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On 6 December 2019 - US, Europe rally on blowout US jobs data, trade hopes; Asia firms

Anne D Picker

Anne D Picker - Econoday

Employment data surprise eases slowdown worry.

US markets

US equities surged Friday as US jobs data far exceeded expectations, and on news suggesting better prospects for a US-China trade deal. The Dow industrials rose 1.2 percent, the S&P 500 rose 0.9 percent, and the NASDAQ was up 1.0 percent.

Market worries about a slowdown, and the sustainability of consumer spending, were relieved by US jobs data showing an unexpected decline in unemployment, an upward revision in wages, and job gains far above expectations in the latest month. A positive surprise in US consumer sentiment data bolstered the healthy consumer narrative. On the trade front, risk assets advanced after Chinese officials spoke of waiving tariffs on US pork and soybeans; later, President Trump and Larry Kudlow, his economic adviser, said the trade talks were progressing.

All sectors in the S&P 500 gained, with energy, financials, industrials, materials, and tech leading. Utilities and real estate were the laggards, along with consumer staples and telecom. Rising oil prices supported energy stocks, especially in the exploration and production sector, while rising interest rates lifted bank stock.

Among companies in focus, Haliburton, the petroleum driller, rose 4.3 percent, as oil prices rose. Goldman Sachs, the bank, gained 3.4 percent. Ulta Beauty, a beauty products chain, was the day’s biggest gainer, up 11 percent, after a positive earnings surprise and reporting stronger margins.

In economic news, the unemployment rate ticked down to 3.5 percent in November while nonfarm payrolls rose 266,000 to far surpass Econoday's consensus range of forecasts. Much of the gain reflects a swing higher for manufacturing, up 54,000 overall and including a 41,000 gain for motor vehicle payrolls on resolution of the GM strike. In a separate report, consumer sentiment showed unexpected strength, jumping 2.3 points to 99.2, which is 3.2 points above Econoday's consensus. Both components posted big gains: current conditions up 3.6 points to 115.2 and expectations up 1.6 points to 88.9.

These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil rose 86 cents to US$64.26, while gold fell by US$16.10 to US$1465.00. The US dollar rose against most major currencies but declined vs. the yen. The US Treasury 30-year bond yield rose 2 basis points to 2.28 percent while the 10-year note yield rose 4 basis points to 1.84 percent.

European markets

Major European equities indexes tracked Wall Street higher Friday after unexpected strength in US jobs data, and positive US-China trade news. The Europe-wide STOXX 600 jumped 1.2 percent, the German DAX gained 0.9 percent, the French CAC rose 1.2 percent, and the UK FTSE-100 surged by 1.4 percent.

UK stocks outperformed as a decline in sterling lifted export-oriented companies, especially miners, while rising oil prices bolstered energy stocks after OPEC and other oil exporters agreed to output cuts. The retail sector outperformed, with Marks & Spencer up 4.1 percent after an analyst upgrade. For the STOXX 600, basic resources led the gainers, along with retail, travel & leisure, and personal & household goods.

Among other companies in focus, Swiss Re, the insurer, rose 3.0 percent after announcing it would sell its ReAssure unit to Phoenix Group, a UK insurer. ReNeuron, a biopharma, surged 10 percent on a positive earnings surprise. Associated British Foods, the grocery chain, rose 1.1 percent on upbeat profits guidance. On the downside, Tarkett, a building product manufacturer, dropped 4.3 percent after cutting its guidance.

In economic news, German goods production surprisingly declined in October. Following a 0.6 percent monthly drop in September, output fell a sizeable 1.7 percent, its fourth decrease in the last five months and its worst performance since April. Compared with a year ago, production fell 5.3 percent. Separately, UK house prices rebounded more sharply than expected in November. A 1.0 percent monthly rise in the Halifax HPI followed an unrevised 0.1 percent dip in October and a 0.4 percent fall in September and was the largest increase since February.

Asia Pacific markets

Most major Asian markets closed up on the day Friday, with performance on the week more mixed. A light regional data calendar provided little guidance to investors, with much of the focus on US payrolls data scheduled for release after the close of trading in the region. Hong Kong’s Hang Seng index rose outperformed on the day, up 1.1 percent, and closed the week 0.6 percent higher, while the Shanghai Composite index advanced 0.4 percent on the day and outperformed on the week with a 1.4 percent gain. Japan’s Nikkei and Topix indices closed up 0.2 percent and 0.1 percent respectively on the day and up 0.3 percent and 0.8 percent respectively on the week. Australia’s All Ordinaries index also posted a modest increase on the day, up 0.3 percent, but closed the week down 1.9 percent after heavy losses earlier in the week.

Household spending in Japan fell 5.1 percent on the year in October, down sharply from growth of 9.5 percent in September and weaker than the consensus forecast for a drop of 3.0 percent. This fall in spending was broad-based across categories and was largely a reaction to the surge in spending that took place in September ahead of an increase in consumption tax rates at the start of October, with this pattern also seen in retail sales growth data released last week.

Looking forward

Central Bank activities

Dec-11

US

FOMC Announcement, Forecasts, Fed Chair Press Briefing

Dec-12

Eurozone

ECB Policy Announcement and Press Briefing

 

Switzerland

SNB Policy Announcement

Dec-13

Japan

BOJ Tankan (Q4)

The following indicators will be released this week...

Europe

Dec-09

Germany

Merchandise Trade (October)

Dec-10

France

Industrial Production (October)

 

Germany

ZEW Survey (December)

 

Italy

Industrial Production (October)

 

UK

Industrial Production (October)

 

 

Monthly GDP (October)

Dec-12

Eurozone

Industrial Production (October)

 

France

CPI (November f)

 

Germany

CPI (November f)

 

Italy

Unemployment Rate (Q3)

 

Switzerland

Producer & Import Prices (November)

Dec-13

UK

Merchandise Trade (October)

Asia Pacific

 

 

Dec-09

China

Merchandise Trade (November)

 

Japan

GDP (Q3f)

Dec-10

China

CPI (November)

 

 

PPI (November)

Dec-11

Japan

PPI (November)

Dec-12

Australia

Residential Property Prices (Q3)

 

India

CPI (November)

 

 

Industrial Production (October)

 

Japan

Machine Orders (October)

Americas

 

 

Dec-10

Canada

Housing Starts (November)

 

US

NFIB Small Bus. Optimism (November)

 

 

Productivity & Costs (Q3r)

Dec-11

US

CPI (November)

 

 

Treasury Budget (November)

Dec-12

US

Jobless Claims (Week of Dec. 7)

 

 

PPI-FD (November)

Dec-13

US

Business Inventories (October)

 

 

Import & Export Prices (November)

 

 

Retail Sales (November)

Global stock markets

 

Index

6 Dec 2019

Daily Change

% Change Daily

North America

 

 

 

 

United States

Dow

28015.06

337.27

1.2

 

NASDAQ

8656.53

85.83

1.0

 

S&P 500

3145.91

28.48

0.9

Canada

S&P/TSX Comp

16996.97

142.05

0.8

Europe

 

 

 

 

UK

FTSE 100

7239.66

101.81

1.4

France

CAC

5871.91

70.36

1.2

Germany

XETRA DAX

13166.58

111.78

0.9

Italy

MIB

23182.72

213.32

0.9

Spain

Ibex 35

9382.7

139.30

1.5

Sweden

OMX Stockholm 30

1742.61

18.98

1.1

Switzerland

SMI

10463.88

100.38

1.0

Asia/Pacific

 

 

 

 

Australia

All Ordinaries

6813.48

22.33

0.3

Japan

Nikkei 225

23354.4

54.31

0.2

 

Topix

1713.36

1.95

0.1

Hong Kong

Hang Seng

26498.37

281.33

1.1

S. Korea

Kospi

2081.85

21.11

1.0

Singapore

STI

3194.71

20.52

0.6

China

Shanghai Comp

2912.01

12.54

0.4

Taiwan

TAIEX

11609.64

14.99

0.1

India

Sensex 30

40445.15

-334.44

-0.8

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.