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Commentary: Gold and stocks drop as blowout US jobs reignite December tapering speculation
00:00, 08 November 2013
October was a truly stellar month for US employment. Despite the disruptions from the government shutdown and budget talks fiasco, the US added over 200K jobs. Even more significant, all of these jobs were added in the private sector and September’s increase was revised upward. This shows that the US job market has remained robust into the autumn despite the politicians. The strength of this report has sparked renewed expectations that the data driven Fed may be in a position to start cutting back QE (tapering) as soon as its next meeting in December. This has sparked a rally against other currencies, slamming gold back under $1,300/oz and knocking back paper majors particularly NOK and SEK with EUR, GBP, AUD and others also falling. Despite a better than expected Canadian jobs report, the loonie has been unable to withstand the USD onslaught today although it has fallen less than most other majors. The Dow staged a bearish key reversal day yesterday and this cast a cloud over overseas markets overnight. With the potential rising that the Fed could start to take away the punch bowl, the selloff in QE inflated stock markets has intensified this morning, suggesting that a significant correction may be getting underway. It’s Day 2 for Twitter trading and its first weekly close. Yesterday, the shares soared on the open to $45.10, surpassed Facebook briefly, traded up toward $50.00 and then slipped back into the close to finish just below $45.00 and its opening price. Today may give a better indication if yesterday’s strong interest was sustainable or if the shares are vulnerable now that the initial burst of interest has passed. In addition to the continuing reaction to today’s employment numbers, Asia Pacific markets could be active to start next week with economic data and possibly financial reform announcements expected from China over the weekend. Corporate News Priceline.com $17.30 vs street $16.22 Walt Disney $0.77 vs street $0.76 Economic News Standard and Poors cut France’s credit rating to AA from AA+ blaming high unemployment and a slow economy. Significant economic announcements released yesterday afternoon and overnight include: US nonfarm payrolls 204K vs street 120K, previous revised up to 163K from 148K US private payrolls 212K vs street 125K US unemployment rate 7.3% as expected Canada jobs change 13K vs street 11K Canada unemployment rate 6.9% vs street 7.0% Canada full-time jobs 16K vs previous 23K Canada part-time jobs (2K) vs previous (11K) Canada housing starts 198K vs street 190K US personal income 0.5% vs street 0.3% US personal spending 0.2% as expected US PCE core inflation 1.2% vs street 1.3% China trade balance $31.1B vs street $24.80B China exports 5.6% vs street 1.7% China imports 7.6% vs street 7.4% Germany trade balance €18.8B vs street €15.4B Germany exports 1.7% vs street 0.5% Germany imports (1.9%) vs street 0.6% France trade balance (€5.8B) vs street (€4.8B) Switzerland retail sales 1.0% vs street 2.5% UK trade balance (£3.2B) vs street (£2.7B) Greece industrial production (1.8%) vs previous (7.2%) Greece consumer prices (2.0%) vs street (1.5%) Economic reports due later today include: 9:55 am EST U of Michigan consumer conf street 74.5 12:00 pm AEDT Sat China new yuan loans street 580B vs previous 787B 12:30 pm AEDT Sat China consumer prices street 3.3% 12:30 pm AEDT Sat China producer prices street (1.4%) 4:30 pm AEDT Sat China industrial production street 10.0% 4:30 pm AEDT Sat China retail sales street 13.4%