Nov 6, 2014 8:15 AM

Markets await Draghi as US payrolls report looms

The Associated Press

LONDON (AP) European stock markets were little changed after the European Central Bank kept its main interest rate unchanged at the record low of 0.05 percent.

Once the upcoming press conference of ECB President Mario Draghi concludes, investors will be primarily concerned with Friday's key U.S. jobs report for October, which could go a long way to determining when the Federal Reserve will start to raise interest rates.

KEEPING SCORE: In Europe, Germany's DAX was up 0.1 percent at 9,321 while the CAC-40 in France was flat at 4,207. The FTSE 100 index of leading British shares was 0.1 percent lower at 6,533. Wall Street was poised for a lower opening with Dow futures and the broader S&P 500 futures down 0.1 percent.

DRAGHI CENTER STAGE: Now that the ECB decided to keep its monetary policy unchanged, investors will zero in on the ensuing press conference of Draghi. Analysts think Draghi will use his news conference to underline the bank's willingness to intensify its stimulus efforts if things get worse. The bank has come under increasing pressure of late to back a Fed-style stimulus, called quantitative easing, to help shore up the ailing European recovery and to prevent prices from falling.

ANALYST TAKE: "Draghi has a tendency to cause hysteria in the markets even when he potentially doesn't mean to," said Craig Erlam, market analyst at Alpari. "It only takes the slightest suggestion that further easing is likely, or that QE is a possibility, and the markets go wild. I see no reason to expect any different today."

JOBS REPORT: When Draghi leaves the stage, the focus will swiftly turn to the U.S. ahead of Friday's nonfarm payrolls report for October. The figures often set the market tone for a week or two after their release. A strong report on U.S. hiring from payrolls processor ADP suggested Friday's official data will show robust employment growth. If that is the case, it will allay lingering worries that the Fed's recent decision to withdraw its extraordinary stimulus, provided through a massive program of bond buying, was premature. Intended to spur economic recovery after the global recession, the stimulus helped markets defy gravity even in the face of poor company earnings or bad economic news.

THE QUOTE: "The market seems to have increased its conviction that we'll see a strong payrolls report on Friday," said Chris Weston, chief market strategist at IG.

ASIA'S DAY: Japan's Nikkei 225 stock average erased gains to end down 0.9 percent to 16,792.48 and Hong Kong's Hang Seng dropped 0.2 percent to 23,649.31 South Korea's Kospi added 0.3 percent to 1,936.48 and Australia's S&P/ASX 200 dropped 0.2 percent to 5,506.10. Markets in Southeast Asia were mostly higher.

ENERGY: Oil prices remained above their multi-year lows hit earlier this week, with the benchmark New York rate down 22 cents at $78.46 a barrel. It swooned earlier in the week on reports that Saudi Arabia was cutting prices for U.S.-bound crude. On Wednesday, oil rebounded on a smaller-than-expected increase in overall U.S. supplies.

CURRENCIES: The dollar fell to 114.58 yen from 114.62 yen late Wednesday. The euro rose to $1.2507 from $1.2487.


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