The US employment report sent stocks in the US and Europe higher and earnings also contributed to the positive performance.
United States
US stocks advanced Friday following the release of better than expected employment data. While buying interest was somewhat subdued, the Dow Jones industrials still reached another new record closing high. The Dow was up 0.3 percent while the S&P and Nasdaq both added 0.2 percent. On the week, the Dow was up 1.2 percent and the S&P, 0.4 percent. The Nasdaq however retreated 0.4 percent.
July non-farm employment was up 209,000 after jumping an upwardly revised 231,000 in June. The unemployment rate edged down to 4.3 percent from 4.4 percent in June. Average hourly employee earnings were up 2.5 percent on the year, unchanged from the previous month. The strong report is likely to clear the way for the Federal Reserve to announce a plan to start shrinking its $4.2 trillion bond portfolio in September and could strengthen its case to raise rates for the third time this year in December.
QEP Resources and Devon Energy advanced. YRC Worldwide led the trucking sector higher after reporting its second quarter results. Goldman Sachs advanced. Dow Chemical was higher. Gilead and Allergan retreated. Walt Disney declined. Viacom was lower after the company forecast a low single-digit dip in sales. Yelp jumped after the company said it would sell its Eat24 business to Grubhub for $287.5 million and reported better than expected quarterly revenue. Grubhub also advanced.
These data reflect observations at 4:00 PM US ET. Gold at the afternoon London fixing was down US$10.40 to US$1,257.70. Copper futures were up 0.2 percent to US$2.89. WTI spot crude was up 55 US cents to US$49.58. Dated Brent spot crude was up 79 US cents to US$52.42. The US dollar was up against all of its major counterparts including the yen, euro, pound, Swiss franc and the Canadian and Australian dollars. The Dollar Index was up 0.7 percent. The yield on US Treasury 30 year bond was up 5 basis points to 2.84 percent while the yield on the 10 year note was up 4 basis points to 2.26 percent..
Europe
Stocks in Europe and the UK advanced Friday and for the week. The FTSE was up 0.5 percent (2.0 percent for the week), the CAC added 1.4 percent (1.4 percent for the week), the DAX gained 1.2 percent (1.1 percent) and the SMI advanced 0.4 percent (1.7 percent). Stocks added to early gains Friday after the release of the stronger than anticipated US employment report. The early strength in Europe stemmed from German June factory orders data and mixed corporate earnings results.
Royal Bank of Scotland Group moved higher after swinging to a profit in the second quarter despite a US settlement fine. HSBC, Barclays and Lloyds also were higher. Allianz also moved to the upside after it agreed to buy a 49 percent stake in LV’s general insurance business. Swiss Re came under pressure after its first-half group net income dropped by a third due to lower premiums and a weaker investment return. Andritz plummeted after the Austrian engineering group said it expects slightly lower sales in 2017 compared to 2016.
British American Tobacco and Diageo advanced. Merlin Entertainments jumped after saying that it still expected to deliver full year profit in line with current expectations. However, housebuilding stocks including Barratt Developments, Persimmon and Taylor Wimpey retreated following a report that the UK government was reviewing Help-to-Buy, a scheme aimed at helping first-time buyers onto the property ladder. Half year results weighed on Pearson — it was lower after cutting its dividend and saying that it would slash another 3,000 jobs.
German factory orders were up 1 percent in June on the month after increasing a revised 1.1 percent in May.
Asia Pacific
Stocks in the Asia Pacific were mixed on Friday before the US monthly employment report which would be released later in the global market day. The US dollar remained under selling pressure during Asian trading after the Wall Street Journal reported that US Special Counsel Robert Mueller’s investigation into possible Russian interference in the 2016 elections is intensifying.
The Shanghai Composite was down 0.3 percent while the Hang Seng inched up 0.1 percent. For the week, the Shanghai Composite and Hang Seng were up 0.3 percent and 2.2 percent respectively.
The Nikkei was down 0.4 percent and the Topix was 0.1 percent lower. A surprisingly soft reading on the US services sector sapped risk appetite and helped to bring down the dollar to a seven-week low on Friday. Energy majors Inpex and Japan Petroleum Exploration declined. Kirin Holdings was lower. Suzuki Motor climbed after its first quarter operating profit jumped 43.8 percent. Mazda Motor rose before an expected announcement of a joint venture with Toyota Motor. Toyota slipped. The Nikkei slipped 7.51 points on the week while the Topix added 0.6 percent.
The S&P/ASX declined 0.3 percent while the All Ordinaries was down 0.2 percent. Weakness in the banking sector pulled shares lower after Commonwealth Bank was accused of money laundering and terrorism financing breaches. Positive retail sales figures and gains in miners helped to limit losses to some extent. On the week, both indices were up 0.3 percent. Commonwealth Bank shares along with ANZ and Westpac were lower. Rio Tinto advanced to snap a two-day losing streak after iron ore prices rebounded on Thursday.
The Kospi added 0.4 percent but was down 0.2 percent on the week. The Sensex was up 0.3 percent but was virtually unchanged on the week (up 15.53 points).
Looking forward

Central Bank activities

August 10

New Zealand

Reserve Bank of New Zealand Monetary Policy Announcementt

The following indicators will be released this week…

Europe

Aug 7

Germany

Industrial Production (June)

Aug 8
Germany

Merchandise Trade (June)

 

France

Merchandise Trade (June)

Aug 9

Italy

Industrial Production (June)

Aug 10

France

Industrial Production (June)

 

Italy

Merchandise Trade (June)

UK

Industrial Production (June)

 

Merchandise Trade (June)

Asia

Aug 8

China

Merchandise Trade (June)

Aug 9

China

Consumer Price Index (July)

 

 

Producer Price Index (July)

Aug 10

Japan

Producer Price Index (July)

 

 

Private Machine Orders (June)

Americas

Aug 8

Canada

Housing Starts (July)

United States

JOLTS (June)

Aug 10
United States

Initial Unemployment Claims (week ending prior Saturday)

 

 

Producer Price Index (July)

Aug 11
United States

Consumer Price Index (July)

Global Stock Markets

*Note — all releases are listed in local time.

Source: Fidelity

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