On 06 January, 2017 – US employment report boosted shares
Stocks advanced in the holiday shortened week.
United States
Stocks advanced Friday after initially showing a lack of direction. Both the Nasdaq and S&P closed at new record highs while the Dow Jones industrials ended the day just shy of the 20,000 level. The Dow was up 0.3 percent, the S&P added 0.4 percent and the Nasdaq was 0.6 percent higher. For the first week of the New Year, the Dow was up 1.0 percent, the S&P gained 1.7 percent and the Nasdaq advanced 2.6 percent.
Strength emerged after the release of the December employment report. While the report showed weaker than expected job growth, it also showed a significant acceleration in the pace of wage growth. Non-farm payroll employment added 156,000 jobs in December. Employment in November was upwardly revised but the increase in employment in October was downwardly revised, reflecting a net addition of 19,000 jobs to previous estimates for the two months. The unemployment rate inched up to 4.7 percent in December from 4.6 percent in November. Annual rate of growth in average hourly employee earnings accelerated to 2.9 percent from 2.5 percent, reaching the fastest rate of growth since June of 2009.
Biotechnology stocks Pernix Therapeutics, Zafgen and Arrowhead Pharmaceuticals advanced. Railcar manufacturer Greenbrier was higher despite reporting weaker than expected first quarter earnings. Apple climbed after Canada’s Competition Bureau did not find sufficient evidence the iPhone maker had engaged in anti-competitive conduct, closing a two-year investigation into the company. Amgen rose after a US district judge blocked Sanofi and Regeneron from selling their cholesterol drug, which Amgen said infringed its patents. Regeneron and Sanofi dropped. Facebook and Amazon advanced along with TripAdvisor.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 85 US cents to US$1,175.85. Copper futures were up 0.3 percent to US$2.55. WTI spot crude was up 23 US cents to US$53.99. Dated Brent spot crude was up 21 US cents to US$57.10. The US dollar was up against the yen, euro, pound, Swiss franc and the Australian dollars. However, it declined against the Canadian dollar. The Dollar Index was up 0.8 percent. The yield on US Treasury 30 year bond was up 6 basis points to 3.01 percent while the yield on the 10 year note was up 7 basis points to 2.42 percent.
Europe
European markets advanced Friday and for the week. The indices initially were lower as they waited for the US employment report. After the report’s release, the indices managed to climb into positive territory. The FTSE and CAC were up 0.2 percent, the DAX edged up 0.1 percent and the SMI was 0.3 percent higher. For the week, the FTSE was up 0.9 percent, the SMI jumped 2.4 percent and both the CAC and DAX were 1.0 percent higher.
Deutsche Lufthansa declined on a broker downgrade. In Paris, Sanofi fell after a US federal judge ruled against the drug maker and partner Regeneron Pharmaceuticals in a patent infringement case covering a cholesterol drug. In London, Lloyds Banking Group climbed after a rating upgrade. Worldpay also jumped on a broker upgrade. easyJet rose after the airline reported improved passenger numbers and load factor for December. TUI decreased on a broker downgrade. Reinforced polymer products maker Fenner jumped after saying it is expecting better fiscal year results. TP ICAP, formerly called Tullett Prebon, rallied after a strong trading update which said it expected 2016 revenue to be 12 percent higher than the £796 million reported in 2015, helped by a spike in trading volumes following the US presidential election.
Eurozone economic and business confidence strengthened to the highest level in more than five years in December, shrugging off political uncertainties from the ‘Brexit’ vote and upcoming national elections in member countries in 2017. The economic sentiment index improved to 107.8 in December from 106.6 in November — the highest level since March 2011. Eurozone retail sales decreased in November after rebounding in the previous month. Retail sales volume fell a seasonally adjusted 0.4 percent in November after rising 1.4 percent in October. November German factory orders declined on widespread weakness across domestic and foreign markets and retail sales retreated on subdued spending. Factory orders dropped 2.5 percent on the month after jumping a revised 5.0 percent in October.
Asia Pacific
Unlike stock indices in Europe and the US, shares here were mixed on Friday. However, they were positive for the week.
The Shanghai Composite was down 0.4 percent as the People’s Bank of China guided the yuan upward against the US dollar to support the currency and curb capital outflows. The Hang Seng was up 0.2 percent on the day. For the week, the former was up 1.6 percent and the latter, up 2.3 percent.
The Nikkei retreated 0.3 percent while the Topix was down 0.2 percent as the yen strengthened and US President-elect Donald Trump threatened to impose a heavy fine on Toyota Motor if it builds cars meant for the US market in Mexico. Toyota along with Honda, Nissan and Mazda were lower. Fast Retailing tumbled after posting weak December sales at its Uniqlo clothing outlets in Japan.
The All Ordinaries inched up 0.1 percent while the S&P/ASX was virtually unchanged (up 2.3 points). Both indices were up 1.6 percent on the week. Australia’s trade balance returned to surplus for the first time in almost three years as surging commodity prices helped power exports.
The Kospi was up 0.4 percent and 1.1 percent on the week. The index gained ground as Samsung Electronics reported a 50 percent surge in its guidance for the fourth quarter profit and foreign investors extended their buying streak to the eighth day. The Sensex lost 0.4 percent Friday and was up 0.5 percent on the week.
Looking Forward
The following indicators will be released this week…
Europe
Jan 9
Eurozone
Unemployment Rate (November)
Germany
Industrial Production (November)
Merchandise Trade (November)
Jan 10
France
Merchandise Trade (November)
Jan 11
UK
Industrial Production (November)
Merchandise Trade (November)
Jan 12
Eurozone
Industrial Production (November)
Asia Pacific
Jan 10
Australia
Retail Sales (November)
China
Consumer Price Index (December)
Producer Price Index (December)
Jan 12
India
Consumer Price Index (December)
Industrial Production (November)
Americas
Jan 10
Canada
Housing Starts (December)
United States
JOLTS (November)
Jan 12
United States
Initial Unemployment Claims (week ending prior Saturday)
Import/Export Prices (December)
Jan 13
United States
Retail Sales (December)
Producer Price Index (December)
Consumer Sentiment (January preliminary)
Global Stock Markets
*Note — all releases are listed in local time.
Source: Fidelity
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