Daily market review

United States

A disappointing US jobs report left equities mixed Friday with the NASDAQ outperforming in quiet trading ahead of a long US holiday weekend. Megacap growth stocks outperformed while cyclical/value stocks lagged. The Dow Jones industrial average eased 0.2 percent, the S&P 500 was flat and the NASDAQ firmed 0.2 percent.

Equities initially dropped after the jobs report as the big miss in US nonfarm payrolls captured the market's attention, but the major indexes recovered as investors also focused on offsetting signs of strength -- including the decline in the jobless rate and a robust rise in hourly earnings, which pushed bond yields higher. They also considered the prospect that Federal Reserve hawks would be obliged to postpone their proposed taper, though several sellside analysts said the weak payrolls report would not change anything.

Among sectors, technology and communication services fared best, as they tend to outperform when the growth outlook is troubled. Friday's winners included heavyweights Apple, up 0.4 percent, and Broadcom, up 1.2 percent after an upbeat earnings report. Most other sectors declined, led by financials, industrials, materials, utilities, and real estate.

These price data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil declined 18 cents to US$72.59 while spot gold rose US$18.47 to US$1,828.81. The US dollar was down vs. most major currencies. The US Treasury 30-year bond yield jumped 5 basis points at 1.95 percent and the 10-year note yield rose 4 basis points to 1.33 percent.

In US economic news, nonfarm payrolls rose just 235,000 in August, way below Econoday's consensus of 740,000, with the lowest forecast at 377,000. The 110,000 upward revision to July's payroll estimate, now at 1.053 million, only brought partial relief. The pace of growth of average hourly earnings doubled to 0.6 percent in August from 0.3 percent in July, also twice as much as Econoday's consensus. The unemployment rate declined a further 2 tenths to 5.2 percent, its lowest level since March 2020, in line with expectations.


A weak US jobs report undercut equities Friday as it fed worries that the Delta variant has pushed back the timeframe for recovery. The Europe-wide STOXX 600 declined 0.6 percent, the German DAX eased 0.4 percent, the French CAC lost 1.1 percent and the UK FTSE-100 declined by 0.4 percent.

On the downside, the day's worst performers were construction & materials, retail, travel & leisure, real estate, and oil & gas. Basic resources stocks held up best on an uptick in commodities prices. Other sectors lower but beating the market were media, chemicals, autos, and technology.

Markets are watching for 10 new companies to be added to the DAX to raise its number from 20 to 30 members, with expectations centering on Siemens Healthineers, Airbus, Hellofresh, among others.

Among companies in focus, Sectra, the Swedish medical technology company, rose 14 percent after an earnings beat.

Eurozone PMI releases suggested slowing but still robust growth across the euro area. Private sector business activity was a little weaker than previously estimated in August but still very robust. At 59.0, the final composite output index was down 0.5 points versus its flash print and now 1.2 points below its final reading in July.

Asia Pacific

Asian equities markets ended mixed Friday with Japan rallying on news Prime Minister Yoshihide Suga would bow out of upcoming elections, while Chinese markets lagged on weakness in internet/tech shares.

The ongoing government crackdown on internet/tech stocks weighed on Chinese markets, with Alibaba (down 3.6 percent) in focus after the e-commerce leader joined other high-growth companies in pledging a mammoth donation to the government's "common prosperity" drive. The CSI 300 dipped 0.5 percent and the Shanghai composite slipped by 0.4 percent. Among sectors, consumer staples and utilities managed gains while lagging were internet/tech, and health care stocks. Separately, Hong Kong's Hang Seng fell 0.7 percent with tech giants leading the decline.

Strength in semiconductors lifted South Korea and Taiwan, with the Korean KOSPI up 0.8 percent and Taiwan's benchmark Taiex rising by 1.1 percent.

Japanese markets rallied after the unexpected news that Prime Minister Suga would effectively step down at the end of his short term amid sliding approval ratings, withdrawing from the Sept. 29 ruling party leadership race, and thus giving up on his earlier plan to call lower house elections.

Investors are hoping for more effective leadership, and near-term steps to boost the economy and address the pandemic. The Nikkei rose 2.1 percent and the broader Topix gained 1.6 percent. Among sectors, iron & steel led the broad-based advance, along with machinery, pharma, banks, and transportation equipment.

Reopening plays led Australian markets higher with the All Ordinaries up 0.6 percent. Travel and leisure outperformed on expectations for an easing in restrictions, and as more Pfizer vaccines are slated for distribution. Other winners included materials and energy, as metals and oil prices gained. Tech lagged, with buy-now-pay-later stocks weak.

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