The local market is looking at a half a per cent rise this morning after a reasonable end to trading on Wall Street early Saturday in the wake of a strong jobs report for July which saw the US dollar rise sharply and other currencies, such as the Aussie dollar sell off.
Gold and oil fell for the day, but iron ore surprised with another sharp rise – up over $US74 a tonne on Friday (see commodities story), while copper edged higher.
Eurozone shares gained 1.1% on Friday as the solid US payrolls for July helped push the Euro lower. In the US, and the 209,000 new jobs report also helped push the US S&P 500 up by 0.2%.
Following this positive lead along with the rise in the iron ore price to $US74.1/tonne ,ASX 200 futures rose 24 points on Friday night or 0.4%.
As a result, US shares rose 0.2% over the last week and Eurozone shares were up 1.2%. Thanks to gains earlier in the week Australian shares rose 0.3%, but Japanese shares were flat and Chinese shares lost 0.4%.
The AMP’s chief economist, Dr Shane Oliver says global economic and earnings news remains good, “but this is partly being offset by the noise around Trump and the risks around US-China trade.”
Bond yields fell over the week and the $US rose helped by the solid US July payroll report and this along with a bit of RBA ‘jawboning’ saw the $A fall, ending at around 79.20 US cents, down around two thirds of a cent over the week.
On Wall Street, the Dow rose 66.71 points, or 0.3%, to 22,092.81, finishing at its highs of the session, which was also an intraday record. The index has now risen for a nine straight trading days, its longest such streak since February. With the day’s record on Friday, it has now posted 34 record closes so far this year.
The S&P 500 rose 4.67 points, or 0.2%, to 2,476.83, while the Nasdaq climbed 11.22 points, or 0.2%, at 6,351.56.
After early weakness at the open, all three indexes were led higher by the July payrolls report, which showed the U.S. created 209,000 new jobs in July, easily beating market forecasts for 175,000 jobs. And the unemployment rate moved to 4.3% from 4.4%, retouching a 16-year low.
That 4.3% rate is currently the central bank’s ‘natural” unemployment rate for the US economy – it was trimmed from 4.6% in late May. US economists say it almost guarantees another Fed rate rise, possibly as early as the September meeting on the 19th and 20th of that month.
For the week, the Dow rose 1.2%, its second straight weekly rise, as well as its fourth positive week of the past five. The S&P was up 0.2% on the week, while the Nasdaq fell 0.4%. The S&P is less than half a percentage point away from its own record, while the Nasdaq is less than 2 percentage points below its own.
The Dow is being driven higher by the belief that the big export stocks such as Boeing and Apple will benefit from the fall in the US dollar. The rise in Boeing shares accounts for a good part of the Dow’s recent rise.
In Australia the ASX 200 ended the week up 0.3%, but it was dragged lower by the 3.9% slide in the Commonwealth Bank.
The index still ended the week 0.3% higher despite a mixed batch of earnings reports.
Investors whacked Sims Metal Management following the abrupt news that CEO Galdino Claro and CFO Fed Knechtel had resigned, with the stock ending the session down 12.5%. There’s bad news coming in the earnings statement obviously.
Webjet shares jumped 8.8% on its return to trade. The online travel agent had spent tow days in a halt as it completed the institutional stage of its capital raising to finance the $330 million expansion in the UK.
And retail sales rose 0.3% in June from May. but for the quarter, there was the best performance since 2013 with sales on a volume basis jumping 1.5% – an early pointer to better than expected GDP numbers early next month.
Retail sales were up 3.8% in the year to June as well. Non-food retailing rose by 0.5% in June. Non-food retailing has risen by 2.4% in the past three months and is up 3.8% on a year ago.
Those figures again bely the stupid fears about the arrival of Amazon.
