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On 5 April 2019 - US stocks advance after employment data show strong payrolls growth in March

Anne D Picker

Anne D Picker - Econoday

UK government seeks further Brexit delay as new deadline approaches.

US markets

US stocks rose moderately Friday to close up on the week after employment data showed stronger-than-expected growth in US payrolls. The Dow rose 0.2 percent on the day and 1.9 percent on the week, the S&P advanced 0.5 percent on the day and 2.1 percent on the week, and the Nasdaq gained 0.6 percent on the day and 2.7 percent on the week. Chevron and Walgreens Boots Alliance were the strongest performers in the Dow Friday, while Dow Inc. posted a sharp fall, partly reversing gains made earlier in the week.

The US employment report showed a strong recovery in labour market conditions in March after weakness in February, consistent with other indicators.  Nonfarm payrolls rose 196,000 in March, beating the consensus forecast of 170,000 and up from a revised increase of 33,000 in February. Professional and business services employment increased at a solid pace, offset by further weakness in retail and manufacturing hiring. The unemployment rate was steady at 3.8 percent, though the participation rate fell from 63.2 percent to 63.0 percent. Average hourly earnings rose 0.1 percent on the month, down from 0.4 percent previously, while year-on-year growth fell from 3.4 percent to 3.2 percent, with this moderation in wage pressures likely reinforcing the Federal Reserve’s assessment that policy settings can remain on hold despite strong employment growth.

Canada’s labour force survey, in contrast, showed a fall of 7,200 in employment in March after strong job gains in the first two months of the year, towards the lower end of the consensus range. Private sector employment fell 17,300, mainly reflecting weakness in the services sector, partly offset by an increase of 4,200 in public sector jobs. The unemployment rate was steady at 5.8 percent while year-on-year growth in average hourly wages rose from 2.2 percent to 2.3 percent. Despite the fall in March, the Canadian economy added 116,000 jobs in the first quarter of the year, the strongest gain since the fourth quarter of 2017.

These data reflect observations at the close of trading Friday. Gold rose US$1.30 to US$1,295.60 while dated Brent spot crude rose US$0.94 to US$70.34. The US dollar fell slightly against the yuan, was flat against the Swiss franc, and made small gains against other major currencies. The yield on the US Treasury 30-year bond fell 3 basis points to 2.90 percent and the yield on the 10-year note fell 2 basis points to 2.50 percent.

European markets

European markets closed higher Friday and on the week. The FTSE rose 0.6 percent on the day and 2.3 percent on the week, the CAC advanced 0.2 percent on the day and 2.4 percent on the week, and the DAX closed up 0.2 percent on the day and 4.2 percent on the week.

German industrial production data published Friday were stronger than manufacturing orders data on Thursday, though this largely reflected the impact of the volatile construction sector. Headline industrial production rose 0.7 percent on the month in February, with January growth revised from a fall of 0.8 percent to no change, and fell 0.5 percent on the year in, up from a revised decline of 2.7 percent previously. This was mainly driven by a 6.8 percent increase in construction activity, with manufacturing output down 0.2 percent on the month and energy output falling 3.1 percent. Although output so far in the first quarter is above the average for the fourth quarter, there remains potential for further revisions and the weakness in orders and business surveys suggests that the improvement seen in the February output data is unlikely to signal the start of a new positive trend. The Halifax House Price Index for the United Kingdom showed a fall of 12.6 percent in March, better than the consensus forecast for a drop of 2.5 percent, but well down on the 6.0 percent increase in February, with the year-on-year change in the index picking up from 2.8 percent to 3.2 percent.

France recorded a seasonally adjusted trade defciit of €4.0 billion in February, narrowing from a minimally larger revised €4.21 billion in January. Exports rose 0.9 percent on the month, mainly reflecting strength in ships and refined petroleum products, while imports rose 0.4 percent. The February data suggest that net exports will make only a small positive contribution to headline GDP growth in the first quarter.

The United Kingdom is scheduled to exit the European Union on Friday, April 12, with no deal in place. Prime Minister Theresa May has requested a further delay until June 30 ahead of the EU leaders summit on Wednesday, with some extension considered likely.

Asia Pacific Markets

Share markets were closed Friday in China, Hong Kong, and Taiwan. Most other Asian markets closed higher Friday and on the week. The Nikkei and the Topix indices both rose 0.4 percent on the day and advanced 2.8 percent and 2.1 percent respectively on the week. Australia’s All Ordinaries index underperformed, falling 0.8 percent on the day and up just 0.1 percent on the week.

Japanese real household spending rose 1.7 percent on the year in February after advancing 2.0 percent in January, below the consensus forecast for an increase of 2.1 percent. Spending, in seasonally adjusted real terms, fell 2.0 percent on the month after increasing 0.7 percent previously. The fall in headline year-on-year growth in February was largely driven by weaker spending on housing, with growth improving for spending on food and utilities.

Looking forward

Central Bank activities

12-Apr

Singapore

Monetary Policy Announcement

10-Apr

Eurozone

European Central Bank Announcement

 

US

FOMC Minutes

     

The following indicators will be released this week...

Europe

   

8-Apr

Germany

Merchandise Trade (February)

9-Apr

Italy

Retail Sales (February)

10-Apr

France

Industrial Production (Feb)

 

Italy

Industrial Production (Feb)

 

UK

Monthly GDP (Feb)

 

 

Industrial Production (Feb)

11-Apr

Germany

CPI (March)

 

France

CPI (March)

12-Apr

Eurozone

Industrial Production (Feb)

     

Asia Pacific

   

9-Apr

Australia

Home Loans (February)

10-Apr

Japan

Machine Orders (February)

 

 

PPI (March)

11-Apr

China

CPI (March)

 

 

PPI (March)

12-Apr

China

Merchandise Trade (March)

 

India

CPI (March)

 

 

Industrial Production (February)

 

Singapore

GDP (Q1a)

     

Americas

   

8-Apr

US

Factory Orders (February)

9-Apr

US

JOLTS (February)

10-Apr

Canada

Housing Starts (March)

 

US

CPI (March)

11-Apr

Canada

PPI (March)

12-Apr

US

Import and Export Prices (March)

 

 

Consumer Sentiment (April)

 

 

 

Global Stock Markets

 

Index

5 Apr 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

26424.99

40.36

0.2

 

NASDAQ

7938.69

46.91

0.6

 

S&P 500

2892.74

13.35

0.5

Canada

S&P/TSX Comp

16396.15

84.54

0.5

Europe

 

 

 

 

UK

FTSE 100

7446.87

44.93

0.6

France

CAC

5476.2

12.40

0.2

Germany

XETRA DAX

12009.75

21.74

0.2

Italy

MIB

21758.61

53.01

0.2

Spain

Ibex 35

9510.3

-23.80

-0.2

Sweden

OMX Stockholm 30

1622.27

6.03

0.4

Switzerland

SMI

9541.15

-22.56

-0.2

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6270.58

-49.84

-0.8

Japan

Nikkei 225

21807.5

82.55

0.4

 

Topix

1625.75

5.70

0.4

Hong Kong

Hang Seng

*

*

*

S. Korea

Kospi

2209.61

3.08

0.1

Singapore

STI

3322.64

6.43

0.2

China

Shanghai Comp

*

*

*

Taiwan

TAIEX

*

*

*

India

Sensex 30

38862.23

177.51

0.5

*Markets closed
Source — Haver Analytics

 

 

 

Note: all releases are listed in local time.

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