US Equities climbed on Friday despite a stronger than expected non-farm payrolls report which showed wage growth was lower than expected, raising the prospects of a soft landing
Economic data released on Friday showed the unemployment rate declined back to a record low 3.5% compared to estimates of 3.7% shown on the chart below with 223k jobs added over the month compared to 200k forecast. Wage growth slowed to a 4.6% increase year-on-year compared to expectations of 5%, boosting investor sentiment as a sign of “soft landing”. Data also revealed that the US services activity reduced for the first time in 2 years amid weakening demand and signs of inflation easing with the ISM non-manufacturing PMI report declining to 49.6 from 56.5 previously, a large miss compared to estimates of 55 and adding further weight to slowing economic growth and hopes of a further cooling in inflation.
The S&P500 gained 2.28% with all sectors higher, with the Dow Jones also rising 2.13% along with the Nasdaq Composite 2.56% and Russell 2000 2.26% with the VIX -5.92% lower at 21.13. Markets in Europe also closed higher with the EURO Stoxx 600 rising by 1.01%. The biggest winners were materials, information technology and consumer discretionary rising 1.95%, 1.61% and 1.53% respectively. The CAC firmed 1.47%, the Dax 1.2%, and the FTSE was up 1.40%.
*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.
The ASX is expected to close higher as futures were up 108 points or 1.5 per cent to 7120. The ASX 200 edged 0.65% higher to close at 7,109.6. The index was boosted by materials leaping 3.03%, followed by energy 1.59%, while the biggest laggards were real estate -1.10% and healthcare -0.68%. The biggest winner was Sayona Mining gaining 25%, and the biggest loss was seen by Region RE which plummeted by -7.27%. Fortescue Metals leapt 3.7%, BHP jumped 3.2% while Rio Tinto firmed 2.4%. In energy, Warrego Energy fell 1.3% following over failed takeover negotiations, Mineral Resources meanwhile jumped 6.9%. Whitehaven Coal and Santos were up by 1.7% while Woodside rose by 2.1%. In gold stocks, Newcrest Mining and Silver Lake Resources were up 2.6%, St Barbara 2.2%, with Evolution Mining gaining 1.8% and Northernstar rising 1.2%. Magellan Financial Group sank 10.5% another reporting further outflows during December. The yield on the Australian 10-year bond was 3.81% while the local currency strengthened against the dollar by 0.04% to 0.68.
In commodities, oil prices were little changed with WTI crude up 0.14% to US$73.77 while Brent edged -0.15% lower to US$78.57. To metals now and spot gold jumped 1.79% to $1,865.69, and spot silver leapt 2.52% to $23.83, copper gained 2.36% to $391, nickel rose 1.1% to $27,919, SGX Iron ore firmed 2.35% to $117.82.
This article was written by Oliver Gordon, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via info@rivkin.com.au or by phoning +612 8302 3632.
