Big U.S. data dominates market but new favorites emerging

Tue May 14, 2013 7:48am EDT
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By Marc Jones

LONDON (Reuters) - Central bank intervention, the euro zone crisis and China's rise have expanded the list of data that moves markets, but surprises in measures such as PMIs and U.S. jobs numbers still pack the biggest punch.

Eager for an early view of economic momentum, investors put extra focus on purchasing manager indexes (PMIs), especially the flash, or preliminary, numbers from China, Europe and the United States.

The crucial question for most in the current environment is not so much what the numbers say about the respective economies, but what they mean for the central bank stimulus programs around the world that have been driving asset prices.

While U.S. labor market data has always been important, it too is under even more scrutiny as unemployment and the participation rate are the key variables for the Federal Reserve's $85 billion a month bond buying program.

"In general terms there's no bigger number than the U.S. non-farm payrolls," said Henk Potts, a cross-market strategist at Barclays in London, referring to the monthly jobs data.

"The U.S. consumer is the biggest driving force in the global economy and will continue to be so for some...time."

Analysts at Societe Generale have a model to predict the reaction of the S&P 500 to non-farm payrolls and have looked at the relationship between key economic data and share prices over the last 40 years.

Quantitative strategist Sandrine Ungari said the bank has found forward-looking data has a big impact on markets and, if used correctly, can predict slumps.   Continued...

Traders work at their desks in front of the DAX board at the Frankfurt stock exchange May 14, 2013. REUTERS/Remote/Lizza David