Europe
European stock markets are in the red as traders remain nervous about the relatively high US government bond yields and the fiscal policy of the Italian government. The US released a mixed non-farm payrolls report and the yields remain reasonably high, and traders are worried it could put pressure on emerging market economies.
The administration in Rome are keen to press ahead and increase the budget deficit in the near-term in an effort to ramp up economic activity.
Intu Properties (LON:INTUP) shares have jumped today after it was reported that a consortium are considering making a bid for the company. Earlier this year, British Land (LON:BLND) and Klepierre (LON:0F4I) expressed an interest in the group, but both parties walked away from the firm. Intu has lost 85% of its value in the past 12 years, and the rise in online shopping has hurt shopping centres and some real estate firms. The stock is relatively cheap, but it is relatively cheap for a reason, and given the drastic change in consumer patterns we could see the sector struggle. Land Securities (LON:LAND) and British Land shares have been dragged higher because of the Intu speculation.
Mining companies like Rio Tinto (LON:RIO), BHP Billiton (LON:BLT), Antofagasta (LON:ANTO) and Glencore (LON:GLEN) are lower today due to the decline in copper and the increased trade tensions between the US and China. It was reported yesterday that chips installed in Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) products were used by the Chinese government for surveillance. President Trump has been gunning for China for some time now, and should these claims turn out to be true, it could prompt him to step up the trade dispute.
Danske Bank (LON:0NVC) shares have fallen to a four year low today after a report emerged the bank executed mirror trades for Russian clients. The bank was fined $630 million by the US previously for carrying out similar practices, and it was alleged it was used to launder money. The prospect of a fine and the whiff of assisting money laundering has sent traders running from the stock.
US
Stocks are a little lower after the non-farm payrolls report was a mixed bag. The headline figure was 134,000, which was well below the 185,000 that economists were expecting. The August report was revised higher to 270,000 from 201,000 – which was an impressive reading. An average of the two reports is 202,000, and that is a respectable update. The unemployment rate fell to 3.7% - the lowest reading since 1969 .The yearly average earnings figure slipped to 2.8% from 2.9%, and this is a little disappointing when you consider the strength of the labour market.
FX
The US dollar index sold-off in the wake of the mediocre jobs report, the greenback has had a great run recently and traders had high hopes for the update. The greenback is still in its upward trend, but traders used the update to take some cash off the table.
EUR/USD is higher on the session due to the sell-off in the greenback. It is a little concerning that the euro dropped below the 1.1500 mark, but that level has been retaken and should that metric be held its outlook might remain positive.
GBP/USD has been helped by the slide in the US dollar and the cautious optimism surrounding the Brexit talks. Dealers are a little hopeful that as deal can be done regarding Brexit, and yesterday we heard that Theresa May was considering an all-UK customs union with the EU, and that could solve the issue of the Irish broader. If the pound can hold above the 1.3000 mark it could look to retest the September high.
USD/CAD is higher on the session as the Canadian jobs report was good, but not as good as initially thought. The unemployment rate dropped to 5.9% and the unemployment change jumped by 63,300, but full-time employment dropped and par-time employment soared, so the Canadian dollar lost its early spark.
Commodities
Gold has benefitted from the weak US dollar and the inverse relationship between the greenback and the commodity continues. Volatility continues to be low, but while it remains below the $1,214 mark its outlook could continue to be weak.
Oil continues to be in demand as traders are fearful about future supply once the sanctions on Iran kick in next month. The energy sold-off yesterday after it was revealed that Saudi Arabia and Russia agreed to raise output in order to offset the anticipated loss of supply from Iran, and today the oil market has ticked higher again.
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