Equity markets around the world have been retreating overnight and into this morning. Overseas, the Hang Seng fell 3.0%, and the Nikkei dropped 1.7%, while the Dax and FTSE are both down about 1.3% this morning. All three main US index futures contracts are down about 0.6%.
Although this should not really have been much of a surprise considering recent actions and comments by central bankers, in the absence of other notable news, the hawkish tone of yesterday’s FOMC minutes appears to have rattled investors, particularly overseas.
US ADP Payrolls came in particularly strong this morning, (497K vs street 228K) more than double street estimates. This indicates a robust economy and positive environment for corporate earnings but also may give central bankers reason to remain hawkish. This sets the stage for tomorrow’s US Nonfarm Payrolls (street 225K vs previous 339K) and Canadian Employment (street 20K) reports and also wage inflation data for the US (street 4.2%) and Canada (previous 5.1%).
US ISM Service PMI (street 51.0) is due at 10:00 am EDT. The US and Canadian headline Manufacturing PMI numbers came in soft earlier this week, but the forward-looking US ISM New Orders component beat the street. Based on this, and with central bankers complaining about sticky inflation in wages and services, investors today may also find interest in the ISM Service New Orders and Prices Paid figures.