UK and Europe
Relative calm in oil markets prompted a less volatile day for stock markets on Friday, at the end of what had been a very volatile week.
The past week can be characterised by over forty-percent gyrations in the shares of multi-billion dollar companies; mining giant Anglo American (L:AAL) gained over 40% in three days while social network LinkedIn (N:LNKD) lost over 40% on Friday alone.
Most of the day was spent waiting for what turned out to be a mixed bag of a US employment report. The result being choppy sideways movement in the FTSE 100 before and after the data.
Mining shares have picked up where they left of, topping the UK benchmark by a wide margin for a second day. After rising as much as 18% on Thursday, Anglo American rose by as much as 12% on Friday with Antofagasta (L:ANTO) and BHP Billiton (L:BLT) also top risers. The sector came off its highs after a strengthening dollar sent metal prices lower, but the surge this past week improves the chance of a lasting bottom.
Shares of BG Group (L:BG) rose modestly after the energy company’s fourth quarter earnings beat expectations.
US
US markets were dominated by reactions to the latest payroll figures as well as dramatic moves in LinkedIn shares which weighed on the shares of other large tech firms including fellow social network Facebook (O:FB).
The headline jobs number widely missed estimates but the unemployment rate falling to an eight year low at 4.9% and faster wage growth were both positives for the US economy. The result is an even more confused picture on the likely pace of rate increases from the Federal Reserve, the uncertainty of which is unlikely to be helpful for confidence in markets.
In merger news, the world’s biggest toy makers Hasbro (O:HAS) and Mattel (O:MAT) announced talks of a possible merger. The firms are looking to fight off competition from Lego.
FX
The US dollar strengthened across the board on Monday as traders short the buck chose to take the positives from non-farm payrolls as a reason to book profits. With the dollar having already made its big move for the week the weakness in the headline number was not enough to take the dollar any lower.
The euro pulled back from a three month high as German factory orders missed expectations and the dollar strengthened.
Commodities
After briefly touching a fresh three-week high on the weak headline US jobs number, the price of gold proceeded to slip lower. The rally this past week that took gold to a three month high has tipped the bias for precious metals to the upside, but January’s payrolls number provided enough positives to cast doubts on the timing of the Fed’s next move on rates.
The price of oil was relatively subdued on Friday, most ranging between gains and loss of +1% and -1%, which when the daily range has been regularly over 5% is still a drop in volatility.
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