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On 3 May 2019 - US and European shares lifted Friday by US employment report

Anne D Picker

Anne D Picker - Econoday

Asia down in quiet trade.

US markets

A very strong US employment report for April pointed on Friday to continued economic strength and helped to give a solid lift to the Dow, up 0.8 percent, and also the Nasdaq which jumped 1.6 percent. Treasuries held steady but the dollar did move lower Friday, down 0.4 percent to 97.21 on the dollar index.

Markets were closed when US President Trump on Sunday said tariffs on $200 billion of Chinese goods will be raised from 10 percent to 25 percent on Friday and threatened to impose 25 percent tariffs on a further $325 billion of goods if trade talks don't improve.

April's employment report underscored Jerome Powell's confidence at Wednesday's FOMC press conference in the strength of the labor market and also his hunch that inflation, based on the Fed's projections, may well be moving back toward the 2 percent goal. Not only did nonfarm payrolls surge a much higher-than-expected 263,000 but the unemployment rate ratcheted 2 tenths lower to 3.6 percent and a 49-year low. And tightening conditions were the signal from the pool of available workers which continues to be drained, down nearly 500,000 in the month to 10.9 million. But wage growth didn't show any effect from the strength, at least in April, coming in as expected for the monthly rate, at 0.2 percent, and 1 tenth under expectations for the year-on-year rate at 3.2 percent.

International trade in goods was also better than expected in March, at a deficit of $71.4 billion which was well under expectations and do not point to a downward revision for first-quarter net exports which were a major strength for GDP. Exports of goods, led by food, jumped 1.0 percent in March after increasing 1.4 percent in February. Imports of goods rose 0.9 percent in March also led by foods.

These data reflect observations at 4:00 PM US ET. Dated Brent spot crude was up US$0.30 to $70.40 while gold was US$8.50 higher at $1,279.40. The US dollar weakened against most currencies including the pound, the Canadian and Australian dollars, the yen, the euro, and the Swiss franc; it was unchanged against the yuan. The yield on the US Treasury 30-year bond fell 2 basis points to 2.92 percent while the yield on the 10-year note was also down 1 basis points at 2.53 percent.

European markets

Strength in the US employment report lifted US shares and in turn helped lift European shares. European data released Friday also indicated strength. The DAX rose 0.5 percent, the FTSE 0.4 percent while the CAC gained 0.2 percent.

Eurozone inflation rebounded in April to a higher than expected annual 1.7 percent rate for a 0.3 percentage points gain from March. Core rates were also higher with the narrowest gauge, which excludes energy, food, alcohol and tobacco, at 1.2 percent from March's 0.8 percent to 1.2 percent. The latest readings are still well short of the European Central Bank's near-2 percent medium term HICP target.

Services business activity in the UK improved in April, At 50.4 the CIPS/PMI Services Index and in line with market expectations, the sector PMI was up 1.5 points vs March's 32-month low though still only 0.4 points on the positive side of the 50-expansion threshold. Yet Brexit worries remained in the fore and were partly responsible for a fourth, though small, successive drop in new business, the longest period of declining demand since 2009. But businesses were more optimistic about the future as sentiment climbed to its highest level since September last year.

HSBC Holdings and Societe Generale both rose after posting results while Adidas jumped 9.2 percent on strong quarterly profits. Air France-KLM fell sharply after posting a quarterly loss which it blamed on high fuel costs.

Asia Pacific Markets

Asian shares were mostly weaker in holiday-thinned trading Friday, amid caution ahead of US jobs data and continued disappointment over Wednesday's Fed policy announcement. Korea's KOSPI index fell 0.7 percent, with Samsung Electronics and other industrials leading the way down. The Australia All Ordinaries and Singapore Straits Index posted fractional declines. Chinese and Japanese markets remained on holiday.

Hong Kong shares were a notable exception to the muted trend as the benchmark Hang Seng index rose 0.5 percent to 30,081.55, just above the key 30,000 level. The gain came after GDP figures spurred hopes for easing by the Hong Kong Monetary Authority. It also reflected a 2.5% advance by HSBC, a major index component, after the big bank posted an earnings beat.

On the data front, year-on-year growth in Hong Kong's economy slowed from 1.3 percent in the three months to December to 0.5 percent in the three months to March, the weakest since 2009. The fall in growth largely reflected weaker private consumption, up just 0.1 percent on the year compared with 2.7 percent previously, and business investment, down 7.0 percent on the year after dropping 5.4 percent previously. Growth in external demand and government spending also weakened on the year.

Australian data were mixed, with the CBA/Markit services PMI better, but housing permits weakening. The services PMI edged up to 50.1 in April from 49.3 in March helped by a rise in new orders for the first time in three months with strength centered in services exports. In the housing sector, building permits for dwellings dropped by 15.5 percent in March, driven by falls in New South Wales and Victoria.

Looking forward

Central Bank activities

May-08

NZ

Reserve Bank of New Zealand Announcement

May-08

Australia

Reserve Bank of Australia Announcement

The following indicators will be released this week...

Europe

 

May-06

EZ

Retail Sales (March)

May-07

Germany

Manufacturers' Orders (March)

 

France

Merchandise Trade (March)

May-08

Germany

Industrial Production (March)

May-10

Germany

Merchandise Trade (March)

 

France

Industrial Production (March)

 

UK

GDP (Q1p)

Asia Pacific

 

May-06

China

General Services PMI (April)

May-07

Australia

Merchandise Trade (March)

 

Japan

PMI Manufacturing Index (April)

May-08

Japan

PMI Composite (April)

 

China

Merchandise Trade (April)

May-09

China

CPI (April)

May-10

Japan

Household Spending (March)

May-10

India

Industrial Production (March)

Americas

 

May-08

Canada

Housing Starts (April)

May-09

Canada

Merchandise Trade (March)

May-09

US

International Trade (March)

 

 

PPI-FD (April)

May-10

Canada

Labour Force Survey (April)

May-10

US

CPI (April)

Global Stock Markets

 

Index

3 May 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26504.95

197.16

0.7

 

NASDAQ

8164

127.23

1.6

 

S&P 500

2945.64

28.12

1.0

Canada

S&P/TSX Comp

16494.43

83.55

0.5

Europe

 

 

 

 

UK

FTSE 100

7380.64

29.33

0.4

France

CAC

5548.84

9.98

0.2

Germany

XETRA DAX

12412.75

67.33

0.5

Italy

MIB

21763.48

53.10

0.2

Spain

Ibex 35

9409.6

-8.60

-0.1

Sweden

OMX Stockholm 30

1672.33

6.88

0.4

Switzerland

SMI

9741.99

-4.07

0.0

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6427.2

-2.82

0.0

Japan

Nikkei 225

*

*

*

 

Topix

*

*

*

Hong Kong

Hang Seng

30081.55

137.37

0.5

S. Korea

Kospi

2196.32

-16.43

-0.7

Singapore

STI

3392.29

-1.04

0.0

China

Shanghai Comp

*

*

*

Taiwan

TAIEX

11096.3

91.81

0.8

India

Sensex 30

38963.26

-18.17

0.0

*Markets closed

 

 

 

Data Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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