European equity markets are higher on the day, but they gave up some of their gains on the back of a mixed US jobs report. 

The non-farm payrolls report showed that 130,000 jobs were added in August, which undershot the 158,000 forecast, while the July reading was revised down to 159,000 from 164,000. The unemployment rate held steady at 3.7%, meeting forecasts, and the average wages reading was 3.2%, which was a touch higher than the 3.1% forecast. Even though it was a largely positive report, the mood was deflated, though stocks are still higher on the week.

European market update

Berkeley Group issued a positive trading update. The house builder said that market conditions in the first four months of the year in London and the South East have been consistent with the conditions when the full-year numbers were posted. The group has a forward sales book that exceeds £1.8 billion, and pricing has ‘remained stable’. The general sense is that the boom times in the house building market in terms of profits are over, but the company is still on track to achieve its 2025 target of £3.3 billion profit.             

Weir Group confirmed that it secured a £100 million contract for a project in Australia. It was the largest ever mining contract that the Scottish firm landed, and their equipment should help lower energy consumption and waste by in excess of 30%, so the deal should benefit all sides. The stock has been driving higher since mid-August, and if the bullish move continues it might target the 1,600p mark.

G4S shares are in demand today after it was reported The Brink’s Company approached G4S, as it is interested in buying its cash solution business. Last month, G4S announced plans to sell-off the division in question as part of a demerger, and the aim is to focus on security. 

US market update

The major indices are subdued in the wake of the jobs report. Traders seem to be fixated on the headline number, and the fact the July reading was revised slightly lower. The chatter about a Fed rate cut later this month is still doing the rounds, but seeing as the unemployment rate is near a 50-year low, and wages are 3.2%, which is comfortably above the 1.8% inflation rate, a rate cut might not be a done deal.                       

Lululemon shares are higher on the back of solid second-quarter figures. EPS were 96 cents, while the consensus estimate was 89 cents, revenue was $883.35 million which topped the $846.83 million forecast. Same store sales jumped by 15%, exceeding forecasts. The group is embracing online sales, and the order online and collect at store service is now available at nearly every stores in North America, and digital sales jumped by 31%.    

FX update

USD/CAD sold-off in the wake of the US jobs report but the Canadian jobs data was the real driver of the move. In August, the Canadian unemployment rate held steady at 5.7% meeting forecasts, and the employment change increased by 81,100, which smashed the 15,000 forecast. The bulk of the jobs added were part-time, but the update was still impressive. 

GBP/USD has given back of the massive gains in made since Tuesday morning. In light of the ground that was covered, the move lower isn’t a shock. If it can hold above the 50-day moving average at 1.23000, the recent bullish move should continue.       

Commodities update

Gold is fractionally higher today as the dip in the US dollar and the lack of volatility in stocks has encouraged traders to buy back into the metal. Gold has traditionally done well when the greenback is soft, and that is playing out today. If it can hold above the $1,500 mark, the market might retest the $1,555 mark.

Oil is in the red as the market gave back some of the yesterday’s gains. The feelgood factor in relation to US-China trade talks, and the Energy Information Administration report which showed a larger-than-expected draw in US inventories has faded. 

 

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