Market update: ECB cuts benchmark rate and is “ready to act if needed” – 03.05.2013

Source: Henderson Global Investors

US stocks reversed Wednesday’s losses yesterday. Both the S&P 500 and Dow Jones gained 0.9% as improving jobs data cheered the markets. Weekly initial jobless claims fell by 18,000 to 324,000, the lowest count since January 2008. Today’s focus will be on the release of monthly non-farm payrolls data. Following March’s disappointing gain of 88,000, a more upbeat 140,000 new jobs is forecast, while the unemployment rate is likely to be unchanged at 7.6%.

European markets initially opened higher this morning following yesterday’s European Central Bank (ECB) decision to lower its main interest rate by 25 basis points to a record low of 0.5%. ECB President Mario Draghi said the central bank was "ready to act if needed", should more support be needed for the eurozone. However, at the time of this report the FTSE Eurofirst 300 is down 0.2% and the FTSE is up 0.1%. Yesterday, Markit’s eurozone manufacturing purchasing managers' index (PMI) April reading inched lower to 46.7, indicating the sector is still in contraction. According to Thomson Reuters Starmine, 59% of European companies have missed quarterly earnings forecasts so far. Investors are likely to be looking out for the US jobs report later today for some comfort that the global recovery is on track.