Daily market review

United States

Equities advanced Friday despite a surprisingly poor monthly US jobs report, though major indexes retreated from morning highs headed into the weekend. The Dow Jones industrial average and the S&P 500 gained 0.7 percent, and the NASDAQ was up 0.9 percent.

Equities perked up and interest rates mostly declined on the jobs report as the huge miss in payrolls and rising unemployment were seen as delaying Federal Reserve tightening, and improving prospects for more fiscal stimulus. Meanwhile, company news suggested the re-opening is still under way, if perhaps delayed. Stocks rose nearly across the board but growth and mega-caps outperformed as high-multiple companies have been seen as vulnerable to rising interest rates.

The US economy added 266,000 jobs in April, far below Econoday's consensus for a 998,000 gain, with the lowest forecast at 755,000. The disappointment was reinforced by the downward revision to March's estimate now at 770,000 from 916,000. The unemployment rate edged up 0.1 percentage point to 6.1 percent, while the consensus had expected a decline to 5.8 percent.

Among outperforming sectors, energy stocks added to the week's gains, with oil services best. Airlines, transports, and building products paced industrials. Consumer discretionary saw strength in homebuilders, travel & leisure, and restaurants. Industrial metals ended another winning week to boost materials. Health care had a good day, with support from McKesson, the medical supplier, up 6.8 percent on an earnings beat. Tech stocks rose as some traders saw bargains after the sector's recent weakness. Consumer staples lagged.

Among companies reporting, Expedia, the online travel broker, rose 5.2 percent as its bookings revived. Microchip Technology rose 2.1 percent after topping earnings and revenues forecasts. On the downside, Shake Shack, the fast food chain, fell 15 percent after a revenues miss, while Beyond Meat, the food product maker, lost 7 percent after disappointing results.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil eased 11 cents to US$68.09 while spot gold rose US$17.28 to US$1,831.96. The US dollar fell vs. most major currencies. The US Treasury 30-year bond yield rose 4 basis points to 2.29 percent and the 10-year note yield was unchanged at 1.57 percent.


European data and company earnings news gave European equities a lift Friday. The Europe-wide STOXX 600 rose 0.9 percent, the German DAX gained 1.3 percent, the French CAC firmed 0.4 percent, and the UK FTSE 100 rose 0.8 percent.

In macro news, focus was on strong Chinese trade data as the session began, a positive for European exporters, which helped Germany outperform, followed by a big beat in German industrial production figures. Next, the big miss in US jobs data left risk appetite unfazed as many investors reasoned that it keeps Fed tightening far off.

Among sectors, technology, travel & leisure, basic resources, utilities, and industrials fared best, while lagging were food & beverage, construction & materials, chemicals, banks, and real estate.

Among companies reporting, Siemens, the German industrial conglomerate, rose 2.5 percent after an earnings and revenues beat and improved guidance linked to Chinese demand. Adidas, the sportswear leader, rose 8.6 percent after topping quarterly expectations and better guidance. On the downside, Medcap, the Swedish medical equipment maker, fell 8 percent on an earnings miss. Akwel, the auto parts maker, fell 6 percent on a disappointing quarter and analyst downgrade.

Among travel stocks in focus, Norwegian Air Shuttle jumped 20 percent after a refinancing and private placement of stock. Europcar, the rental agency, rose 15 percent on an earnings beat and analyst upgrade.

In economic news, German industrial production rose 2.5 percent, well above the market consensus and the sharpest since last October. With base effects supportive, annual growth jumped from minus 6.6 percent to 4.9 percent. However, production was still 4.3 percent below its pre-pandemic level in February 2020.

Asia Pacific

Asian equities markets were mixed Friday with Japan firmer for a second straight day and China weaker despite strong economic reports, while Australia edged up ahead of the US monthly jobs report.

Japanese markets gave up most of their early gains as the market turned its focus to negative Covid news and expectations for new restrictions on commerce and mobility. The Nikkei ended up a marginal 0.1 percent and the broader Topix up 0.3 percent. Among companies in focus, Nippon Steel rose 5.7 percent after raising its annual profits guidance. Tokyo Electron, the chipmaker, rose 2.4 percent. On the downside, Nintendo fell 2 percent on gloomy profits guidance.

For Chinese markets, worries about tensions between China and the West, and concerns about the pandemic in Asia, ex-China, weighed on risk assets Friday, despite economic data showing ongoing recovery. The Shanghai composite slipped 0.7 percent and the CSI 300 fell 1.3 percent.

Chinese sectors were mixed; consumer discretionary and health care shares lagged while materials and energy outperformed. Vaccine makers rebounded from Thursday's selloff after Germany appeared to oppose the US proposal to ease trademark protection for Covid-19 vaccines. Shanghai Fosun, a vaccine maker, rose 4.8 percent.

Hong Kong's Hang Seng eased 0.1 percent with tech stocks lagging amid concerns over US-China disputes after Bloomberg reported the Biden administration is likely to keep the Trump administration sanctions against Chinese companies linked to the military.

A mixed sector performance left Australia flat to higher with the All Ordinaries up 0.3 percent. Strength in commodities lifted miners, offset by declines in technology and health care. Biotechs dragged down health care while buy-now-pay-later stocks again hurt tech. News Corp. was among the day's winners, up 5.5 percent on an earnings beat, while Afterpay, the buy-now-pay-later leader, fell 4.1 percent as its recent selloff continued.

India's markets firmed Friday with the Sensex up 0.5 percent and the Nifty rising 0.7 percent. Metals and bank stocks outperformed as the market focused on the Reserve Bank of India's provision of liquidity in the face of continued fallout from the pandemic. Tata Steel was the day's leader, up 7.5 percent after an earnings beat.

In economic news, Chinese merchandise trade exports rose 32.3 percent on the year in April, up from 30.6 percent in March and well above the expected 24.1 percent. Imports gained 43.1 percent on the year after increasing 38.1 percent previously, close to the consensus forecast. Separately, the Markit China PMI services index rose from 54.3 in March to 56.3 in April, the fastest pace since December. The manufacturing PMI survey, published last week, also showed its headline index rising, from 50.6 to 51.9. These lifted the composite output index from 53.1 in March to 54.7 in April.

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