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Commentary: Royal Mail delivers on debut, Gold in free fall
00:00, 11 October 2013
The loonie has caught a big tailwind this morning from this month’s Canadian jobs report. A drop back from last month’s very high 59K increase had been widely expected but the retrenchment was not as bad as feared with the economy adding 12K jobs, which beat the 10K street estimate. More importantly, full-time jobs increased by 23K, more than offsetting an 11K decline in part-time jobs. A surprise drop in the unemployment rate to 6.9% from 7.1% added icing to this cake. In Europe today, the FTSE is rallying, outpacing a mixed performance from its continental counterparts. Although not part of the index yet, the Royal Mail IPO has been a big success so far, climbing 33% on its first trading day and rekindling interest in UK stocks. Hopes that progress could be made on the US budget crisis propelled a big catch up rally in Asia Pacific markets overnight, but this has not carried through into European or North American trading where US indices have been consolidating yesterday’s gains but have struggled to advance much further. Questions remain over whether a deal on the debt ceiling will also allow the federal government to reopen or not or if possible restrictions on the US Treasury to act could scuttle the deal. This situation is far from settled and the potential for big developments over the sidelines could inspire some profit taking today. That being said, gold and silver have gone into free fall today, dropping 2.2% and 3.5% today and JPY has underperformed other majors suggesting that political risk fears continue to recede at the moment. Capital in currency markets has moved more into risk currencies overnight, particularly NOK, SEK and NZD. Remember even if a short-term deal is reached, it may just put off the big decisions for a few week dragging on the situation rather than resolving it. Uncertainty over what may happen on the political could keep markets active in both directions and creating opportunities for trading for some time to come. Corporate News Potash Corp Profit Warning!!! Expects EPS $0.41 for Q3 down from July guidance of $0.54-$0.60, blames potash market uncertainty for sales shortfall JPMorgan Revenues $23.1B vs street $24.0B, EPS loss on big items Wells Fargo EPS $0.99 vs street $0.97, revenues $20.4B vs street $21.0B Economic News Significant economic announcements released yesterday afternoon and overnight include: Canada jobs change street 10K vs previous 59K Canada unemployment rate street 7.1% Canada full time jobs previous 17K Canada part time jobs previous 41K Germany consumer prices 1.4% as expected Spain consumer prices 0.3% as expected Italy consumer prices 0.9% as expected UK construction output 4.0% vs street 3.9% India industrial production 0.6% vs street 2.0% Economic reports due later today include: 9:55 am EDT U of Michigan consumer conf street 75.7