Naoteru Teraoka, general manager of investment management division at Chuo Mitsui Asset Management.
The benchmark Nikkei average ended down 0.2 percent or 20.22 points at 12,972.06, the lowest close since Jan 23. The broader TOPIX index was down 0.1 percent at 1,263.91.
OIL SPIKES, DOLLAR FIRMS
Oil prices moved above $100 after an almost 3 percent tumble a day earlier, as growing signs that OPEC would not raise output at its latest meeting balanced expectations of bearish U.S. oil stocks data.
U.S. light crude for April was up 78 cents at $100.31 a barrel, still below Monday’s record high of $103.95.
“The market, not only oil but all commodities, will remain supported,” said Ken Hasegawa, manager of commodities derivatives at broker Newedge in Tokyo.
The dollar gained ground against the euro and a basket of major rival currencies but was still close to record lows ahead of the U.S. data.
Against a basket of six major currencies, the dollar was up around a quarter of a percent at 73.844, while the euro was down 0.3 percent at $1.5168 — still fairly close to this week’s record $1.5275.
The dollar was up 0.4 percent versus the yen at 103.70 yen.
The dollar has fallen roughly 5 percent against the yen in the past week while the euro has climbed around 3.5 percent versus the U.S. currency.
Euro zone government bond yields were flat to lower. The benchmark 10-year bond yield was up 4 basis points at 3.854 percent. (Reuters)
