Here are the top five things you need to know in financial markets on Wednesday, March 2:
1. Oil prices move lower after API report shows huge build, pending EIA data
Oil moved lower on Wednesday after the American Petroleum Institute, an industry group, said that U.S. oil inventories rose by 9.9 million barrels in the week ended February 26, surprising market players who were expecting a gain of 2.5 million barrels.
Crude oil futures for April delivery tumbled 2.06% to $33.69 at 10:57AM GMT or 5:57AM ET, while Brent oil lost -0.92% to $36.47.
The U.S. Energy Information Administration will release its weekly report on oil supplies at 15:30GMT, or 10:30AM ET, Wednesday, amid expectations for a gain of 3.6 million barrels.
2. Global economic data sparks risk-on appetite
A strong showing of economic data from the U.S. to Australia boosted risk appetite across the board. Australian fourth-quarter GDP growth surprised to the upside on Wednesday with quarter-on-quarter growth of 0.6% and a year-on-year expansion of 3.0%, beating consensus estimates of 0.4% and 2.5%, respectively.
The news followed a better-than-expected increase in both growth in the Canadian economy and U.S. manufacturing activity, while American construction spending also hit an eight-year high.
3. Markets digest central bank comments for clues on rate action
Investors kept on an eye on comments from both the European Central Bank (ECB) and the Federal Reserve (Fed) on Wednesday as the clock ticked down for monetary policy decisions to be announced on March 10 and March 16, respectively.
ECB member and Bank of France chief Francois Villeroy warned on Wednesday that euro zone inflation remains too low, suggesting that region’s central bank may need to take additional easing measures, while fellow central bank member Benoit Coeure stressed the importance of the central bank’s commitment to push inflation up via accommodative monetary policy.
Meanwhile, San Francisco Fed president John Williams showed a more hawkish stance in an interview with Financial Times. He told the British financial paper that he doesn’t understand warnings about an imminent U.S. recession as there are no signs of weakening domestic demand which is more than compensating for economic slack abroad. In line with the U.S. central bank’s current rhetoric, Williams repeated that Fed rate hikes would be gradual.
4. Investors await U.S. employment “preview”
Traders will focus on the publication of the ADP nonfarm employment change for the month of February at 13:15GMT or 8:15AM ET. Analysts forecast the data from the private provider of business outsourcing solutions to show the creation of 190,000 jobs, down slightly from the prior reading of 205,000.
Although ADP has a questionable track record, markets still watch the data as an indicator for the official U.S. government report to be realized on Friday.
5. Global stocks move broadly higher; U.S. futures take profits
Asian and European stocks followed the U.S. higher after the aforementioned data bolstered investor sentiment.
The Nikkei 225 closed with hefty gains of 4.12%, while Dow Jones Shanghai surged 4.35% and Australia celebrated its growth data with an advance of 2%.
At 11:04AM GMT or 6:04AM ET, European stocks markets moved broadly higher with the European benchmark Euro Stoxx 50 rising 0.45%, the DAX edging up 0.02%, the CAC 40 gaining 0.18%.
The outlier was the FTSE 100 turned around despite hitting a 2016 high in early trading after it was reported that growth in the UK construction sector hit a 10-month low. The London index slipped 0.14%.
U.S. futures were also in the red as investor took profits after solid gains in Tuesday’s session when the Dow registered its second best day of the year and the Nasdaq tacked on the biggest gain so far this year. Futures initially reacted positively to the Super Tuesday results as Hillary Clinton and Donald Trump appeared to solidify positions but, at 11:13AM GMT or 5:13AM ET, the blue-chip Dow futures fell 0.26%, S&P 500 futures dropped 0.27% and the Nasdaq 100 futures traded down 0.17%.