News & Analysis

Dow adds 300 – tech driven by Apple; NFP misses expectations – Unemployment drops to 3.9% Oil surges breaking above $69.50; USD ends mixed post NFP

May 7, 2018 | Daily Market Outlook

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US markets – digested mixed employment data on Friday night, 164K jobs were created in April lower than the 190k the market had been expecting. Average earning also cooled to 0.1% missing 0.2% expected. Unemployment was the main surprise dropping to 3.9% beating 4.0% expectations. The Dow started the session in the red, tech jumped after news Warren Buffet has a holder of Apple and this drove Apple to close at record highs. “Tech is having a good day and obviously Apple is helping. The Warren Buffett headlines have helped give momentum to share prices,” said Quincy Krosby, chief market strategist at Prudential Financial. The Nasdaq snapped it’s losing streak driven higher by Apple, Facebook and Alphabet.

The market is still paying attention to the trade situation with China, treasury yields and Fed interest rate developments. Tomorrow Chairman Powell will be giving a speech titled “Monetary Policy Influences on Global Financial Conditions and International Capital Flows” at the High-Level Conference on the International Monetary System, from Zurich. Friday’s close; the Dow Jones +332.36 the S&P500 +33.69 the NASDAQ +121.47

European markets – moved further into positive territory on Friday following the tech drive higher. Earning also continued to drive buyers. Ferrari led the gains and its share price hit a record high after better-than-expected earnings led to a number of rating upgrades for the automaker closing 7.7 percent higher. Societe Generale fell close to the bottom of the European benchmark, losing 5 percent. Net banking income stood at 6.294 billion euros for its first quarter of 2018, a drop of 2.5 percent from a year ago. U.S. authorities accused former Volkswagen chief Martin Winterkorn of conspiring to cover up the German automaker’s diesel emissions cheating as Diesel-gate continues to linger on. On the close; the DAX +129.45 the FTSE +64.45 the CAC +14.39

Oil – flew back above $69.50 on Friday returning to levels not seen since 2014. Price closing at new 2018 highs. “The big story this week is going to be about oil and the Iran Nuclear deal. We know President Trump doesn’t like it,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader. “All in all, the bets are – based on the price action in oil that President Trump does withdraw from the deal,” he added. Some traders are starting to look at the market as high, Hedge funds cut their net long U.S. crude futures and options positions in the week to May 1, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday, reducing their exposure to positions that would profit from further crude price rises by 11,825 contracts to 444,060.

Forex – the USD had mixed Friday with employment data as the main influence. The USDCAD touched new weekly highs before trimming gains to finish slightly higher. Risk ended the week mixed, the AUDUSD closed higher but the EURUSD and GBPUSD ended in the red. The JPY was very active on the buy side during Friday’s London session and US session. The AUDJPY closed flat but the EUR and GBP ended weaker. Gold finished higher on Friday adding 3.60. Buyers have continued to recover from last week’s low. 14.50 has been added for the last 4 sessions including this morning’s trade. The USDJPY pullback continues this morning, sellers testing 108.80.

Good trading from Eightcap.

Sources; CNBC All times are AEST

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