US shares rebounded slightly yesterday after strong data on the US services sector, while soft European economic data weighed on European equities and weakened the euro a day ahead of a closely watched European Central Bank policy meeting.
Better-than-expected data on US services sector growth drove gains on Wall Street, reversing earlier losses on an industry report that showed weakness in the US private-sector labour market. Yields on benchmark 10-year US Treasury notes edged higher.
MSCI’s all-country world index of equity performance in 45 countries rose 0.12 point, or 0.03 per cent, to 422.16, while the pan-European FTSE Eurofirst 300 index of regional shares closed flat at 1,374.75.
The Institute for Supply Management said its US services sector index rose to 56.3 in May from 55.2 in April, topping expectations for a read of 55.5. A reading above 50 indicates expansion.
“The ISM number was a clear beat and reversed us,” said Robert Francello, head trader at Apex Capital in San Francisco.
“People wanted to see something at least solid to keep us stable before the ECB tomorrow.”
Earlier, the ADP National Employment Report showed that about 179,000 private-sector jobs were added in May, well below the 210,000 that had been expected. April’s job gains were revised downward by 5,000.
The government will release its more comprehensive labor report on Friday.
The Dow Jones industrial average rose 19.96 points or 0.12 per cent, to 16,742.3, the S&P 500 gained 4.37 points, or 0.23 per cent, to 1,928.61, and the Nasdaq Composite added 21.138 points, or 0.5 per cent, to 4,255.219.
The euro was last down 0.17 per cent, at $1.3604, after data showed the 18-nation bloc’s economy expanded by just 0.2 per cent in the three months to March, cementing investor expectations that the ECB is heading for further monetary easing today.
“It seems unlikely the ECB would disappoint in terms of action,” said CMC Markets analyst Jasper Lawler.
The dollar held near a 3-1/2-month high against a basket of currencies after getting a lift from rising Treasury rates following the services sector data.
The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.089 point, or 0.11 per cent, to 80.643.
Benchmark 10-year Treasury notes were last down 3/32 in price to yield 2.6039 per cent, with the yield rising to levels not seen since mid-May.