Market commentary: All eyes on US employment report

At the time of writing, European shares are trading lower following a weak session in Asia which is heading for a weekly loss. The main items for today are the US non-farm payrolls that are due this afternoon and the OPEC meeting. Furthermore, Greece continues to be in the headlines as the saga continues and a solution has not been found yet.

All eyes will be on the US employment report this afternoon, as the US economy is expected to maintain the same pace in job creation for the month of May. More than the actual figure, analysts will be looking at the trend to try and forecast whether a rate hike by the Fed is imminent.

The consensus seems to be that a rate hike will not come before at least the third quarter of this year. The IMF yesterday urged the Fed to postpone the rate hike to the first half of next year.

Greece continues to be in the news as negotiations (or lack thereof) continue. In their last meeting, European leaders and IMF official gave Greece their required terms for a bailout.

Headlines this morning indicate that Prime Minister Tsipras yesterday communicated to Chancellor Merkel and President Hollande that these terms are a nonstarter. In the meantime Greece informed the IMF that the payment due this week would be deferred and collated with future payments.

Furthermore, today a very important item is the meeting of the Organization of Petroleum Exporting Countries (OPEC) where the analysts will be looking for hints with regards to outlook for oil amid speculation that the organization will refrain from cutting output. The meeting is being held in Vienna.

Also on the economic data front, the second estimate for the first quarter GDP for the Eurozone will be released later on this morning.

In the fixed income world the moves in Bunds again filtered into the rest of bond markets. The yield on Germany's 10-year bund 10y rose 2 basis points to 0.865%.

In equity news, Vodafone is in the spotlight as it announced it is in talks on a possible exchange of assets with Liberty Global Plc amid consolidation in the telecommunications industry. Although a merger of the two is not on the table at the moment the shares of Liberty global jumped as much as 6.2 percent in late U.S. trading yesterday. There remains uncertainty whether any transaction will be agreed and which assets are involved.

The Stoxx Europe 600 index fell 0.6% to 390.29, though losses pared slightly from a deeper drop at the open. The German DAX 30 index lost 0.8% to 11,261.77, while the French CAC 40 index lost 0.8% to 4,949.82. Spain's IBEX 35 index fell 0.6% to 11,077.80, and the FTSE MIB Italy index dropped 0.6% to 23,188.92. London's FTSE 100 index was off 0.4% to 6,834.19. Banks and oil stocks led decliners, with Total SA off 1% and Banco Santander SA down 0.9%.

This article was issued by Darin Pace, Trader/ Analyst at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri & Co. Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.