Europe
European stocks have undergone a mixed session with the FTSE 100 outperforming, led higher by the oil and gas sector and gold mining stocks.
Initial nervousness over the US Tomahawk cruise missile strikes on Syria has given way to a realisation that away from the usual shadow boxing of diplomatic tit for tat, this morning’s actions look likely to have been a one-off, as well as an opportunity for President Trump to send a warning to China and North Korea that the current US administration is a different animal to the Obama one.
While European stocks have underperformed, probably as a result of a terrorist incident in Sweden, which is likely to play into the narrative in the lead up to the French elections, UK markets have held up with the FTSE 250 making a new record high.
Amongst the better performers we’ve seen Randgold Resources Ltd (LON:RRS) move higher as a result of the higher gold, along with Fresnillo PLC (LON:FRES). Underperforming, a sliding copper price has seenAnglo American PLC (LON:AAL) slip back, along with the rest of the sector.
On the plus side defence stocks are higher, led by BAE Systems PLC (LON:BAES), while supermarkets got a lift after UBS upgraded WM Morrison Supermarkets PLC (LON:MRW).
US
US markets opened higher after investors took the opportunity to digest the nuances of the March employment report. Initial concerns about weakness in the US jobs market were put to one side with the drop in the unemployment rate, while the weak 98k number was partly discounted for weather related reasons, the steady participation rate and wage growth feed into a narrative of a potentially tighter labour market.
FX
The US dollar has outperformed today despite what on the face of it was a mixed bag of a March employment report. After the disappointment of the headline number of 98k had worn off investors chose to focus on the drop in the headline unemployment rate to 4.5%, a ten year low, from 4.7%.
With wage growth remaining steady along with the participation rate there is a case to argue that this would suggest that the US labour market could be on the cusp of tightening up and as such making a rate rise more likely and not less, which helps explain the rebound in the US dollar, after an initial sharp drop.
The Canadian dollar has outperformed after a better than expected jobs report saw 19.4k new positions added in March, while the higher oil price has also helped though this effect is starting to dissipate, as crude prices slip back from their highs.
The pound has had another difficult day after disappointing manufacturing data for February raising concerns that the UK economy may well slowing more sharply than initially feared.
Commodities
Having had a number of attempts this week to move above the 200 day MA, US air strikes on Syria provided the catalyst to move above this important level and push gold prices up to their highest levels since last November.
This move up could well see the yellow metal head even higher given that this morning’s attack could be also be viewed as a message to China and North Korea, that the new US President will act on red lines, unlike President Obama.
This morning’s US Tomahawk cruise missile attack on Syria this morning also briefly lifted crude oil prices, to one month highs continuing their rebound this week, though they still remain below their February lows. In a way while Iran may well look to criticise the US in attacking one of their allies, these actions won’t have done them any harm on the finances front with crude prices up over 4% this week.
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