US equities climbed on Friday following a significantly stronger-than-expected jobs report for March, pointing to continued strength of the US economy.
United States
For the month of March, 303k jobs were added, well above the 214k estimated while the unemployment rate remained unchanged at 3.8%. The report also showed that average hourly earnings over the year rose 4.1% as forecast, increasing 0.3% over the month also in line with forecasts.
US Non-farm Payrolls (MoM Mar)
In reaction to the report, equities rose along with Treasury yields. The 2-year rate was 10.3 basis points higher along with the 10-year rate by 9.3 basis points, with the jobs report dampening expectations for the need for rate cuts sooner rather than later. In equities, the S&P500 rose 1.11% in broad-based buying with all sectors higher let by communications 1.61% and technology 1.38%. The Dow Jones also rose 0.8% along with the Nasdaq Composite 1.24% and Russell 2000 0.47%.
Ahead this week, the latest inflation data for March will be in focus on Wednesday expected to show core prices rose 3.7% and headline prices rose 3.4% over the 12 months. The latest FOMC minutes will also be released overnight on Wednesday, followed by producer price data for March on Thursday. The week will then be rounded off with the latest consumer sentiment report, as well as several Fed speakers throughout the week.
Europe
European stocks finished the session lower on Friday, with European markets closing before the release of the US jobs report which lifted optimism. The Euro Stoxx 600 finished -0.84% lower, marking the first weekly drop since January. The DAX was also -1.24% lower along with the CAC -1.11% and FTSE100 -0.81% with major indices across the region lower. In economic data this week, the ECB will meet to set monetary policy on Thursday, with no changes expected to interest rates. UK GDP will follow on Friday with no other major data for the week.
Australia
The ASX is expected to open higher this morning with ASX200 futures up 38 points or 0.49% to 7,853. On Friday, the index finished -0.56% lower, with a weekly loss of -0.59%. Ahead this week, the latest consumer confidence survey for April will be released on Tuesday, followed by consumer inflation expectations on Thursday. Thursday will also see the release of the latest Chinese inflation data for March, forecast to show a 0.4% increase over the 12 months.
Commodities
Oil prices extended gains on Friday with both WTI and Brent crude up 0.37% and 0.57% respectively, taking year-to-date gains to 21.3% and 18.34% respectively. Iron ore futures in Singapore finished 0.62% higher on Friday, although are -1.58% lower this morning at US$96.80 taking a drop since peaking in January to -30%. Gold climbed 1.69% on Friday despite the firmer jobs report lifting yields and the US dollar, with the precious metal up 1.69% to US$2,329 an oz with silver 2.09% higher at US$27.47.
Economic Calendar
No major data releases
This article was written by James Woods, Portfolio Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3632.
