United States
US equities slipped Friday after an underwhelming US jobs report, and as traders scaled back on risk headed into the weekend after the US announced a new round of sanctions against Iran. The Dow industrials fell 0.5 percent, the S&P 500 declined 0.3 percent, and the NASDAQ was off 0.3 percent.
In US economic news, the December employment report saw a 145,000 rise in nonfarm payrolls that was on the low side of Econoday's consensus range of forecasts. This is also the lowest in seven months, though it followed a revised 256,000 jump in November that was the highest in 10 months.
A second set of headlines was even softer as average hourly earnings rose only 0.1 percent on the month for a 2.9 percent year-on-year rate; both of these readings are below the consensus range. Also soft was the workweek, coming in at 34.3 hours which again is below the consensus range, with November revised lower at 34.3 hours. These readings suggest slowing growth going into year-end. Yet despite the softness and in a very important offset, the unemployment rate held at an extremely low 3.5 percent.
Among sectors in the S&P 500 Friday, financials, industrials, and consumer discretionary sectors weakened the most, while defensive sectors – utilities and real estate – fared best, along with health care and technology. Energy stocks weakened as oil prices continued to retreat from recent highs on Mideast jitters.
Among companies in the news, builder KB Home slipped 3.2 percent despite an earnings beat, as deliveries missed expectations. Boeing fell 1.9 percent on news of a new raft of internal emails suggesting Boeing staff were well aware of problems with the Supermax 737 aircraft. On the plus side, Synnex, a business technology company, jumped 12.9 percent as revenues and earnings beat expectations, and it raised its dividend.
These data reflect observations at 4:00 PM US ET: Dated Brent spot crude oil fell 49 cents to US$64.98, while gold rose US$9.50 to US$1,561.00. The US dollar was mixed against major currencies. The US Treasury 30-year bond yield fell 5 basis points to 2.28 percent while the 10-year note yield fell 4 basis points to 1.82 percent.
Europe
European equities edged down Friday from recent highs after somewhat soft US employment figures. The Europe-wide STOXX 600, the German DAX, the French CAC, and the UK FTSE-100 all eased 0.1 percent.
US payrolls rose a relatively muted 145,000, with downward revisions to prior months, and soft earnings figures. Meanwhile, attention is turning to US-China trade meetings scheduled next week, ahead of a signing ceremony set for Jan. 15 for an interim trade pact. Details of the agreement have not been announced, which leads many market participants to expect a modest accord, and more trade disputes to come.
Defensive shares fared best, with utilities the leader. Travel & leisure, and autos & parts also outperformed. Ryanair, the Irish airline, rose 5.6 percent after raising its profits guidance on strong holiday bookings. On the downside, retail, banks, and industrial sectors lagged. In the UK retail category, reports of weak holiday sales hit shares of Superdry, which fell 6.8 percent, and B &M, off 6.1 percent.
In economic news, French industrial production (excluding construction) rose a stronger than expected 0.3 percent on the month in November and that after the October rate had been nudged a tick firmer to 0.5 percent. Annual growth jumped from minus 0.1 percent to 1.3 percent, its strongest reading since last May.
Asia Pacific
Most major Asian markets advanced Friday, following the lead set by Wall Street Thursday as concerns eased about US-Iran tensions, with moderate to solid gains recorded on the week across the region. Australia's All Ordinaries outperformed on both the day and on the week with gains of 0.7 percent and 2.0 percent respectively after stronger-than-expected retail sales data, while Hong Kong's Hang Seng index closed up 0.3 percent on the day and 0.7 percent on the week. Japan's Nikkei and Topix indices closed up 0.5 percent and 0.4 percent on the day respectively, with tech suppliers benefitting from gains made by Apple, with both indices closing up 0.8 percent on the week. The Shanghai Composite index underperformed, closing down 0.1 percent on the day and rising just 0.3 percent on the week.
Retail sales in Australia rose 0.9 percent on the month in November after increasing 0.1 percent in October, above the consensus forecast for growth of 0.3 percent. Stronger headline retail sales in November was broad-based across most major categories of spending, with officials noting that an increasing tendency by major retailers to offer pre-holiday discounts in late November had boosted sales by a greater amount than in previous years. In original terms, retail sales rose 2.7 percent on the year, up from 2.0 percent previously.
Household spending in Japan fell 2.0 percent on the year in November, picking up from a decline of 5.1 percent in October and close to the consensus forecast for a drop of 1.8 percent. Spending rose 2.6 percent on the month after slumping 11.5 percent previously. Weakness in October was largely a reaction to the surge in spending that took place in September ahead of an increase in consumption tax rates at the start of October.
India's industrial production index rose 1.8 percent on the year in November, rebounding from a decline of 3.8 percent in October, with growth moving back into positive territory for the first time since July. Manufacturing output, which accounts for almost 78 percent of the total index, rose 2.7 percent on the year after dropping 2.1 percent previously. PMI survey data also indicated that conditions improved in the Indian manufacturing sector in November and further again in December.
