A disappointing ADP Employer Services jobs report issued Wednesday, which showed a still-sluggish U.S. job market, drove U.S. and European markets down and signaled that a key report on employment at the end of the week could be grim.
Meanwhile, additional bad news emerged across the Atlantic as euro zone manufacturing contracted in April and powerhouse Germany reported a rise in unemployment, news that cut the euro and boosted the dollar. And that, in turn, lifted prices for dollar-denominated benchmark commodities.
The European Central Bank meets Thursday. Analysts surveyed by Bloomberg were unanimous in their belief the benchmark interest rate will remain at 1 percent. Also, French and Greek voters this weekend pick leaders, and if left-of-center candidates get overwhelming victories, then it could raise their governments' borrowing costs.
Stocks. The Dow Jones Industrial Average and S&P 500 managed to recover some early morning losses but couldn't maintain Tuesday's momentum. Asian markets rose, still reacting to the positive manufacturing data from the U.S. and China. In Europe, the FTSE 100 and the DAX settled lower while France's CAC 40 closed up.
Bonds. Germany's two-, five-, and 10-year yields fell to record lows, according to FactSet. Spanish and Italian yields also fell as investors sought shelter from disappointing news. Treasury prices on 10-year U.S. notes edged up, driving the yield to their lowest since February on the poor ADP jobs report and a growing anticipation that the U.S. Fed's bond-buying program will not be extended past June.
Currencies. The euro continued its slide against the dollar, the British pound and the yen on the bad euro zone manufacturing news. The market is looking to see what the European Central Bank will do with its key interest rate. The dollar's gain was mediated by Wednesday's report of lower-than-expected jobs growth.
Commodities. Benchmark commodities copper, oil and precious metals fell on concerns of a slowdown in industrial orders. The strengthening dollar also adversely affected dollar-denominated futures. Wheat, corn and beans also declined.