The Friday Market Minute

  • U.S. employment report shows a much stronger-than-expected 128,000 new jobs added in October, with big upside revisions for September and October.
  • China Caixin PMI rises to 51.7, the strongest in more than two years, as US trade tensions ease and exports report.
  • Global stocks gain after surprise China factory data offsets PMI weakness from major economies around the world.
  • U.S. dollar index eases as investors re-think Fed pause following Chicago PMI data, as well as weakening readings in Asia and Europe.
  • Corporate earnings continue with third quarter earnings from oil majors Exxon and Chevron as well as China's online shopping giant Alibaba Holding Co.

Market Snapshot

Wall Street futures extended gains Friday after data showed the a much stronger-than-expected gain of 128,000 net new jobs last month, despite the longest strike in General Motors GM history, that came with big upside revisions for August and September.

The October reading of 128,000 was coupled by a modest increase in the headline unemployment rate, which rose to 3.6%, and average hourly wage gains that showed a 3% increase from last year. August and September readings were also revised higher, adding a net 95,000 new jobs in total, taking the three-month moving average to 176,000.

Futures contracts tied to the Dow Jones Industrial Average suggest a 114 point gain for the 30-stock average while those linked to the S&P 500 are indicating a 13.3 point bump higher for the broader benchmark.

A weaker reading might have altered market assumptions on Federal Reserve rate cuts following this week's signal of a pause in monetary easing from Chairman Jerome Powell, but the much stronger job gains are likely to cement the case for the current U.S. growth story that has, in part, underpinned record highs on Wall Street.

The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.1% higher at 97.43, while 10-year U.S. Treasury note yields rose 3 basis points to 1.72%.

Global stocks also extended gains Friday, helped by both the solid non-farm payroll data and the Caixin/Market PMI reading for China's manufacturing economy rose to the fastest pace in more than two years last month, rising to 51.7 -- well above the 50 mark that separates growth from contraction -- as exports order rebounded amid easing trade tensions with the United States.

Weaker readings from the Asia region, however, including a three-year low from Japan underscored the longer-term damage the U.S.-China trade dispute has brought to some of the world's largest economies, a fact highlight yesterday's Chicago PMI reading which fell to 44.6 - the lowest level since 2015. 

Europe's Stoxx 600 benchmark was seen 0.7% higher in Frankfurt following the NFP release, extending its fourth quarter advance to 1.5%, while Britain's FTSE 100 added 0.1% even as the pound tested multi-week highs of 1.2963 against the weaker dollar.

Overnight in Asia, Japan's weakening factory activity, as well as yesterday's policy hold from the Bank of Japan, pushed stocks on the Nikkei 225 0.33% lower on the session to 22,850.77 points while the improving factory data in China helped regional stocks -- in the form of the MSCI Asia ex-Japan benchmark -- to a 0.47% gain heading into the close of trading.

Global oil prices were little changed from last night's close in New York, but look set to close out the week with a 4% decline following concerns for the fate of U.S. China trade talks and the implication for energy demand, and EIA data from Wednesday showing a bigger-than-expected 5.7 million build up in domestic U.S. crude supplies.

Brent crude contracts for December delivery, the global benchmark, were seen 5 cents higher from their Wednesday close to trade at $59.67 per barrel, while WTI contracts for the same month were marked 16 cents higher at $54.34 per barrel.