Exchange traded funds (ETFs) got off to a mixed start this morning as conflicting job reports coincided with crude-oil futures once again topping $100 a barrel.
- Private sector employers added more jobs than expected last month in a sign of steady improvement in the labor market, ahead of the closely-watched non-farm payrolls from the Labor Department on Friday. Employers added 217,000 jobs in February, the ADP Employer Services report showed on Wednesday, compared to expectations for a rise of 175,000. Economists often refer to the ADP report to fine-tune their expectations for the payrolls numbers on Friday, though it is not always accurate in predicting the outcome.
- On the other hand…the number of planned layoffs at U.S. firms rose in February to its highest level in 11 months as government and non-profit employers let workers go. Employers announced 50,702 planned job cuts last month, the highest level since March 2010 and a jump of 32% from January, according to the report from consultants Challenger, Gray & Christmas, Inc. Layoffs were 20% higher than the 42,090 announced in February of last year, marking the first year-over-year increase since May 2009. The Direxion Daily 20+ Year Treasury Bear 3x Shares ETF (NYSEArca: TMV) rose almost 2% in early trading.
- European stock markets sank Wednesday after a sharp sell-off earlier in Asia and overnight on Wall Street as high oil prices and instability in the Middle East and North Africa undercut sentiment. “European equity markets are being driven lower by fears of contagion in the Middle East,” said Dublin-based Dolmen Stockbrokers in a note. “The region has long been the world’s most important oil producer and the recent unrest has underlined the global economy’s vulnerability to price shocks. The SPDR Euro Stoxx 50 ETF (NYSEArca: FEZ) gained approximately 1% early this morning.
- The dollar is slipping in early trading in New York ahead of comments from central bank officials that may point to higher interest rates in Europe. Lifting interest rates help counter inflation and tends to support a currency, but can also slow economic growth. Investors will scrutinize European Central Bank officials’ comments on inflation Thursday at a policy meeting as a hint to future moves. The CurrencyShares Euro Trust (NYSEArca: FXE) is up about 1% so far today.
- Oil futures again broke through the $100 a barrel mark in electronic trading today as violence in Libya and the surrounding region sparked fears that the unrest will spread. Oil prices climbed nearly 3% in regular New York trading on Tuesday amid continuing political uncertainty in the Middle East and North Africa. “As Libyan oil supplies and exports remain severely disrupted, market sentiment remains on a precarious edge, as fears of contagion remain widespread,” analysts at Barclays Capital said. The United States Oil ETF (NYSEArca: USO) is flat in early trading.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Gregory A. Clay contributed to this article.
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