LONDON (AP) — With a large chunk of Europe on holiday, financial markets were lead-footed Wednesday ahead of a policy statement from the Federal Reserve.
A soft private payrolls report from ADP raised concerns over the state of the U.S. economy but reinforced market expectations that the Fed will persevere with its super-easy and cheap monetary policy for a bit longer than had been anticipated.
ADP reported that private employers in the U.S. added only 119,000 jobs last month, down from March's gain of 131,000 and below market expectations for a 150,000 increase.
March's figure was also revised lower, providing further evidence that the job market in the U.S. has cooled somewhat. As a result, economists may look to revise down their forecasts for this Friday's official nonfarm payrolls report for April.
"While it cannot be said enough that the ADP report, while helpful, is hardly a perfect guide to Friday's payroll report, weakness in the number is never welcome," said Dan Greenhaus, chief global strategist at BTIG. "And by and large, that's what today's report was; weak."
The ADP figures weighed on expectations for Wall Street's open as well as hurting the dollar. Dow futures and the broader S&P 500 futures were down 0.1 percent while the euro pushed 0.5 percent higher to $1.3235.
In Europe, there was little going on with most markets closed for the May Day holiday. Of the major indexes, only Britain's FTSE 100 was trading and it was 0.6 percent higher at 6,470.
The ADP figures came ahead of the monthly manufacturing report from the Institute for Supply Management and the latest policy statement from the Fed after it concludes its two-day meeting.
Investors will be interested to see if the tone of the subsequent statement has changed significantly from the last one in March. A mixed bag of economic data since the last meeting has raised expectations that the Fed will persevere with its
"The only thing for markets to focus on will be any changes to nuances of the language in the Fed statement on the economy," said Michael Hewson, senior markets analyst at CMC Markets.
Earlier in Asia, the yen's appreciation weighed on the Nikkei 225 index, which fell 0.4 percent to close at 13,799.35. Japan's exporters have seen their share prices shoot up over the past few weeks on the back of the yen's fall which makes their products more competitive in international markets. The ADP figure added to the dollar's soft tone and it was trading 0.3 percent lower on the day at 97.14 yen.
The tone in Asia was generally subdued after a survey showed the pace of China's manufacturing growth slowed in April, raising fears of a weaker recovery in the world's second-largest economy. Chinese markets were closed though so couldn't react to the news.
Oil prices dipped following a strong run and the ADP release, with the benchmark New York rate down $1.39 at $92.07 a barrel.