US job growth ‘unsustainably hot’: Mixed signals for US economy
US equities were mixed in Friday trading, though finished well off morning lows.
Stocks wavered Friday in a volatile trading session after the July jobs report was much better than expected, as investors assessed what a strong labor market would mean for the Federal Reserve’s rate tightening campaign.
The labor market added 528,000 jobs in July, easily beating a Dow Jones estimate of a 258,000 increase. The unemployment rate ticked down to 3.5 per cent, below the 3.6 per cent estimate. Jerome Powell, the Fed chair, has described the labor market, as “unsustainably hot”.
Economists and politicians have spent weeks arguing about whether the United States is in a recession. If it is, the recession is unlike any previous one – given the extraordinary growth in jobs in July. For US consumers, of course, the argument is that the economy doesn’t feel like a boom. Measures of consumer confidence are at record lows, and Americans overwhelmingly say they are dissatisfied with the economy. That perception is grounded in reality: High inflation is eroding — and in some cases erasing — the benefits of a strong job market for many workers.
This week markets will also be eagerly awaiting the US July consumer price inflation data midweek for a further read on US inflation.
On the ASX this week we kick off the earnings season with seventeen major ASX 200 companies reporting including Suncorp (today and more on its proposed bank sale to the ANZ), Computershare and CBA (Wednesday), Mirvac, AMP, QBE and Telstra (Thursday) & Insurance Australia Group (Friday).
On Friday the Dow Jones Industrial Average gained 0.23 per cent .The S&P 500 shed 0.16 per cent to end at 4,145.19, and the Nasdaq Composite lost 0.50 per cent Friday, falling to 12,657.56.
Losses were offset by bank stocks, which rose on hopes that interest rate hikes will continue at a solid clip. Energy stocks also gained, but technology companies slumped.
US Corporate earnings have come out stronger than expected for the second quarter, with some 87 per cent of S&P 500 companies having reported with 75 per cent beating earnings estimates.
Disney, Fox Corp and News Corp are the media companies reporting this week.
“Outlook comments have been mixed reflecting the uncertainty regarding the growth outlook but not overwhelmingly negative.
On Friday the energy sector was the best performer – of note – the utilities and energy sectors are the only S&P 500 sectors with stock price gains year-to-date.
Earnings from Exxon, Chevron, Shell, BP and others have boosted US profit numbers. In fact, According to FactSet, earnings would be -3.7 per cent lower year-over-year for the second quarter if the energy sector was excluded from the calculation.
Overnight Senate Democrats narrowly passed a sweeping climate and economic package -The 755-page bill includes $430 billion to combat climate change and extend health care coverage. The bulk of the spending – more than $300 billion – are investments to tackle climate change and boost clean energy.
In currency news
The US Dollar rallied on the major crosses with the best gains coming against the yen.
One Australian dollar has weakened compared to the US dollar on Friday, buying 69.14 US cents (Fri: 69.70 US cents), 57.43 Pence Sterling, 93.31 Yen and 67.95 Euro cents.
On the commodity front
Iron ore futures are pointing to a 4.9 per cent gain.
Gold lost $15.70 or 0.9 per cent to US$1791 an ounce.
Silver was down $0.28 or 1.4 per cent to US$19.84 an ounce.
Copper was up $7.05 or 2 per cent to US$355.20 a pound.
Oil prices rose slightly on Friday, bouncing off their lowest levels since February, as concern over supply shortages was countered by expected declines in fuel demand. Oil added $0.47 or 0.5 per cent to US$89.01 a barrel.
The SPI futures are pointing to a 0.1 per cent fall.
Figures around the globe
Across the Atlantic, European markets closed lower. Paris fell 0.6 per cent, Frankfurt lost 0.7 per cent and London’s FTSE closed 0.1 per cent lower.
Asian markets closed higher. Tokyo’s Nikkei gained 0.9 per cent, Hong Kong’s Hang Seng added 0.1 per cent and China’s Shanghai Composite closed 1.2 per cent higher.
On Friday, the Australian sharemarket added 0.6 per cent to 7016.
Ex-dividends
There are two companies set to trade without the right to a dividend.
Djerriwarrh Investments (ASX:DJW) is paying 7 cents fully franked
Finbar Group (ASX:FRI) is paying 2 cents fully franked
Dividends payable
There are four companies set to pay eligible shareholders today.
Gryphon Capital Income Trust (ASX:GCI)
Metrics Income Opportunities Trust (ASX:MOT)
Metrics Master Income Trust (ASX:MXT)
Perpetual Credit Income Trust (ASX:PCI)
Sources: Bloomberg, FactSet, IRESS, TradingView, UBS, Bourse Data, Trading Economics, CoinMarketCap.
Copyright 2022 – Finance News Network
Source: Finance News Network
