NFP Surprises Market, Futures Edge Higher, Trade Concerns Linger

Strong labor data surprises the market and futures move higher. Trade concerns linger but the outlook for 2020 is improving.
Thomas Hughes

Strong Data Supports U.S. Markets

A round of surprisingly strong U.S. labor data shocked the market. The NFP payrolls figure was expected to fall below 100K but the headline outpaced consensus by a wide margin. The headline NFP came in at 128,000, more than 28,000 above consensus. Add in the 45,000 in revisions to August and September and the number of new jobs grows to over 200,000. The unemployment rate edged up by 0.1% to 3.6% but remains very low relative to the trend. Average hourly earnings rose by a stronger than expected 0.2% MOM and 3.0% YOY showing continued strength in labor demand.

The Dow Jones Industrial Average, S&P 500 and NASDAQ Composite are all up about 0.15% in early trading. The indices have been up all morning but edged higher following the NFP release. Later in the session, traders will be looking out for the ISM Manufacturing report for insight into the state of U.S. industry. The analysts are expecting the ISM to rise from last month but remain below the expansionary 50-level. A better than expected ISM number would confirm the FOMC’s decision to halt the rate-cutting cycle.

In stock news, shares of Exxon are up more than 1.5%. The globally integrated oil company reported a double-digit decline in 3rd quarter earnings but better than expected results.

Europe Moves Higher On Strength In China

The European markets moved broadly higher on Friday after a round of solid manufacturing data from China. The Caixin PMI, a measure of the domestic small-cap economy, came in at 51.7 and 0.7 above consensus. The news is contrary to the official PMI data which shows China’s large-cap economy is still in contraction.

In Europe, The DAX is in the lead with a gain near 0.40% while the FTSE and CAC are close behind. Autos and basic resources, with their heavy exposure to China, are the leading sectors and up more than 1.0%. In stock news, shares of Danske Bank are down -3.0% after it reported a miss on the top and bottom lines. Shares of money-handler Loomis are up more than 7.0% on its results. The company reports better than expected revenue and earnings on higher than expected traffic volumes.

Asian Markets Are Mixed

Asian markets are mixed at the end of Friday’s trading as trade concerns dominate sentiment. Chinese markets in Shanghai and Hong Kong led with advances of 0.99% and 0.72% respectively, better than expected PMI is the reason why. Elsewhere, gains were capped by rising concern the Phase I Trade Deal if signed, will be the only trade deal we see for many years. The Japanese Nikkei is the only index to post a loss and it is down -0.33%.

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