Goldilocks returns as US jobs report boosts yields, stocks and US dollar


EEuropean stocks ended the week with further records for the FTSE 250 and Stoxx 600, with financials leading the winners following this afternoon’s US jobs report, which contributed to a rise yields, which in turn raised tastes. Lloyds and Barclays on the rise, while NatWest Group shares hit their best levels this year and their best levels since February 2020.

Europe

Once again, the FTSE 100 has fallen behind but is still on track for its best weekly performance since June.

The London Stock Exchange led the winners today, after announcing that it was making good progress in achieving the various cost savings of its Refinitiv deal. After finalizing the acquisition of Refinitiv in January, the company warned in March that synergies from the deal could cost it as much as £ 850million, causing its shares to drop sharply, where since then they have had to. hard to gain ground. Today’s first half report appears to show progress is being made, with the LSE claiming £ 77million has been saved so far, pushing total income up 4.6% to 3.35 billion pounds, helping to push operating profits up to 1.29 billion pounds, slightly ahead. expectations.

Morrisons shares are higher after the Fortress consortium of equity investors raised their offer to £ 6.7bn from £ 6.3bn in anticipation of a possible counter-offer this week -end.

Hikma Pharmaceuticals first half figures saw the company post revenue up 7% to $ 1.2 billion, and profit up 26%, mainly driven by the outperformance of its generics division . As a result of the better-than-expected performance, the company improved its revenue forecast in this area, between $ 810 million and $ 830 million, bringing the basic operating margin from 22% to 24%. The company also raised its dividend to 18 cents per share, but the shares fell sharply, possibly due to disappointment that the forecast increase was not better.

Darktrace shares fell sharply after shareholders sold 23.15 million shares at 620p each when the lock-in period expired, generating a handsome profit.

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U.S. markets opened higher, with the S&P 500 and Dow Jones hitting new highs after the latest U.S. non-farm payrolls posted solid gains of 943,000 in July, along with a decent upward revision to 938 000 for June. There wasn’t much to lament about the numbers, with the only worry of a bigger than expected wage hike, which helped push 10-year U.S. yields to their highest level since July 26.

Smaller Cap Russell 2000 is also rising on confidence in the US recovery, as the higher valued Nasdaq retreats as capital moves out of the higher valued areas of the market to the cheaper parts.

Beyond Meat shares initially fell sharply after expectations for the third quarter fell short of expectations, although they have since rebounded. Second-quarter revenue was better than expected at $ 149.4 million, but the drop in net income forecast from $ 120 million to $ 140 million was not welcomed, while losses were was higher than expected at $ -0.31 per share.

Didi Global has seen its shares rise following reports that the company is considering ceding control of its data to a third party to appease Chinese regulators.

Novavax shares plunged after the company again delayed its Covid-19 vaccine candidate, this time pushing demand into the fourth quarter, starting in the third quarter.

After experiencing steep declines yesterday, Robinhood Markets shares have soared after the company said it likely would not be able to get approval for any sale of SEC shares, before its second quarter results, expected around August 18.

Virgin Galactic shares also rose after unveiling new tickets for $ 450,000 each.

FX

The US dollar surged after today’s US jobs report and strong payroll data. Even more positive, the unemployment rate plunged from 5.9% to 5.4% and the underemployment rate from 9.8% to 9.2%.

We also saw the participation rate increase to 61.7% as more people returned to look for work. On a more conservative note, the average hourly wage rose to 4% on an annualized basis, which may be concerning given that much of the extra jobs that were added were in restaurants and bartenders, who tend to be be in the lower part of the range. wage scale. Maybe employers have to pay to get these employees back, some jobs, like truck drivers, certainly charge higher rates.

The biggest losers have been the negative-yielding currencies of the Swiss franc, the euro and the Japanese yen, as markets anticipate the prospect of a gradual reduction in asset purchases by the Federal Reserve before the end of the year. This year.

Merchandise

Precious metal prices have sank like a rock, with gold prices sliding to a month-long low following today’s exceptional US wage report hampered by higher returns. higher and a stronger US dollar. Silver also came under similar pressure, sliding to four-month lows.

Crude oil prices did not react much to today’s decent jobs report, with the strengthening US dollar perhaps acting as a damper on optimism that the US economy is enjoying significant momentum as autumn approaches.


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