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On 04 October 2019 - US, Europe up on US jobs data; Asia mixed

Anne D Picker

Anne D Picker - Econoday

Apple leads tech stocks higher.

US markets

US equities advanced Friday on a US jobs report that assuaged worries about a sharp slowdown while leaving open prospects for Federal Reserve easing. The Dow industrials, the S&P 500, and the NASDAQ all rose 1.4 percent.

Among sectors, technology, financials, and healthcare outperformed, while energy shares underperformed, even though NYMEX WTI crude oil prices rose. Apple (up 2.8 percent) and its suppliers led technology shares higher on positive iPhone news.

Among other companies in the news, retailer Costco rose 1.0 despite an earnings shortfall, while HP, the computer hardware company, fell 9.6 percent after cutting its guidance and announcing a restructuring plan.

In US economic news, the jobless rate fell unexpectedly to 3.5 percent from 3.7 percent, but wage pressures eased in September for a 2.9 percent year-on-year growth rate that is the lowest since July last year. Payroll growth itself is running a notch or two below last year and is well under 200,000, but it is still very solid. Non-farm payrolls rose 136,000 in September with August revised sharply higher, up an additional 38,000 to 168,000. Yet manufacturing, the economy's weak link due to slowing global trade, is showing weakness, down 2,000 in September versus expectations for a 3,000 gain.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 89 cents to US$58.43, while gold fell by US$2.00 to US$1,510.60. The US dollar fell against most major currencies. The US Treasury 30-year bond yield declined 2 basis points to 2.01 percent while the 10-year note yield fell 2 basis points to 1.52 percent.

European markets

European equities rose Friday on relief over moderate job growth in the US employment report. The Europe-wide STOXX 600 and the German DAX both rose 0.7 percent, the French CAC was up 0.9 percent, and the UK FTSE-100 rose 1.1 percent.  UK shares outperformed as headlines suggested the UK may get more time to arrange an orderly Brexit.

Among shares in the Stoxx 600, outperformers were mostly defensive sectors, including health care and utilities, though technology saw gains, along with energy stocks. Notable winners included supermajor oil companies British Petroleum, up 2.1 percent, and Royal Dutch Shell, up 1.3 percent, as oil prices gained. Underperformers included autos & parts, banks, real estate, and basic resources.

Among companies in the news, Norwegian Air Shuttle rose 1.9 percent on positive September traffic. Electromagnetic Geoservices, a Norwegian oil technology company, rose 6.3 percent on positive usage data.

Asia Pacific markets

Major Asia markets posted mixed results Friday, with regional data and events providing only limited trading direction ahead of the release of US payrolls data. Chinese markets were again closed for national holidays. Japan’s Nikkei and Topix indices both closed up 0.3 percent on the day Friday, finishing the week down 2.1 percent and 2.0 percent respectively. Australia’s All Ordinaries index all closed moderately higher Friday, up 0.4 percent, but was the worst regional performer on the week with a 2.7 percent decline. investor sentiment in Hong Kong remains fragile after PMI survey data showed economic conditions were again very weak in September and ahead of another weekend in which serious civil unrest is expected, with the Hang Seng index closing down 1.1 percent on the day and 0.8 percent on the week.

The Reserve Bank of India's Monetary Policy Committee cut the benchmark repurchase rate by 25 basis points to 5.15 percent at its policy review Friday, in line with the consensus forecast. This follows a cut of 35 basis points at its last meeting in August and cuts of 25 basis points at its previous three meetings. This rate is now at its lowest level since mid-2010. Officials downgraded their near-term growth forecast and continue to forecast headline inflation will remain below the mid-point of their target range of 2.0 percent to 6.0 percent over the next few quarters. Until headline inflation moves decisively higher, it appears likely that the bias for officials will remain in favor of further policy rate cuts in coming months.

PMI survey data published ahead off the RBI meeting indicate that activity in the Indian services sector contracted in September, with the with the headline business activity index falling from 52.4 in August to 48.7, its lowest level since February 2018. The Markit manufacturing PMI survey for India, published earlier the week, showed its headline index steady at 51.4. These moves resulted in the composite index falling from 52.6 to 49.8.  Also published Friday, the Hong Kong PMI survey showed a slight increase in its headline index from  40.8 in August, its lowest level since February 2009, to 41.5 in September, its second-lowest level over that period and still signaling sharp contraction in the Hong Kong economy.

Retail sales in Australia rose 0.4 percent on the month (seasonally adjusted) in August after no change in July. In original terms, retail sales rose 2.9 percent on the year, up slightly from growth of 2.6 percent previously. Recent reductions in policy rates and tax rates have likely provided some boost to retail sales, but growth remains relatively subdued, with officials at the Reserve Bank of Australia noting that a sustained period of modest growth in household disposable income has continued to weigh on consumer spending.

Looking forward

Central Bank activities

 

Oct-09

US

FOMC Minutes

The following indicators will be released this week...

Europe

   

Oct-07

Germany

Manufacturers Orders (August)

 

UK

Halifax HPI (September)

Oct-08

France

Merchandise Trade (August)

 

Germany

Industrial Production (August)

 

Italy

Retail Sales (August)

Oct-10

France

Industrial Production (August)

 

Germany

Merchandise Trade (August)

 

Italy

Industrial Production (August)

 

UK

Industrial Production (August)

   

Monthly GDP (August)

Oct-11

Germany

CPI (September f)

Asia Pacific

   

Oct-07

China

General Services PMI (September)

Oct-08

Japan

Household Spending (August)

Oct-10

Japan

Machine Orders (August)

   

PPI (September)

Oct-11

India

Industrial Production (August)

 

Singapore

GDP (Q3a)

Americas

 

 

Oct-08

US

PPI-FD (September)

Oct-09

Canada

Housing Starts (September)

 

US

JOLTs (August)

Oct-10

US

CPI (September)

   

Jobless Claims (Week of Oct. 5)

   

Treasury Budget (September)

Oct-11

Canada

Labor Force Survey (September)

 

US

Consumer Sentiment (October p)

   

Import & Export Prices (September)

Global stock markets

 

Index

3 Oct 2019

4 Oct 2019

Daily Change

% Change Daily

North America

 

 

 

 

 

United States

Dow

26201.04

26573.72

372.68

1.4

 

NASDAQ

7872.27

7982.47

110.20

1.4

 

S&P 500

2910.63

2952.01

41.38

1.4

Canada

S&P/TSX Comp

16369.03

16449.35

80.32

0.5

Europe

 

 

 

 

 

UK

FTSE 100

7077.64

7155.38

77.74

1.1

France

CAC

5438.77

5488.32

49.55

0.9

Germany

XETRA DAX

11925.25

12012.81

87.56

0.7

Italy

MIB

21311.51

21470.44

158.93

0.8

Spain

Ibex 35

8902.2

8961.8

59.60

0.7

Sweden

OMX Stockholm 30

1588.41

1593.98

5.57

0.4

Switzerland

SMI

9760.44

9827.72

67.28

0.7

Asia/Pacific

 

 

 

 

 

Australia

All Ordinaries

6611.68

6636.9

25.22

0.4

Japan

Nikkei 225

21341.74

21410.2

68.46

0.3

 

Topix

1568.87

1572.9

4.03

0.3

Hong Kong

Hang Seng

26110.31

25821.03

-289.28

-1.1

S. Korea

Kospi

*

2020.69

-11.22

-0.6

Singapore

STI

3087.97

3078.36

-9.61

-0.3

China

Shanghai Comp

*

*

*

*

Taiwan

TAIEX

10875.91

10894.48

18.57

0.2

India

Sensex 30

38106.87

37673.31

-433.56

-1.1

*Markets closed

 

 

 

 

 

Note: all releases are listed in local time.

Important Information

Econoday Inc. is a US company that provides financial commentary and indicators to industry professionals. All information provided and views expressed are those of Econoday. Reference in this document to specific securities should not be construed as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Past performance is not a reliable indicator of future results. The value of investments can go down as well as up and investors may not get back the amount invested.