Market update: Will it be a happy holiday for US investors? – 04.07.2013

Source: Henderson Global Investors

US stock markets delivered small gains yesterday in volatile trading (S&P 500 +0.1%; Dow Jones +0.4%) as markets closed early for the Independence Day holiday today. Economic newsflow sent mixed messages about US growth. ADP’s private payrolls report showed that job creation had accelerated in June (+188,000), while a separate release showed the number of people filing initial claims for jobless benefits fell by 5,000 last week. However, the services sector slowed during June and the trade deficit widened to its highest level in six months after a drop in exports. Markets reopen Friday – coinciding with the release of the important US non-farm payrolls report – so the holiday may not be as relaxing as usual for investors.

European shares are climbing this morning (FTSE 100 +1.0%; FTSE Eurofirst 300 +0.8%) after losses during the previous two sessions. Markets are hoping for (if not expecting) calming rhetoric from European Central Bank President Draghi given the bank’s policy decision today – tensions in Portugal and Greece have ratcheted up another level. Portuguese prime minister Pedro Passos Coelho is struggling to keep his government in office, while Athens appears unlikely to meet its targets for reforming the public sector, to secure the next tranche of aid from its lenders. Oil has come under pressure in the last few days given fears for potential supply disruption; in Egypt, President Mursi is now under house arrest after being ousted by the military.