Daily market review

United States

Labor recovery in North America is raising optimism over the economic outlook which is balanced, however, by an increasing chance of stimulus withdrawal.

In results that will likely raise pressure within the Federal Reserve to begin tapering its asset purchases, US nonfarm payrolls rose 943,000 in July to top Econoday's consensus for 900,000 and including a sharp 88,000 upward revision to June to 938,000. Wage pressures came along with the job growth with average hourly earnings rising 0.4 percent on the month and 4.0 percent on the year, also higher than expected.

Reaction in the US stock market was mixed: the Dow rose 0.4 percent, the S&P inched 0.2 percent higher while the NASDAQ slipped 0.4 percent. In contrast, the US 10-year yield jumped 10 points which led to rotation out of gold which fell more than $40.

Canada's July labour market report was also released Friday, showing a 94,000 rise in employment which missed Econoday's consensus for 150,000 but followed June's very strong 230,700 increase. With gains in accommodation and food leading the way, the country's reopening appears to be going well and is raising talk that additional QE tapering by the Bank of Canada may not be far away. The S&P/TSX rose 0.5 percent.

In other news, the US Senate has so far failed to finalize a $1 trillion infrastructure package though a vote is scheduled for Saturday.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell US$0.80 to US$70.49 while spot gold fell a sharp US$42.47 to US$1,761.94. The US dollar rose sharply vs. major currencies. The US Treasury 30-year bond yield jumped 9 basis points to 1.95 percent while the 10-year note yield jumped 10 basis points to 1.31 percent.


Shares were widely mixed in an uneven Friday session that followed not only the strength of the US employment report but also a batch of mixed economic data from Europe. France's CAC rose 0.5 percent but the UK FTSE and German Dax managed only fractional gains.

German industrial production unexpectedly fell for a third time in a row and for a fifth time in six months, down a sizeable 1.3 percent in June in what contrasts strongly with Thursday's sharp rise in manufacturing orders. The separation underlines the damage being done by the disruptions to global supply chains and helps explain upside cost pressures at the producer level.

Italy's FTSE MIB led the way in Europe, up 1.3 percent following a 1.0 percent rise in industrial production and that lifted second-quarter output 1.0 percent higher than the first quarter, confirming a positive contribution from the sector to quarterly GDP.

Company news included a 2.5 percent rise for Allianz after the German insurer raised guidance and a 7.6 percent fall for HelloFresh after the German meal-kit service lowered guidance.

Asia Pacific

Asian markets were quiet Friday ahead of the US release of July employment data; the Shanghai Composite fell 0.2 percent while the Nikkei rose 0.3 percent.

Strong earnings continue to underpin Japanese shares including Friday from optics icon Nikon (up 8.4 percent) and electrical products maker Fujikura (up 16.3 percent). Earnings have helped offset rising Covid cases that have now topped 1 million, including daily counts in Tokyo of more than 4,500 on Friday and a record 5,042 on Thursday.

Cases in China have also been on the rise with PMI data released earlier in the week showing related supply disruptions affecting manufacturing though the services sector was seeing no significant impact.

The Reserve Bank of India left its policy rate unchanged at 4.0 percent as expected. Although inflation has been above the RBI's target range, RBI Governor Shri Shaktikanta Das said the central bank remains in "whatever-it-takes" mode to support the recovery. The Sensex slipped 0.4 percent on the day.

Global Stock Market Recap

Global Bond Market Recap

Global Currency Recap

Commodities and currencies

Looking forward