8 September 2014
Ahead (high impact only)
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# Choppy trading for global equity markets Friday, buffeted around by the opposing factors of a weaker than anticipated U.S. payrolls report and news of a ceasefire in the Ukraine. The EuroStoxx600 was down about 0.5% before news of the ceasefire emerged sending the index back towards par. However the rebound didn’t hold and the market ended down 0.38% on the day for a 1.63% gain on the week. U.S. markets meanwhile sold off in the immediate wake of the payrolls report, however as usual the devil was in the detail, and after closer examination the market came to the conclusion the report wasn’t as bad as the headline figures suggested. The S&P500, after falling 0.4% rallied strongly to end up 0.50% for a new all-time closing high. For the week the big board rose 0.22%.
# The U.S. Non-farm Payrolls report is these days more closely dissected given Fed chair Yellen’s ‘dashboard’ approach to reading the labour market. The headline result being the creation of only 142k jobs was well under market expectations of a +225k read. However closer examination revealed there were at least a few things to like about the results including a 0.2% rise in the hourly earnings, a fall in the unemployment rate to 6.1% from 6.2% and a broad measure of joblessness that includes those who want to work but have given up searching falling to 12%, its lowest level since 2009. It was also pointed out by economists that the August US jobs report tends to undershoot expectations and is often open to upward revisions in later months. By the end of the day the market saw the report as being more “Goldilocks” than anything else.
# The Kiev government and pro-Russian separatists agreed to a ceasefire on Friday. Despite reports of sporadic outbreaks of fighting, it looks to be holding. Bloomberg reports that both sides agreed to hold their fire, exchange prisoners and allow access to supply convoys (from Russia) to the Donetsk and Luhansk regions. There is no agreement as yet on the retreat of Russian or Ukrainian forces, or the disarmament of ‘volunteer’ battalions on either side. U.S. and European powers have suggested they will wait to implement new sanctions should the ceasefire be respected.
# Over the weekend The UK Sunday Times released a poll showing the ‘yes’ vote to Scottish independence had moved ahead to 51% v 49% against. GBP/USD has gapped 150 points lower on the open this morning.
# Commodities were mixed on Friday with gold rising US$9 to 1,269 and copper rising 0.62%. Meanwhile the down-trends in Crude and iron ore continued with WTI Crude falling 1.23% and iron ore hitting a fresh 5-year low at 83.60 down 0.82% from Thursday’s close at 84.30. For the week gold fell 1.40%, copper rose 0.73%, WTI Crude slid 2.78% and iron ore plunged 4.98%. Since the 6th of August iron ore is down around 13%.
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