Stocks Slip as U.S. Private Payrolls Miss Expectations

European stock markets sold off after comments from BoE and ECB officials hinting at tightening ahead, after the FOMC minutes left the Fed on course to reduce stimulus. Bond yields rose sharply and the DAX and FTSE lost ground despite a rebound in oil prices. The weak session in Europe followed a largely negative close in Asia, where Japanese markets underperformed as a stronger Yen weighed on exporters. The Nikkei closed with a loss of -0.44%, Hang Seng and ASX were also in the red, while the CSI 300 managed a marginal 0.01% gain.

Oil prices have sprung back by over 1% on weekly API data showing U.S. crude inventories fell more sharply than expected in the latest reporting week, by 5.8 million barrels. The median forecast had been for a more limited draw of 2.3 million barrels. WTI futures are presently up 1.8% at $45.73, which recoups some of yesterday’s 4%-odd crash. Crude markets will be looking to official EIA data later today to corroborate the API figures, though the weekly data is unlikely to put much of a dent in the global oversupply narrative, with data this week showing OECD total oil inventories unexpectedly remaining above 3 billion barrels in the face of rising supply out of the Nigeria, Libya and the U.S.

U.S. ADP Private Payrolls Missed Expectation

The 158k June ADP rise undershot the markets expectations of a rise of 180k, following a 23k trimming in the May rise to 230k from 253k that narrowed the gap to the 147k private payroll rise in that month. The ADP disappointment reflected a surprisingly restrained flat figure for June goods employment despite robust factory sentiment readings and other signs of upside payroll risk, with declines of 4k for mining and 2k for construction that offset a 6k factory rise, alongside the expected 158k service job gain.

U.S. initial jobless claims rose 4k to 248k in the week ended July 1 after rising 2k to 244k in the prior week. This is a third straight weekly increase, and it increased the 4-week moving average to 243k from 242.25k. Continuing claims increased 11k to 1,956k in the June 24 week after rising 3k to 1,945k which was revised from 1,948k. The Labor Department said there were no special factors impacting the data, although seven states/territories did estimate their numbers.