Caution sets in, losses pared on private sector hiring (ISFM) (05-01-2011)

Caution began to set in today after two days of optimism and world stocks were mostly lower, as investors took the opportunity to take some profits while they awaited a number of significant U.S. economic reports ending with the non-farm payrolls on Friday. Ahead of the open on Wall Street, the sharp rise in private sector employment numbers eased concerns somewhat and helped pare losses

In Asia earlier, the region's stocks ended lower, as commodity prices dragged on indexes, while investors were becoming wary again of any possible announcements fro China with regard to policy changes after the rate increase at the end of last year, and after a newspaper report saying that there could be a plan put in place to adjust bank reserves on a monthly basis to keep lending in check.

Oil prices slumped after a drop in demand, while among currencies, the euro lost steam after a Portuguese bond auction, which brought back to the forefront the never quite forgotten debt crisis in Europe.

In Europe, stock markets fell today after gaining for two days, as banks, retail and commodity-related equities sent stock markets down throughout the region. Some recovery was seen, however, after the report by Automatic Data Processing Inc. showed employment increased by a surprising 297,000 in December, where analysts had been expecting the numbers to be in the region of 100,000. U.S. stock futures also pared losses.

The successful auction of six-month Treasury bills in Portugal came at great cost as the interest rate of just under 3.7 percent to get the necessary backing was quite steep, compared to the 2 percent it had to pay in September.

On Wall Street, U.S. stocks opened slightly lower on falling commodities which offset the surprise boom in private-sector hiring.

Source: ISFM