This article is from the source 'guardian' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at https://www.theguardian.com/business/live/2018/dec/07/markets-rebound-ftse-asia-wall-street-huawei-us-jobs-report-business-live

The article has changed 14 times. There is an RSS feed of changes available.

Version 0 Version 1
Markets rebound as US jobs report misses forecasts – business live Markets rebound as US jobs report misses forecasts – business live
(34 minutes later)
Today’s jobs report shows that the US economy is slowing, but not drastically, says Paul Ashworth of Capital Economics.
He’s written a thorough note on November’s Non-Farm Payroll....and here it is:
The slightly more modest 155,000 gain in payroll employment in November may not go down well in markets given the heightened nervousness in recent months, but this is still a solid gain that suggests economic growth is gradually slowing back towards its potential pace.
There is nothing here to suggest the economy is suffering a more sudden downturn.
Admittedly, 155,000 was below the consensus forecast at 200,000 and the six-month average, which was slightly above 200,000. But gains of that magnitude should still be enough to keep the unemployment rate grinding lower. Looking at the employment breakdown, manufacturing increased by a healthy 27,000, retail added 18,000 and transportation added 25,000 (including 10,000 couriers ahead of the Holiday season). Leisure & hospitality added only 15,000, however, and education & health added only 34,000. Both below normal. State governments also shed 13,000 employees.
The unemployment rate was unchanged at only 3.7% last month, as a 233,000 gain in the household survey measure of employment more than offset a 133,000 increase in the labour force. That said, the broader U6 measure of unemployment did rebound to 7.6%, from 7.4%. Average hourly earnings increased by 0.2% m/m in November, with the annual growth rate unchanged at 3.1%.
Overall, employment growth may be fading a little from the unsustainable pace in the first half of this year, but there is nothing here to unduly worry the Fed or prevent it from hiking interest rates at this month’s FOMC meeting.
The European stock markets are all pushing higher, clawing back more of yesterday’s losses.
Britain’s FTSE 100 is leading the way, up almost 2%, with solid gains on Germany’s DAX (0.8%) and France’s CAC (+1.5%).
This seems to confirm that traders are relieved that the US economy is still creating jobs, but not so rapidly to force several interest rate hikes in 2019.
Matt Weller of Faraday Investment Research says:
See my Top 3 Takeaways from today's #NFP report: pic.twitter.com/waPFOGJ2Cj
America created tens of thousands more jobs in transportation and warehousing last month, as online shopping continued to expand.
Today’s non-farm payroll report shows that:
Employment in transportation and warehousing rose by 25,000 in November
Job gains occurred in couriers and messengers (+10,000) and in warehousing and storage (+6,000). Over the year, transportation and warehousing has added 192,000 jobs.
America’s service sector created the bulk of the new jobs last month, hiring around 132,000 new workers.America’s service sector created the bulk of the new jobs last month, hiring around 132,000 new workers.
Factories also expanded their workforces, with 27,000 new hires.Factories also expanded their workforces, with 27,000 new hires.
Lots of talk about manufacturing slowdown given GM, tariff concerns, etc. But no sign of that in jobs report: +27k manufacturing jobs in November, continuing strong run. (Slight decline in auto manufacturing jobs, though.) pic.twitter.com/Vb4VpA7HgbLots of talk about manufacturing slowdown given GM, tariff concerns, etc. But no sign of that in jobs report: +27k manufacturing jobs in November, continuing strong run. (Slight decline in auto manufacturing jobs, though.) pic.twitter.com/Vb4VpA7Hgb
Economics professor Justin Wolfers reckons today’s jobs report will reassure the Federal Reserve that they have the situation under control.Economics professor Justin Wolfers reckons today’s jobs report will reassure the Federal Reserve that they have the situation under control.
With jobs still being created, and wages rising modestly, there’s little sign that the economy is over-heating.With jobs still being created, and wages rising modestly, there’s little sign that the economy is over-heating.
Payrolls growth slows a little, but to a more sustainable +155k in November. The unemployment rate remains steady at 3.7%. Revisions suggest the two previous months weren't quite as strong.While some may be disappointed, this pace of expansion is more likely to be sustainable.Payrolls growth slows a little, but to a more sustainable +155k in November. The unemployment rate remains steady at 3.7%. Revisions suggest the two previous months weren't quite as strong.While some may be disappointed, this pace of expansion is more likely to be sustainable.
Hourly earnings rose by +0.2% this month, and are up by 3.1% over the year. That's still not enough wage pressure to seriously threaten the Fed's inflation target, but we're getting closer.Hourly earnings rose by +0.2% this month, and are up by 3.1% over the year. That's still not enough wage pressure to seriously threaten the Fed's inflation target, but we're getting closer.
This is the sort of jobs report that manages to both calm folks at the Fed a bit -- no, we're not right on the cusp of overheating -- while also continuing the narrative of robust ongoing jobs growth that will, if it continues, keep bringing unemployment down.This is the sort of jobs report that manages to both calm folks at the Fed a bit -- no, we're not right on the cusp of overheating -- while also continuing the narrative of robust ongoing jobs growth that will, if it continues, keep bringing unemployment down.
This jobs report doesn’t have much cheer for US workers, although the unemployment rate remained at just 3.7%.This jobs report doesn’t have much cheer for US workers, although the unemployment rate remained at just 3.7%.
Bad news IS good news for the markets!Bad news IS good news for the markets!
The UK’s FTSE is now up by 112 points, or 1.7%, close to its highest point of the day.The UK’s FTSE is now up by 112 points, or 1.7%, close to its highest point of the day.
Wall Street future, which has been down earlier, are recovering too.Wall Street future, which has been down earlier, are recovering too.
Dow futures rise to pre-market session high despite jobs report missing expectations https://t.co/aaSJKDTQda pic.twitter.com/4rrjTvPQFuDow futures rise to pre-market session high despite jobs report missing expectations https://t.co/aaSJKDTQda pic.twitter.com/4rrjTvPQFu
More disappointment! US wages only grew by 0.2% month-on-month in November, dashing hopes of a 0.3% rise.More disappointment! US wages only grew by 0.2% month-on-month in November, dashing hopes of a 0.3% rise.
That’s a blow to US families in the run-up to the festive season.That’s a blow to US families in the run-up to the festive season.
Annual wage growth was 3.1%, the same as in October.Annual wage growth was 3.1%, the same as in October.
BREAKING: The US economy created 155,000 new jobs last month, fewer than the 200,000 which Wall Street had expected.BREAKING: The US economy created 155,000 new jobs last month, fewer than the 200,000 which Wall Street had expected.
And in another blow, October’s figures was revised down to 237,000, from a first estimate of 250,000.And in another blow, October’s figures was revised down to 237,000, from a first estimate of 250,000.
That suggests the labor market isn’t as strong as hoped - which will lower the pressure to raise US interest rates.That suggests the labor market isn’t as strong as hoped - which will lower the pressure to raise US interest rates.
More to follow.....More to follow.....
Brad Bechtel, global head of FX at Jefferies, predicts that shares will fall if the US jobs report beats forecasts....and rise if it misses.Brad Bechtel, global head of FX at Jefferies, predicts that shares will fall if the US jobs report beats forecasts....and rise if it misses.
As he puts it on Bloomberg TV:As he puts it on Bloomberg TV:
Good equals bad, and bad equals good.Good equals bad, and bad equals good.
That’s because the markets will assume that the US Federal Reserve will step in to support the economy, if required.That’s because the markets will assume that the US Federal Reserve will step in to support the economy, if required.
We’ll find out if he’s right very soon!We’ll find out if he’s right very soon!
Word from the White House....Word from the White House....
China talks are going very well!China talks are going very well!
As City traders grab a quick sandwich before the US jobs report (oh the glamour!), here’s a look at the markets.As City traders grab a quick sandwich before the US jobs report (oh the glamour!), here’s a look at the markets.
FTSE 100: Up 80 points at 6784, a gain of 1.2%FTSE 100: Up 80 points at 6784, a gain of 1.2%
German DAX: Up 49 points at 10,860, a gain of 0.4%German DAX: Up 49 points at 10,860, a gain of 0.4%
French CAC: Up 61 points at 4,842, a gain of 1.3%French CAC: Up 61 points at 4,842, a gain of 1.3%
Definitely a recovery, but a relatively muted one given European markets shed more than 3% on Thurday.Definitely a recovery, but a relatively muted one given European markets shed more than 3% on Thurday.
A reminder of how the US monthly job-creation figures have bounced around in recent months:
The London stock exchange is holding onto most of its early gains, as City traders turn their attention across the Atlantic.
Huawei’s CFO, Meng Wanzhou, is expected at a bail hearing in Canada later today. That might yield more information about why she was arrested, and whether she’ll be extradited to the US.
Mihir Kapadia of Sun Global Investments says investors are worried that Meng’s arrest will destabilise US-China relations.
China and the US continue to have frosty relations and this has seen investors prefer to stay away than get involved in what has proven to be a volatile market for quite some time now. This reversed the hope felt earlier in the week after it was announced the US would delay tariffs on China in the aim of making progress but it is now clear that this negativity will last until the new year.”
Traders will also be watching for the US jobs report, in 30 minutes. Wall Street expects that around 200,000 new jobs were created last month, with wages rising by 0.3% month-on-month, or 3.1% year-on-year.
A strong report might rock markets, as it would put pressure on the Federal Reserve to raise interest rates in 2019. But weak job creation, and paltry earnings growth, could force the Fed to leave borrowing costs alone - which is good for equities.
The Bank of England is already under fire over its warning about a no-deal Brexit. But it now faces another storm.
Top officials from Venezuela have flown to London, to ask for 14 tonnes of their gold back.
The Press Association has the details:
The Bank is reportedly due to meet Calixto Ortega Sanchez, president of the Venezuelan Central Bank, and Simon Zerpa, the Venezuelan minister of finance, over the repatriation of 550 million US dollars (431 million) of gold.
The Bank is the second largest depository of gold and has been holding Venezuela’s gold deposits since the 1980s.
Andrew Lewer MP wrote to the Bank and the Treasury, criticising the move, saying a meeting “would pose significant reputational risk to the Bank and may be in violation of US Treasury imposed sanctions”.
Mr Lewer said Mr Zerpa has been sanctioned by the US Treasury Department and that Mr Ortega Sanchez “is not a legitimate president” of the Venezuelan Central Bank as his appointment “was not ratified by the National Assembly”.
“It is entirely inappropriate for senior officials of the Bank of England to meet with an individual who has been placed on the US sanctions list for reasons of corruption. To treat with such an individual would threaten the reputation of both the Bank of England and the Government as a whole,” Mr Lewer said.
Although the markets are up today, fears over the global economy haven’t gone away.
Royal Bank of Canada have cautioned that Chinese trade data due out on Saturday should be watched very closely, for signs that export growth have dropped.
RBC’s Sue Trinh says:
There is compelling evidence that exports, which have surprised significantly to the upside in the last three months, have been boosted by front-loading ahead of successive tranches of tariffs.
Export growth (in yuan terms) is expected to slow to 14% year-on-year from 20% previously (or from 16% to 9% in US dollar terms).
But as the chart shows, there is potential for a much sharper weakening, this month or in the coming one to three months. Exports in the sectors first affected by tariffs (steel and aluminium) are already falling from their June peak.
The FTSE 250 index, which contains smaller UK-focused companies, is also recovering today.
It’s gained 193 points, or over 1%.
Games Workshop, the miniature wargaming firm, is among the top risers, up over 5%.
It told shareholders this morning that sales and profits are in line with expectations, and that its Warhammer business is in “great shape in our core markets.”
But while demand for GW’s intricately-designed Cataphractii Terminators, Taurox armoured personnel carriers and chainsword-toting missionaries is holding up now, an economic shock could change that.
Last week, company founder Ian Livingstone warned that Brexit could destabilise the UK’s gaming sector, which contributes around £2bn to the UK economy per year.
No-deal Brexit would 'devastate' UK gaming industry, says report
Paul Donovan of UBS Wealth Management believes the threat of new US tariffs on Chinese goods caused Thursday’s sell-off.
But on the upside, he reckons today’s non-farm payroll jobs report will show American workers are in demand.
Equity markets had a bad day on Thursday. The fear of additional US trade taxes is really not being well received, and investors seem to see the risk as rising.
Otherwise, economic data was generally pretty good. Today’s US employment report is more likely to show firms struggling to find people to hire, than a lack of jobs available.
Speaking of slowing economies...new data have confirmed that the eurozone only grew by 0.2% in the last quarter.
The single currency bloc was dragged down by Germany, which contracted by 0.2%, and Italy which shrank by 0.1%.
The UK outperformed the average, though, expanding by 0.6% thanks to strong growth in July.
Euro area #GDP +0.2% in Q3 2018, +1.6% compared with Q3 2017 https://t.co/1i6OErjggo pic.twitter.com/KZrSTIXZQi
Ralf Preusser, head of rates research at Bank of America Merrill Lynch, says recent market instability is mainly due to concerns about the underlying global economy.
That includes the impact of the US-China trade dispute, and worries that we are approaching the end of the economic cycle (ie, heading towards a recession)
Speaking on Bloomberg TV, Preusser explains that the markets are paying “particular attention” to the Federal Reserve, to see how US central bankers handle the situation.
Will the Fed recognise these fears, and try to engineer a soft landing (by being more cautious about rate hikes)? Or will they press on, given that economic data suggests the US economy isn’t really slowing at all, he explains.
Consumer-facing firms, telecoms, tech and industrial companies are leading the rally in London:
Good news! £27bn has been wiped back onto the value of Britain’s biggest companies this morning.