– An appalling miss on Friday night with non-farm payrolls undershooting expectations by a wide margin. They came in at just 74,000 against expectations of a rise of 195,000 in the market. The unemployment rate fell 0.3% to 6.7% but it was largely on the back of people leaving the work force. The result was that stocks initially sold off but it was on foreign exchange and bond markets where the true impact was felt.
– The euro rallied sharply from a low of 1.3566 up to 1.3687 before closing at 1.3670. But it wasn’t just euro shooting higher – the US dollar was on the ropes across the board with USDJPY having a big reversal, closing at 104.12 right back on support a break of which the technicians suggest will see a further big fall. GBP was higher too at 1.6478 and the Aussie moved more than 1 cent higher, closing at 0.8992.
– Worth noting, as Marc Chandler at Brown Brothers Harriman did over the weekend, was that the weakness in US jobs was “a North American phenomenon. Canada reported a nearly 46k decline in employment, which was driven by a 60k decline in full-time positions.” That is a huge number for an economy the size of Canada’s and while the Loonie was hit hard – again – it closed down against the USD at 1.0891.
– On Bond markets, US 10-year treasuries had been trading the week up near 3% and opened the day at 2.97% before rallying strongly to close the day at 2.86%. UK 10-year Gilts rallied a similar amount, closing at 2.88% while in Germany 10-year Bunds rallied 7 points to 1.85%. Australian bonds rallied less than those in the US and UK with the 10-year futures on the Sydney Futures Exchange up just 4.5 points to 95.83 (4.17%).
– Turning to the stock market, the Dow opened at 16,488, falling to a low of 16,379 before rallying back toward home for a fall of just 0.05%. The Nasdaq and S&P 500 both fell hard as well, but managed to rally back into the black, with the Nasdaq closing 0.45% and the S&P 500 up 4 points to 0.21%.
– Stocks in Europe rose strongly, even though UK industrial production was weaker with no change in November against 0.4% expectations. In Europe, GDP printed on expectations but was still weak at just 0.1% qoq and -0.4% yoy.
– At the close, the FTSE was up 0.73%, the DAX was 0.55% higher while the CAC was up 0.61%. In Madrid and Milan, stocks weren’t as ebullient as might have been expected, up just 0.56% and 0.34% respectively.
– In futures trade, the ASX SPI 200 March contract fell just 4 points to 5282 bid.
– On commodity markets, Gold was the big mover, up something of the order of $17 after the US dollar weakness, to close the week at $1,242 and looking like it is building momentum. Crude bounced as well, up 1.16% to $92.89 but still vulnerable if it has a weak close this week. Copper rose 3 cents to $3.40 lb while Corn fairly soared after the USDA downgraded the crop forecast. The rise of 5% was one out, given Wheat fell 2.61% and Soybeans rose just 0.58. Bitcoin ended the week at $992.
On the data front, Australian home loans are out along with new loans in China and the French budget tonight, along with US budget statement, the only other points of interest.
Later on this week there is some important data which you can find in our Trader Diary.
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