Shares were mixed on the week but were boosted in the US and Europe thanks to the US employment gain.
United States
Stocks advanced Friday following the much better than anticipated US employment report. The strong report lifted the S&P to just shy of its record closing high set in May of 2015. The Dow Jones industrials were up 1.4 percent, the S&P gained 1.5 percent and the Nasdaq was 1.6 percent higher. The three indices closed above their pre-Brexit levels. For the holiday-shortened week, the Nasdaq soared by 1.9 percent, while the S&P and the Dow added 1.3 percent and 1.1 percent respectively.
In June, US employment surged 287,000 jobs — expectations were for an increase of 180,000. May was downwardly revised to only an increase of only 11,000 from the original 38,000 in data skewed downward by the Verizon strike. While the report a said the unemployment rate rose to 4.9 percent in June from 4.7 percent in May, the increase primarily reflected a rebound in the number of people in the labor force.
Technology and consumer-discretionary companies helped lead US stocks higher. But energy stocks were down on the week along with falling crude prices. Second quarter earnings season begins in earnest this week, with companies including Alcoa and J.P. Morgan Chase set to report.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$2.45 to US$1,354.25. Copper futures were down 0.2 percent to US$2.12. WTI spot crude was up 27 US cents to US$45.41. Dated Brent spot crude was up 36 US cents to US$46.76. The US dollar was up against the euro, Swiss franc and the Canadian dollar. However, it declined against the yen, pound and Australian dollar. The Dollar Index was up 0.05 percent. The yield on US Treasury 30 year bond was down 4 basis points to 2.10 percent while the yield on the 10 year note slipped 3 basis points to 1.36 percent.
Europe
Stocks surged Friday after the release of the stronger than expected US employment report. Automakers were among the strongest performers, after an increase in vehicle sales in China. Banks were also a source of strength after the prospects for Italian banks improved. Monte dei Paschi is reportedly working with authorities towards a solution for its bad loans. The FTSE and SMU were up 0.9 percent each while the CAC gained 1.8 percent and the DAX was 2.2 percent higher. However, for the week, only the FTSE gained. It was up 0.2 percent. The CAC, DAX and SMI lost 2.0 percent, 1.5 percent and 0.6 percent respectively.
According to the IMF, Eurozone’s domestic demand driven economic recovery that had strengthened recently, is expected to slow next year, mainly due to the uncertainty created by the “Brexit” vote. Euro area GDP growth is expected to decelerate from 1.6 percent this year to 1.4 percent in 2017, mainly due to the negative impact of the UK referendum outcome.
In Frankfurt, automakers soared after industry data showed vehicle sales in China rose at a faster pace during the first half of the year, led by rising demand for new-energy vehicles and SUVs. Commerzbank and Deutsche Bank advanced. ThyssenKrupp and Salzgitter were higher. In Paris, Air France-KLM increased after its Chief Financial Officer resigned from the company. Crédit Agricole, Société Générale and BNP Paribas advanced. Technip and Total climbed.
In London, British Land rallied after reaching a deal with a private investor to sell off its Debenhams building on Oxford Street for £400 million. Berkeley Group, Taylor Wimpey, Persimmon and Barratt Development increased. Marks & Spencer Group jumped on a broker upgrade. Royal Bank of Scotland, Lloyds Banking Group, Barclays and Standard Chartered all advanced.
Germany’s May exports declined the most in nine months on weak global demand while imports logged weak growth, reflecting subdued domestic demand. France’s industrial production declined as expected in May. The UK’s May visible trade deficit widened thanks to weak exports. The deficit on trade in goods increased to £9.9 billion from £9.4 billion in April.
Asia Pacific
Most Asian Pacific stocks retreated in cautious trade Friday, as investors waited for the US employment report which would be released after markets here were closed for the week. A slump in oil prices overnight on concerns of a gasoline oversupply, worries about the level of non-performing loans at Chinese banks, another terror attack in Bangladesh and a horrifying snipper attack in Dallas, Texas also weighed on investor sentiment heading into the weekend.
The Shanghai Composite declined 1.0 percent as a weak yuan spurred fears of more capital outflows and the focus returned to emerging risks from non-performing loans at China’s banks. Investors shrugged off People’s Bank of China data showing a surprise increase in June foreign exchange reserves. The Hang Seng lost 0.7 percent. On the week, the Shanghai Composite was up 1.9 percent while the Hang Seng was 1.1 percent lower.
The Nikkei dropped 1.1 percent and was 3.7 percent lower on the week. The stronger yen and disappointing readings on labor cash earnings as well as nominal wage growth weighed on sentiment. Japan’s current account surplus shrank for the first time in 22 months in May as a firming yen curbed gains from investment overseas. Sumitomo Realty & Development, Aeon, Tokyo Fudosan, Mitsui Fudosan and Asahi Glass tumbled. However, Nintendo soared on expectations that its new Pokemon GO smartphone game will prove a success.
The S&P/ASX and All Ordinaries edged up 0.1 percent after the coalition said it will gain enough seats to form a majority government. Fortescue Metals Group, Rio Tinto and South32 advanced even though Australia cut its iron ore price forecast for 2016. Whitehaven Coal soared on higher thermal coal prices. The big four banks ended narrowly mixed on concerns they would probably have to boost their capital buffers further to meet stringent capital requirements. Energy stocks also ended mixed after crude oil prices fell overnight. On the week, the S&P/ASX was 0.3 percent lower while the All Ordinaries slipped 0.2 percent.
The Kospi declined 0.6 percent Friday and was 1.2 percent lower for the week. The Sensex slipped 0.3 percent and was down 0.1 percent for the week.
Global Stock Markets

Looking forward

Central Bank activities

July 13

Canada

Bank of Canada Monetary Policy Announcement

United States

Federal Reserve Publishes Beige Book

July 14

UK

Bank of England Monetary Policy Announcement

The following indicators will be released this week…

Europe

July 13

Eurozone

Industrial Production (May)

July 15

Eurozone

Merchandise Trade (May)

Asia/Pacific

July 11

Japan

Private Machine Orders (May)

July 12

Japan

Producer Price Index (June)

India

Consumer Price Index (June)

Industrial Production (May)

July 13

China

Merchandise Trade (June)

July 14

Australia

Labour Force Survey (June)

July 15

China

Gross Domestic Product (Q2.2016)

Industrial Production (June)

Retail Sales (June)

Americas

July 12

United States

JOLTS (May)

July 13

United States

Import/Export Prices (June)

July 14

United States

Initial Unemployment Claims (week ending prior Saturday)

Producer Price Index (June)

July 15

Canada

Manufacturing Sales (May)

United States

Retail Sales (June)

Consumer Price Index (June)

Industrial Production (June)

Consumer Sentiment (July preliminary)

Industrial Production (June)

*Note — all releases are listed in local time.

Source: Fidelity

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