The market is up 22 points. The Dow Jones was up 168 points to a record high of 15,762. The market jumped on strong employment data and continued to strengthen during the day, closing at its highs in a 185 point range.
The US jobs numbers surprised on the upside with 204,000 new jobs created, ahead of expectations of a 125,000 gain. After the initial good-news-is-bad-news response, the reaction became more positive based on the view that the economy is improving and able to withstand a reduction in monetary stimulus.
The S&P was up 23 to 1771.
Oil rose 0.42% to US$94.60.
Gold was down US$23.90 to US$1284.60 per ounce.
The US$ rose against most major currencies and the Aussie dollar continued to drift lower, currently trading at US$0.9382.
VIX volatility index fell 7.26% to 12.90.
US treasuries were weaker — The 10 year yield rose 15 basis points to 2.753%.
European share were generally weaker — The UK FTSE rose 0.17% but the German DAX was down 0.03% and the French CAC fell 0.48% after Standard & Poors lowered France’s sovereign credit rating from AA+ to AA.
European bonds were weaker. The Euro 10 year bond yield rose 15 basis points and the Greek bond was 23 basis points higher at 8.2%.
Base metal prices we mixed — copper and zinc were stronger but nickel fell 0.60% and aluminium and zinc were also weaker.
Iron ore fell US$1.00 a tonne to US$135.90 a tonne.
- Good news is good news for once in US economics. The higher than expected jobs number on Friday, rather than dumping the market because it brings on tapering, has bounced the markets. The wash up seems to be that despite the number being good the tapering timetable is unchanged — markets are expecting a cutback from $85 billion worth of asset purchases a month to $70 billion in March. There are some mentions of tapering happening before the end of the year but the markets say not.
- The jobs numbers are not actually that good — There were 204,000 new jobs added in October, higher than the 125,000 new jobs expected. The key issue was the decline in the participation rate, with fewer people actively looking for work. Also a concern was the quality of jobs being created, with analysts noting it’s the leisure and retail sectors showing strength. And the data came with a warning — most of the effect of the government shut-down has yet to be reflected in the data so far.
- The data from China was also positive. Industrial output rose 10.3% in October (10.2% previous, 10.0% expected) and retail sales rose 13.3% from year ago levels. The CPI inflation was 3.2% in October (previous 3.1%), led mainly by food prices. The generally positive numbers came after trade data last week which showed exports rose 5.6% in October from a year earlier, reversing September’s fall. It all adds up to an economy that is picking up without any obvious headline inflationary pressure.
- Looking head, this week in Australia we have housing finance, consumer sentiment and business confidence which will hopefully show that the port-election bounce is being sustained — there hasn’t been much to suggest that so far. It is Veteran’s Day in the US Monday — stock markets are open but the US bond market is closed. US data this week includes import and export prices on Wednesday, the trade balance and weekly jobless claims on Thursday and industrial production and capacity utilisation on Friday.
- Company wise we have a few more AGMs this week — the bigger ones are Fortescue (FMG), REA Group (REA), Webjet (WEB), Bluescope (BSL), Resmed (RMD), Lend Lease (LLC), Automotive Holdings (AHE) and MacMahon Group (MAH). And results include Newsorp first quarter earnings and Incitec financial year results on Tuesday; Leighton third quarter results, Myer first quarter sales, CSR half-year results and Dulux financial year results on Wednesday.
- Twitter shares fell 7.2% to $US41.65 a day after their NYSE debut. Shares had rallied 72.7% on Thursday.
- Orica (ORI) full year results are out. They are better than expected in a bit of a turnaround from the recent profit warning in July — on the day of the profit warning the stock fell 13% in a day to 1800c. Today it is up 6% to 2080c. NPAT of $602 million up 49% before material items. The clean number is down from $650 million to $602 million on sales up 3%. Final dividend of 55c making 94c for the year. They have also announced a three year gas agreement with Esso.
- Cochlear (COH) — Have reported that an FDA advisory committee (not the FDA) have approved the Cochlear “Nucleas Hybrid” L24 device this morning. Still trying to work out the relevance.
- Fortescue Metals Group (FMG) — Have re-priced their loan and reduced margins by 1%. FMG have their AGM on Wednesday.