US open: Stocks rally after strong ADP jobs numbers, investors eye Fed minutes

Ahead of publication of the latest Federal Reserve minutes, US stocks rallied on Wednesday following strong private sector employment numbers.

At 1549 BST, Dow Jones Industrial was up 0.83% to 20,860.13, the S&P 500 rose 65% to 2,375.52, and the Nasdaq added 0.53% to 5,930.12.

Meanwhile, oil prices advanced after the American Petroleum Institute reported a draw of 1.8m barrels in US crude oil inventories last week, versus expectations of a 435,000 draw.

West Texas Intermediate was up 0.86% to $54.64 per barrel and Brent crude rose 0.75% to $51.42.

In currency markets, the dollar was down 0.39% against the pound to 0.8008, flat against the euro at 0.9376, and 0.42% firmer versus the yen at 111.20.

ADP, a precursor to Friday's all important non-farm payrolls, revealed that private sector employers added 263,000 jobs in March more than the 187,000 increase expected. The February figure was revised down from 298,000 to 245,000.

Small businesses with fewer than 50 employees added 118,000 jobs, while medium businesses with between 50 and 499 employees added 100,000.

Investors are also eyeing the release of the Federal Open Market Committee minutes at 1900 BST. At the last meeting in March the Fed voted 8-1 to hike interest rates by 25 basis points to between 0.75% and 1%, with Minneapolis Fed president Neel Kashkari the only dissenter.

Analysts will be pouring over the minutes for suggestions of when the next possible two or three interest hikes will be and the central bank's plans to unwind its $4.5trn balance sheet.

Ipek Ozkardeskaya, senior market analyst at London Capital Group said that investors had labelled March’s Fed action as a ‘dovish hike’ on the back of its accompanying statement, however since raising rates several FOMC members have made hawkish comments, so the “minutes are expected to give some clarity to confused investors”.

The publication of the FOMC minutes comes a day after the abrupt resignation of Jeffrey Lacker, the former non-voting member of the FOMC and Richmond Fed president, following the disclosure of his role in leaking confidential policy information in 2012.

Elsewhere, president Donald Trump is to meet Chinese counterpart Xi Jinping at Trump’s Mar-a-Lago resort in Florida on Thursday. The two leaders are expected to discuss trade and reining in North Korea’s nuclear ambitions.

TopTradr analyst Tony Cross said the summit is “key in determining where markets will go next”.

In other data, Markit's US services purchasing managers’ index reached a six-month low to 52.8 in March from 53.8 the month earlier and missing expectations for a reading of 53.1.

The final composite PMI output index eased to 53.0 last month, down from 54.1 in February.

While the ISM non-manufacturing index also fell in March to 55.2 from 57.6 in February, below the 57 consensus forecast.

In corporate news, Panera Bread climbed 13.89% after JAP Holding, the parent of Krispy Kreme, said it will buy the restaurant chain for $7.5bn.

Drug store operator Walgreen Boots Alliance fell 1.12% after reporting a drop in quarterly revenue.

Monsanto rose 1.52% after the seed company beat profit and revenue expectations and issued a rosy outlook.

US-listed shares of Syngenta was up 1.09% after US antitrust officials cleared ChemChina's acquisition of the pesticide group.