Market update

In the UK, helping to boost investor sentiment was data showing that construction activity in Britain bounced back a little last month, after weakness in the first quarter undermined expectations of the Bank of England’s monetary policy plans.

Construction purchasing managers’ index showed a rebound to 52.5 in April from the poor 46.0 a month earlier that capped off a 3.3% quarter-on-quarter fall in output in the first quarter as a whole.

With a PMI reading above 50 indicating growth, April’s PMI was the highest in five months and beat the average economist estimate of 50.5 but was only slightly ahead of its 12-month average of 52.1 and short of the 53 level that historically equates to actual output growth.

So despite the pick-up, construction activity was still far from racing ahead in April and a stronger rebound could realistically have been hoped for given the extent of March’s weakness.

In the US, hiring continued at a solid pace in April, with private companies adding 204,000 jobs even amid signs of a tightening jobs market. The number was essentially in line with expectations of economists who had forecast 200,000. The total did indicate a slight deceleration from March, which posted a downward revised 228,000 from an initially reported 241,000.

Employment has been one of the strongest pillar of the economic recovery and the release of the ADP will be a pre-empt for the publication of the U.S. non-farm payrolls (NFP) report on Friday, although the focus has shifted from job numbers to wage growth indicators.

The Federal Reserve held interest rates steady and indicated it remains on track to raise them gradually in the coming months to keep the expanding economy from becoming overheated.

In a statement released after its two-day policy meeting, the Fed offered nothing to dispel market expectations that it would deliver its second rate increase of the year when it meets in June.

In Geopolitics, Prime Minister Theresa May’s “Brexit war cabinet” is meeting to discuss the divisive issue of customs arrangements after EU withdrawal. With customs arrangements emerging as the key stumbling block to a deal on EU withdrawal, the issue has split the Cabinet, where freedom to strike new trade deals are pitted against others who fear barriers to commerce in Europe.

Oil started May on shaky ground after a 5.6 percent rally last month fuelled by conflict between Saudi Arabia and Yemen and the impending May 12th deadline for U.S. President Donald Trump’s decision on whether to re-impose sanctions on Iran.