– Non-farm payrolls in the US were much weaker than expected on Friday night, printing just 142,000 against expectations of around 230,000, but in many ways it is the unexpected ascendancy of the Yes vote in the Scottish Independence referendum that will have traders talking this morning. Whereas most thought the vote would be solidly defeated on September 18, it looks like it is going to go down to the wire according to the BBC. Currency traders will be watching closely and the pound is already under pressure this morning in early Asian trade.
– Back to Friday though, and the signing of the Ukrainian ceasefire – which looks like it has been breached by both sides already – and the weaker than expected non-farm payrolls gave stocks in the US impetus to break higher, with the S&P 500 closing at a new all-time high of 2008, up 10 points for a gain of 0.51%. The Nasdaq rose 0.45% to 4,583 and the Dow was 67 points higher at 17,137 for a gain of 0.39%.
– Many believe that the lower than expected number of jobs created in August gives rise to a kind of Goldilocks economy in the US where growth is positive but not strong enough to force the fed to hike rates soon. One number however, like a lone swallow before summer, does not mean that growth has suddenly slowed. But this data point suggests markets might be more receptive to the data flow over the month ahead, meaning stocks should/could remain bid.
– In Europe, the post-Draghi euphoria faded a little with the 2.8% inflation rate in the UK and the fall in sterling combining to hit the FTSE a little. Stocks in London finished down 0.33%. The DAX, however, was up 0.23% while the CAC fell 0.2%. Stocks in Milan and Madrid went in opposite directions, down 0.11% and up 0.44% respectively.
– On the local Futures market, the SPI 200 September contract fell 2 points to 5,591 while the December contract fell 11 points to 5,590. Friday’s trade, according to Michael McCarthy from CMC Markets, saw a lack of the buying on dips that had been usual on the ASX recently, so traders will be wary today and this week.
– In Asia Friday, the Shanghai recovery is phenomenal and it rose another 0.83% to 2,326. Prices are now at levels not seen for 15 months and back toward the Feb 2013 highs. The Nikkei was largely unchanged, down just 0.05% and the Hang Seng fell 0.23%.
– European bonds rallied, showing the impact of QE on yields with 10-year Bunds back at 0.93% while Spanish and Italian bonds rallied hard, dropping 9 and 12 points respectively. Spanish 10s at 2.06% are at ridiculously low levels – but that’s the point of QE. In the US, 10-year Treasuries closed at 2.46% – the euro can’t seriously hold onto 1.20 let alone 1.29 at this spread differential.
– Turning to Currency markets, it is time for the RBA to follow words with action. Professor Ross Garnaut has given the RBA some advice about rate cuts and perhaps it should be heeded given the Aussie rallied on Friday, rising to 94 cents again before easing back to be 0.9366 at the moment. Euro is at 1.2952, USDJPY sits at 105.08 and the pound has tanked down to 1.6178 on the Scottish referendum closeness.
– On Commodity markets, Iron Ore fell again, with September 62% futures off another 87 cents a tonne to $83.84. Newcastle Coal was also lower with September futures falling 45 cents to $66.0 a tonne. Nymex Crude fell 1.06% to $93.45 a barrel, Gold settled at $1,269 an ounce and Silver is back above $19 at $19.22. On the Ags, Wheat rose 0.94%, Corn was 2.66% higher and Soybeans were up 1.77%.
On the data front today, it is all about Asia with the release of Japanese GDP and Chinese trade. ANZ job ads are out locally and then we see German trade tonight.
And now from CMC Markets’ Ric Spooner is today’s Stock of the Day
Apple’s new iPhone launch
Apple’s next product announcement is due Wednesday morning (2am, Aust time). This will be an important event for investors and traders as well as for tech geeks. Keeping ahead of competitors is crucial for the valuation of a technology stock like Apple.
Here’s some interesting analysis surrounding Apple product launches by my North American colleague, Colin Cieszynski:
Ric Spooner, chief market analyst, CMC Markets
You can follow Ric on Twitter @ricspooner_CMC