Stock indexes in the US and Europe advanced on the better than expected US employment report.
United States
US indices advanced Friday after a better than expected employment report. The gains were driven by energy, technology and industrial companies. The Dow Jones industrials were up 0.3 percent both for the day and week. The S&P and Nasdaq both added 0.4 percent Friday. For the week the indices were up 0.6 percent and 0.9 percent respectively.
Energy companies rose as the price of oil recovered from losses earlier in the week. Occidental Petroleum, Transocean and Baker Hughes gained. Media companies have struggled the last few days as investors worried about declining cable ad revenue. Media companies CBS and Charter Communications recovered from losses incurred earlier in the week. CBS gained after it announced a bigger profit and more revenue than expected. Charter Communications, Scripps Networks and Tegna all traded higher. Technology companies rose but IBM declined after investor Warren Buffett said he sold a large part of his stake in the company. Apple jumped to another record high.
Basic materials makers including Dow Chemical, gas supplier Praxair and CF Industries climbed. Revlon plunged after its sales in North America fell during the first quarter. Revlon bought Elizabeth Arden in September and sales there were about the same as they had been a year ago. Biotech drug companies including Biogen, Incyte and Celgene slipped. Herbalife was higher after it reported better than expected first quarter results and raised its full-year earnings guidance. Shake Shack also posted a strong gain after reporting first quarter results that exceeded estimates on both the top and bottom lines. Both Verizon and AT&T advanced.
April employment was up a greater than expected 211,000 while unemployment slipped to 4.4 percent.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down 40 US cents to US$1,228.05. Copper futures were up 0.7 percent to US$2.53. WTI spot crude was up 70 US cents to US$46.22. Dated Brent spot crude was up 72 US cents to US$49.10. The US dollar was up against the yen. It was lower against the euro, pound and the Canadian and Australian dollars. It was unchanged against the Swiss franc. The Dollar Index was down 0.2 percent. The yield on US Treasury 30 year bond was down 2 basis points to 2.98 percent while the yield on the 10 year note was unchanged at 2.35 percent.
Europe
Stocks initially struggled in early trading but rallied following the release of the stronger than expected US jobs report. The rebound in crude oil and precious metal prices also helped to push the markets higher for the day. The FTSE was up 0.7 percent, the CAC gained 1.1 percent, the DAX added 0.5 percent and the SMI was 0.4 percent higher. The indices also advanced for the week with the FTSE up 1.3 percent, the CAC up 3.1 percent and the DAX and SMI up 2.2 percent and 2.3 percent respectively. Investors now are focusing on Sunday’s results of the presidential runoff election in France.
Evonik was lower after its first quarter net income fell 33 percent to €160 million from €240 million last year. JCDecaux tumbled after the outdoor advertising firm reported a 1.0 percent drop in first quarter revenue due to weakness in its billboard and transport segments. Engie, formerly called GDF Suez, declined. The company reported that its first quarter EBITDA declined 5.9 percent to €3.30 billion from €3.5 billion a year ago. Vivendi advanced after it strengthened its power over Telecom Italia by appointing all of its 10 candidates to the 15-member board of the Italian company. Intercontinental Hotels Group retreated after it announced its CEO will retire this summer after being with the company for 25 years.
International Consolidated Airlines Group climbed after the company reported record first quarter performance in what is traditionally its weakest quarter. Smith & Nephew advanced after the medical device maker backed its full-year guidance despite posting flat first quarter revenue in line with expectations. Pearson surged on restructuring news. EasyJet increased after its April load factor increased. Tullow Oil and BP climbed after oil prices rebounded. Syngenta was higher in Zurich after its shareholders approved ChemChina’s $43 billion takeover of the Swiss agribusiness giant. Vestas Wind Systems gained after it reported that its first-quarter profit surged to €160 million from €35 million last year following strong sales in the US, Germany and China.
Asia Pacific
Asian stocks were mixed as lower commodity prices pulled down mining and energy stocks. Investors were cautious prior to the release of the US employment report — the report would be released later in the global market day. The data were seen as pivotal in the Federal Reserve’s June monetary policy decision regarding the fed funds rate. Japanese markets remained closed for a third day for the Golden Week holidays. Korean markets were closed Friday as well.
The Shanghai Composite declined 0.8 percent on concerns over cooling growth and tightening regulatory scrutiny to curb leverage and speculation. The Hang Seng also lost 0.8 percent. For the week, the Shanghai Composite was down 1.6 percent while the Hang Seng was 0.6 percent lower.
Australian shares extended losses for a fourth straight session, dragged down by mining and energy stocks. S&P/ASX was down 0.8 percent and was 1.5 percent lower on the week. The All Ordinaries was 0.7 percent lower Friday and down 1.4 percent on the week. Weaker iron ore and copper prices weighed on miners, with BHP Billiton, Rio Tinto and Fortescue Metals Group retreating. Gold miner Newcrest tumbled after gold prices fell to close at their lowest level in seven weeks overnight. Energy stocks Woodside Petroleum, Santos, Oil Search and Origin Energy declined as oil extended losses in Asia after dropping overnight on concerns about global oversupply.
Bank of Japan Governor Haruhiko Kuroda on Friday voiced confidence that the country’s inflation rate will accelerate toward his 2.0 percent target as robust economic growth pushes up wages and helps heighten inflation expectations. Kuroda conceded that inflation expectations were not well anchored in Japan, making it challenging to convince households and companies that a sustained economic recovery will eventually lead to higher inflation and wages. But he said that once inflation rates start to accelerate significantly, that will change public perceptions of future price rises and enable the BoJ to achieve its price target. Kuroda was in Yokohama, eastern Japan, to meet financial leaders gathering for the Asian Development Bank’s annual meetings.
Looking Forward

Central Bank activities

May 11

UK

Bank of England Monetary Policy Announcement & Minutes

 

 

Quarterly Inflation Report (May)

 

New Zealand

RBNZ Monetary Policy Announcement

The following indicators will be released this week…

Europe

May 8

Germany

Manufacturing Orders (March)

May 9

Germany

Industrial Production (March)

 

 

Merchandise Trade (March)

May 10

France

Merchandise Trade (March)

Industrial Production (March)

Italy

Industrial Production (March)

May 11

UK

Industrial Production (March)

Italy

Merchandise Trade (March)

Asia Pacific

May 8

China

Merchandise Trade (April)

May 9

Australia

Retail Sales (March)

May 10

China

Consumer Price Index (April)

 

 

Producer Price Index (April)

Americas

May 8

Canada

Housing Starts (April)

May 9

United States

JOLTS (March)

May 10
United States

Import/Export Prices (April)

May 11

United States

Initial Unemployment Claims (week ending prior Saturday)

Producer Price Index (April)

United States

Consumer Price Index (April)

Retail Sales (April)

 

 

Consumer Sentiment (May preliminary)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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