Europe
UK and European stock markets largely tracked US counterparts lower after the hotly-anticipated US jobs report slightly missed expectations but left consensus opinion for a September rate-hike intact.
Consensus is often the opposite of what brings about the best trading opportunities. Surely the Fed is looking for an improvement in economic conditions rather than consistency, let alone a slight worsening? Meaning a September hike is now less likely.
Disappointing German industrial output offset the strong factory orders and weighed on the Xetra DAX.
Another good day for UK-listed mining and energy companies wasn’t enough to help the FTSE 100 with ITV (LONDON:ITV) a top faller, getting negative follow-through from disappointing earnings results amongst US media companies.
US
US stocks opened lower on Friday following a US jobs report that narrowly missed expectations, leaving the consensus idea an interest rate-hike in September very much intact.
There was a small initial move higher in stocks and drop in the dollar when the jobs number came in at 215K, below the 225K expected. The initial reaction in the markets was quickly reversed into a resumption of the established trend of strong dollar / weak equities. Job creation over 200k and annual wage growth above 2% means a September rate hike will still be on the table.
Outside of the major indices, another tech stock was taking a pummelling with shares of Groupon making new 52 week lows, opening down by more the -4%. The deals site company saw a rare profit in Q2 but missed estimates and guided lower for the third quarter.
Shares of Apple found some buyers on Friday, in part thanks to a report from NPD Group showing that US watch retailers sold 14% less units in June than a year ago, coinciding with the release of the Apple Watch. Part of the reason for the correction in Apple shares (NASDAQ:AAPL) was disappointment that the company wasn’t more specific on its watch sales but various outside indicators are starting to suggest they may have been pretty strong.
FX
Non-farm payrolls dominated proceedings within the FX market on Friday. After an initial wobble, the US dollar was mostly stronger but off the highs.
Losses in the euro were compounded by weaker than expected German industrial production figures. EUR/USD is hovering above 1.08, a break of which would put it at three month lows.
The Australian dollar is still picking up strength after the RBA left its traditional jawboning out of the most recent statement, with monthly employment figures surprising to the topside. AUD/USD is making another run at closing above 0.74.
Commodities
The widely-watched $50 per barrel in Brent crude oil is not seeing much demand and as such prices sank again on Friday to fresh six month lows beneath $49 ahead of US rig count data.
Silver was showing some relative strength in the face of a rising dollar after the payrolls report with the price rising over 1.5% and looking to challenge $15 per oz, the neckline of a possible double bottom reversal pattern.
Of wider importance for the slump in commodities according to data from Hedge Fund Research Ltd is that the amount of money under management by commodity hedge funds stands at $24bn, 15% below the peak three years ago.
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