European stocks are fractionally higher this afternoon as the US non-farm payrolls report was well-received. 

The headline non-farms reading showed that 1.76 million jobs were created last month, which was a little higher than the 1.65 million consensus estimate. The June reading was revised slightly lower to 4.79 million.

The US unemployment rate slipped from 11.1% to 10.2%, while economists were expecting 10.5%. The yearly average earnings reading dropped from 4.9% to 4.8%, higher than the consensus estimate of 4.1%. In the current climate, a fall in wages can be viewed as positive for the economy as it's likely that more lower-income workers are returning to the labour market. Overall, it was a good report as it's clear the job market is recovering.      

Hargreaves Lansdown, the stockbroking firm and investment manager, posted strong full year results. Pre-tax profit jumped by 24% to £378.3 million. Assets under management rose by 5% to £104 billion. The number of active clients now stands at 1.412 million, up 15.3% on the year. It is interesting that the company stated it witnessed an increase in the number of younger new clients. This could be a reflection of the fact that people from a younger generation are more proactive in looking after their own finances, while the older generations was typically happy to reply on a work-related pension scheme. Hargreaves total dividend was lifted by 31% to 54.9p – this makes it more attractive to income seeking investors. The stock has hit its highest level since January on the back of the update.

Hikma Pharmaceutical shares are in high demand on the back of impressive first half results. Revenue increased by 9% to $1.13 billion, and core operating profit rose by 15%. The injectables unit performed well, and the full year sales target for the division was lifted. The interim dividend is 16 cents, up from 14 cents last year.              

Rightmove shares hit a five month high as the company has seen a surge in demand for property sales and rentals since the market has reopened. Across June and July, demand for property sales is 50% higher on the year, while rental demand has increased by 20%. It is clear there was huge pent up demand on account of the lockdown. The UK property market is holding up better than anticipated. This morning, the Halifax HPI reading for July confirmed that average prices are up 3.8% on a yearly basis – its largest increase since January. Not surprisingly, Rightmove revealed poor first half numbers as the lockdown impacted the sector. Revenue and operating profit fell by 34% and 43% respectively.  

It was reported that BP is planning on selling ‘standard’ oil and gas assets. It is understood the group is keen to offload the assets even if there is a continuation of a recovery in commodity prices. The energy titan recently cut its dividend on account of the current climate. BP are also focused on ramping up their exposure to renewable energy, which entails cutting back on fossil fuels.  

ValueAct, a US hedge fund, is believed to have sold off its stake in Rolls Royce. The investment group built up a 10% stake in the engineering company, which made it the largest shareholder in the firm. Rolls Royce was having problems with its Trent 1000 engines long before the pandemic struck, so the heath crisis has compounded its issues. 

US market update

US indices are mixed as the robust jobs update is being counteracted by heightened tensions with China. Dealers reacted well to the employment report, but some uncertainty is chipping away at the sentiment. The Trump administration will target a number of Chinese tech companies on the grounds of national security. The move will see the banning of the popular apps, TikTok and WeChat. Now that the jobs report is out of the way, dealers will turn their attention back to China, and the squabbling over the coronavirus stimulus plan at home. Negotiations between Democrats and Republicans are under increasing pressure, and hopes of a deal being achieved soon are not high.       

Uber Technologies shares are in the red on the back of the latest quarterly results that were posted last night. Revenue in the three month period slumped by 29% to $2.24 billion, but that was slightly ahead of forecasts. The loss per share was $1.02, which was greater than the 86 cents loss per share that equity analysts were expecting. The group lost $1.8 billion in the quarter, and that was a big improvement from the $5.24 billion loss posted in the same period last year. The number of active riders in US cities dropped between 50% and 85% on account of the pandemic, but bookings in New Zealand and Hong Kong have exceeded the pre-Covid-19 levels. The Uber Eats bookings more than doubled, and that helped offset the sharp decline in active riders.  

Datadog posted its second quarter numbers last night. Revenue jumped by 68% to $140 million, topping the $135 million that traders were anticipating. EPS was 5 cents, which comfortably exceeded the 1 cent consensus estimate. The cloud monitoring company comment that it is ‘under pressure’ because of the pandemic – in terms of high demand – which sounds like a good complaint to have. The stock is in the red, but keep in mind, from the lows of March to the recent high, the stock rallied over 240%, so traders had highs hopes for the numbers.  

FX

The US dollar index was pushing higher in advance of the jobs report, and now that the dust has settled, it is still driving higher. The greenback was coming from a low base because yesterday it briefly fell to its lowest in over two years. The US-China tensions helped the dollar this morning as the flight to quality play boosted the currency. A healthier labour market has lifted the dollar, and in turn, dented EUR/USD and GBP/USD

USD/CAD is up as the broad positive move in the greenback has managed to overpower the respectable jobs update from Canada. The unemployment rate in Canada fell from 12.3% to 10.9%, and economists were predicting 11.1%. The employment change showed that 418,500 new jobs were added last month, which was basically in line with forests. The fall in the oil market has hit the ‘loonie’,     

Commodities

The robust rebound in the greenback has triggered a wave of profit taking in gold. The metal has been on a very bullish run recently and the weakness in the dollar was a fairly big factor behind the move, so now we are seeing the opposite.

WTI and Brent crude are in the red as the Chinese import figures raised concerns about demand. The latest data showed that imports fell by 1.4% last month, and that undershot the 1% growth forecast. The US-China relationship is a factor too as their fights tend to impact the global economy.