US futures higher following positive European start

US futures higher following positive European start

By Craig Erlam on Apr 2, 2014 08:06:49 GMT

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  • US futures continue to edge higher on Yellen comments;
  • US manufacturing data in focus today;
  • Gradual decline in eurozone unemployment continues;
  • Eurozone manufacturing PMIs largely positive this morning.

The positive start to the week for US indices looks set to continue on Tuesday, as future point to a higher open, with the S&P seen up 3 points, the Dow up 27 points and the Nasdaq up 6 points.

It seems Yellen’s soothing words on Monday regarding the ongoing accommodative stance of the Federal Reserve worked wonders following her blunder at the press conference a couple of weeks ago. Traders were not previously impressed with Yellen’s suggestion that rates could rise in the middle of 2015, but those fears appear to have been now eased somewhat.

Now it’s over the economic data to provide the next catalyst for a push higher. There’s plenty of data being released this week so we’re certainly not short on this front, the only question now is how much of a response we’ll get to these figures with the US jobs report being released on Friday. On the upside, investor sentiment seems fairly high at the moment, especially by recent standards, which suggests traders are anticipating a good jobs report. This could mean they’re more inclined to respond positively to good figures between now and then. Of course this is dangerous but I strongly believe forecasts of only 196,000 for Friday’s non-farm payrolls figure is too conservative.

The response to today’s economic releases could provide some insight into how traders will respond for the rest of the week. The two manufacturing PMIs are expected to be quite positive, with the official reading being revised higher to 55.9, although that would still represent a slowdown from the previous reading of 57.1, while the ISM survey is seen rising to 54.2 from 53.2 in February.

The European session has been fairly mixed in terms of economic data so far, although indices are still more than half a percentage point higher as traders react to Yellen’s comments. One of the positive point, of course only by its own standard, was the drop in the eurozone unemployment rate to 11.9%. I say this is a positive because in recent years, the figure has risen almost every month to reach record highs of 12.2%. A period of stabilisation around this level is now being followed by a very gradual decline, which is to be expected given the amount of stress that has been put on the region. On the bright side, at least it is now headed in the right direction.

The manufacturing PMIs were largely positive, with only the German number slightly missing expectations. On the bright side, the German, French, Spanish and Italian numbers are all in growth territory which may be a token win as far as the eurozone in concerned, but at least it signals improvement.

About Craig Erlam

Craig Erlam is Market Analyst at Alpari UK. He joined Alpari (UK) at the beginning of 2012 after four years in the financial services industry, including working at Goldman Sachs. Craig writes market commentary that regularly appears on websites including The Financial Times, Reuters, BBC, The Telegraph and FOX Business. He also provides insight and analysis for clients which he posts daily on Twitter and the Alpari (UK) website. You can also find Craig on YouTube where he gives short market updates, including charting analysis.

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