The Friday Market Minute

  • US stocks hold gains after data shows domestic economy adds a fewer-than-expected 130,000 new jobs over August.
  • Average hourly wages rise 0.4% on the month, and 3.2% on the year, raising concerns for near-term inflation as unemployment holds at a 50-year low of 3.7%.
  • Asia stocks cap best week in two months as government bond yields ease and investors creep back into risk markets.
  • Global oil prices ease from this week's rally, fueled by the lowest levels of U.S. crude stocks since October 2018 and renewed U.S.-China trade talks.
  • Federal Reserve Chairman Jerome Powell is set to speak on monetary policy and the economy at 12:30 Eastern time in Zurich.

Market Snapshot

U.S. stocks held onto modest gains Friday after data showed the domestic economy added fewer-than-expected new jobs last month, but low unemployment added to costs pressures that saw average hourly wages rise more quickly than forecast, adding to concerns for near-term inflation.

U.S. employers added 130,000 new jobs to the economy last month, according to official Labor Department data, well shy of the median Wall Street forecast of 158,000. Around 25,000 of those jobs, the report said, were linked to hiring of officials for the 2020 census. Average hourly wage growth accelerated to 0.4% on the month, and 3.2% for the year, both figures coming in ahead of forecasts.

U.S. equity futures were modestly higher following the data release and ahead of ahead of Federal Reserve Chairman Jerome Powell's speech in Zurich later today. Contracts tied to the Dow Jones Industrial Average suggest a 55 point opening bell gain while those linked to the S&P 500 indicate a 5.5 point bump for the broadest U.S. equity benchmark. Nasdaq Composite futures are guiding to a 7.2 point gain for the tech-focused index.

Trump's concern -- as well as the overhang from the bitter trade dispute between the U.S. and China and it impact on global growth -- will likely be addressed during Powell's "Economic Outlook and Monetary Policy" speech at 12:30 am eastern time this morning in Zurich, where the Fed Chair is expected to take questions from both the audience and Swiss National Bank President Thomas Jordan.

European stocks were firmer following the U.S. data, with gains held down by a weaker-than-expected 1.1% decline in industrial orders in German for the month of July, a figure that continues to highlight the risk of recession in Europe's biggest economy. 

The Stoxx 600 was marked 0.17% higher in Frankfurt, while Britain's FTSE 100 slipped 0.04% as the pound held onto its recent gains against the U.S. dollar. 

Overnight in Asia, the stronger-than-expected ADP jobs reading, as well as the best pace of service sector growth for the U.S. economy since February, helped give stocks a Friday session boost. Yesterday's news that U.S.-China trade talks will resume in October is also still filtering through, with the MSCI ex-Japan index rising 0.38% to cap its best week in nearly two months while Japan's Nikkei 225 rode a weakening yen to an end-of-week gain of 0.51% in Tokyo.

Away from equities, the U.S. dollar index eased modestly in overnight trading as investors shifted cash into riskier markets, taking the greenback to 98.343 against a basket of its global peers.

The large moves in U.S. Treasury bonds yesterday, however, were also see influencing the dollar, with 10-year note yields rising to 1.576%, just over 4 basis points ahead of benchmark 2-year notes following the surprisingly solid jobs and service sector activity reads.

Global oil prices, which have lifted Brent crude to the highest levels in a month this week, eased in quiet Friday trading following data from the Energy Department yesterday which showed domestic U.S. crude stocks fell by 4.8 million barrels last week to the lowest levels sine October of last year.

Brent crude contracts for November delivery, the global benchmark, were seen $1.37 lower from their Thursday close in New York and changing hands at $59.58 per barrel while WTI contracts for October, which are more tightly linked to U.S. gas prices, were marked $1.16 lower at $55.14 per barrel.

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