Europe
Momentum from Friday’s US jobs report continued to resonate throughout stock markets on Monday helped by diminished international tensions and some positive changes implemented by troubled corporates Tesco and Hewlett Packard.
UK stocks bounced off 10-month lows with the FTSE 100 making up ground thanks to gains in the distressed supermarket, airline and banking sectors.
EasyJet and IAG were top risers thanks to the former’s recently reported strong earnings and the ongoing fall in oil prices. Tesco (LONDON:TSCO) introduced two new non-executive directors including former head of IKEA which was well received by those concerned about mismanagement at the UK’s top grocer. HSBC Holdings Plc (LONDON:HSBA) and Standard Chartered (LONDON:STAN) bounced back after protests in Hong Kong calmed down while lay-offs at Lloyds Banking Group Plc (LONDON:LLOY) boosted the sector as a whole.
Weakness in Germany remains an ongoing concern with factory data coming in way below expectations. European stock indices including the German DAX were able to brush the weak factory data aside for now but should German industrial data be poor tomorrow, there will be extra weight on the downside.
US
With China still on national holiday, it was the world’s largest, not its second-largest economy driving global market direction today after Friday’s strong NFP unemployment report emphasised the strength of the US economy and allowed investors to refocus on the upcoming earnings season.
Alcoa unofficially kicks off third quarter earnings on Wednesday with PepsiCo, Yum! Brands, Costco, Family Dollar and Monsanto also reporting this week.
Hewlett-Packard Company (NYSE:HPQ) jumped higher on news of a de-merger of its PC and printer division. The PC and printing units make up near-on 50% of revenue and profits so the company is essentially splitting in half. PC sales have recently had a boost from upgrades thanks to the end of Microsoft Corporation (NASDAQ:MSFT)’s support for Windows XP but CEO Meg Whitman has described it as a declining market and is looking to invest more heavily in the software and business services elements of the business.
FX
The US Dollar was down against every major currency pair today with no particular catalyst other than profit-taking after the huge rally on Friday after the strong US unemployment report.
The Australian dollar was a strong performer ahead of the RBA rate-setting meeting where there is speculation the booming domestic housing market may spur a change in language pointing to a future rate-hike. AUD/USD on Friday made a low for 2014 below 0.8650 very much akin to the price action in gold.
USD/JPY is again coming off 110, the pair has been one of the strongest in the past several weeks and further declines could be an early warning for the fate of the trend higher in the USD.
Commodities
Gold came within inches of multi-year lows today, almost descending below $1,180 per oz but bargain-hunters came in just before and pushed the precious metal higher on the day.
Silver and copper followed gold higher on dollar-weakness.
Oil prices were still edging lower today with WTI crude falling below $90 and closing in on $89 per barrel.
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