Stocks soared today after positive news was released from China overnight. 

Europe

The Caixin survey of Chinese manufacturing reading was 53.9, which exceeded the forecast of 52.9, and it was an improvement on the 53.8 reading in the previous update.

The Chinese government confirmed it will assist the economy in light of the broadly disappointing economic indicators that have been released in recent weeks. The reserve requirement ratio has been trimmed in order to boost the economy, and cuts to taxes are expected too, and that has raised sentiment across Europe. Adding to that, The US and China have agreed to hold trade talks on the 7 and 8 of January. The landscape has changed recently, and given the sell-off in US stocks, and the continued weakness in Chinese equities in the past couple of months, both sides may take a softer approach to the talks. Mining and oil shares are higher on the back of the Chinese news, and they are some of the biggest risers on the FTSE 100.

The impressive non-farm payrolls report from the US added volatility at lunchtime, and European markets continued their rally.

ITV shares are down today after Morgan Stanley cut its price target to 130p, from 190p.

Morrisons shares are lower after HSBC and Jefferies cut their price target to 240p and 265p respectively. The supermarket will release its Christmas statement next week, and the two banks are clearly nervous.

US

Equity markets are higher on the back of the general positive sentiment out of China, and the robust jobs report added to the bullish mood.

The headline non-farm payrolls report was 312,000, which smashed the 177,000 estimate. The November report was revised higher to 176,000, from 155,000. The unemployment rate ticked up to 3.9%, from 3.7%. On a yearly basis, the average earnings rate was 3.2%, while economists were anticipating 3%. The monthly average earnings was 0.4%, a sizeable increase on the 0.2% in November.

The update was impressive and it shows the US economy is in good shape, and it is all the more impressive given the economic cooling in Europe and China. Today’s report adds weight to the argument the Fed should continue down that path of monetary tightening. Jerome Powell, the head of the Fed, said they will be ‘patient’ and their policy is ‘flexible’. The announcement drove stocks even higher.

FX

EUR/USD was in the red on the back of the rally in the greenback due to the robust jobs report, but the remarks from Mr Powell damped the US dollar. Eurozone CPI slipped to 1.6% from 2%, and the consensus estimate was 1.8%. The CPI report that strips out food and energy, held steady at 1.1%, so actual demand is in OK shape.

USD/CAD is lower as traders bought into the Canadian dollar on the back of the firm Canadian jobs update. The unemployment rate held steady at 5.6%, and the employment change jumped by 9,300. There was an 18,900 fall in full-time jobs, but part-time jobs increased by 28,300. The less hawkish comments from Jerome Powell added to the downward move in the currency pair.

Commodities

Gold is in the red on the back of the stellar jobs report from the US. The metal rose to a fresh six month high in the early hours of trading, but profit taking set in after the strong employment report from the US was revealed. The metal recouped some ground after Jerome Powell said the Fed will be ‘patient’ when it comes to their next move. 

Oil rallied today on the back of the optimistic news out of China. The healthy US jobs report played a role in the rally too. The Energy Information administration update showed that US oil stockpiles actually rose by 7,000 barrels, while traders were expecting a draw of 3.08 million barrels.

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