Stock markets are set to finish the week on a positive note, helped along by an impressive US non-farm payrolls report.
Europe
The FTSE 100 basically saw gains across all sectors, as energy, health care, financials, consumer and mining stocks all gained ground. The DAX registered its highest level in over six months, and the index was helped by solid numbers from Adidas.
HSBC shares are in demand today after the bank posted solid first-quarter results. Profit before tax jumped by 30.7% to $6.21 billion, and the consensus estimate was $5.39 billion. Revenue edged up by 5.24% to $14.42 billion, while the consensus estimate was $13.78 billion. Net interest margin was 1.59%, and that was a drop from 1.66% for the last three months of last year. The uncertainty surrounding Brexit, has led to the flattening of the yield curve, and banks across the board are finding it harder to make money. HSBC confirmed that operating costs dropped by 12%, and the retail and wealth management operations performed well.
Adidas shares have hit an all-time high on the back of a strong first-quarter update. Group sales rose by 4%, and operating profit jumped by 17% to €875 million, which comfortably topped the €794 million forecast. Operating margin nudged higher too. Not many European stocks are racking up all-time highs, and that underlines the bullish sentiment.
Intu Properties warned that rental revenue might fall between 4% and 6% on a like-for-like basis The rise of online shopping has hurt footfall at shopping centres, and retailers are struggling to keep up, and that is why rents are coming down.
US
The jobs report was strong and that helped US stocks. In April, the 263,000 jobs were added, while the March report was revised slightly lower to 189,000 from 196,000. The unemployment rate was dipped 3.6% a 49-year low, but it is worth noting the participation rate fell too. Yearly average earnings held steady at 3.2%, while economists were expecting to rise up to 3.3%. Overall, it was an impressive report, and it vindicates the Federal Reserve for holding rates, and for issuing an optimistic outlook. President Trump might be calling for lower rates, but the economic updates don’t warrant loosening monetary policy.
Beyond Meat is trading higher after its bullish debut yesterday, where the stock had an IPO price of $25, it began trading at $46, and it closed above $65. The food company produces plant-based meat substitutes, and given the change in consumer dieting habits, the company has grabbed a lot of attention.
Gilead Sciences posted mixed results yesterday, the latest quarterly EPS came in at $1.76, which topped the forecast of $1.71. Revenue was $5.28 billion, which was just shy of the $5.30 billion forecast. The company’s HIV drug, Biktarvy, posted revenue of $793 million, which comfortably topped the $682 million forecast. The stock is slightly higher.
FX
The US dollar index initially jumped on the back of the US jobs report, but it drifted lower as traders realised it wasn’t as strong as initially thought. The yearly wages component held steady, and economists were expecting it to edge higher by 0.1%. The greenback still remains in its wider upward trend.
EUR/USD is higher due to the dip in the dollar. The headline reading came in at 1.7%, up from 1.4%, and the core reading surged from 0.8% in March to 1.2% in April. The impressive jump in the core measurement suggests that demand is on the rise.
GBP/USD has also been helped by the softer US dollar. The UK services sector rebounded from 48.9 in March to 50.4 in April. The services sector accounts for the bulk of the UK’s economic output, and it is encouraging to see that the services industry is expanding again, albeit at a slow pace.
Commodities
Gold has been given a lift in the wake of the non-farm payrolls update. The metal initially moved lower after the US jobs report, but then pushed on to the high of the session. Gold has been in a downward trend since mid-February, and a break below the $1,266 region might bring the $1,250 area into play.
Oil is a little higher after the severe sell-off yesterday, and it has managed to pull back some of the lost ground. Despite the concerns about Iranian sanctions and chatter of OPEC cuts, and surge in US stockpiles has hanging over the market.
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