Asian markets took a cautious stance on Friday and rather than rallying in response to the strong session on Wall Street, markets were just modestly higher. A weaker U.S. dollar weighed on some markets, while anticipation of the U.S. non-farm payrolls to be released late Friday kept some investors on the sidelines.
Diminished chances of tightening from U.S. and European central banks sent equities in Europe higher for a third consecutive session Friday. News from Bloomberg that the ECB was considering waiting until December to reveal plans for tapering its bond purchases sent the Euro lower, helping lift equities. Then when the U.S. released weak jobs data the markets got a further boost as the news was seen as a reason to keep the Federal Reserve from raising interest rates again in 2017. The U.K. market gained as well, following a much stronger-than-expected manufacturing PMI, although gains were muted in the afternoon as the Pound rallied strongly against the USD.
U.S. markets started September off on good footing, gaining as mixed economic data caused speculation that the Federal Reserve would refrain from any further interest rate hikes in 2017. In economic news the U.S. economy added just 156,000 new jobs in August versus expectations for 180,000. The unemployment rate also crept up 0.1% to 4.4%. Gains were modest, but the Nasdaq had the best weekly performance of the year, and closed at a new record high for the 46th time in 2017.
FOREX
EUR/USD
The pair is now seeing the 1.1900 level as resistance and on Friday it traded briefly above that level before drifting slowly lower. There was a huge spike nearly to the 1.2000 level when traders reacted to weaker-than-expected U.S. employment data, but that quickly fizzled out and the pair retraced the gain and sank back beneath the 1.1900 level. It spent the rest of the session moving lower, closing near its session low, indicating more downside to come.
GBP/JPY
Pound-Yen looks as if it has solid support at the 141.60 level, having found buyers there in the past two sessions which allowed the pair to bounce back near starting levels. A third test on Monday would give an excellent entry, but if the pair begins the day moving higher it can aim 143.75 level before finding resistance.
Cryptocurrencies
After Bitcoin and Litecoin hit new all-time highs on Friday, cryptocurrencies turned broadly lower over the weekend. Saturday saw broad based losses across most digital currencies. With Ethereum leading the way lower among the major cryptocurrencies as it fell 11%. Bitcoin Cash was also quite weak, losing 9.3% as the optimism over the new currency has been waning in the past week.
Commodities
Metals
Precious metals gained further on Friday as the weak U.S. employment data combined with weak inflation data from earlier in the week. Gold ended the week 2.5% higher, and its 4% August gain was its best monthly performance since January. Silver, platinum and palladium all made solid gains as well, as global manufacturing activity remains strong.
Oil
Crude pulled back modestly on Friday, as roughly 22% of the U.S. refining capacity remains shut due to the flooding caused by then hurricane Harvey. Traders were also digesting news from OPEC that August production for the cartel fell by 170,000 barrels a day thanks to improved compliance to the production cutting deal.
Indices
Dow Industrials
The Dow was the best performing major U.S. index on Friday, adding 0.3% as market participants continue to have appetite for equities. The biggest surprise in the Dow was General Electric (NYSE:GE), which has been the worst performing Dow component. The GE finished Friday at the top of the Dow leaderboard with 2.4% increase after gaining as much as 3% intra-day. The Dow itself closed higher for the fourth session in a row as investors shrugged off their geopolitical concerns.
Cac 40
The French benchmark index was one of the best performers across Europe on Friday as investors were treated to an improved forward guidance from Vivendi (PA:VIV) which sent shares of the media conglomerate 5.2% higher, and Airbus was upgraded by Bank of America Merrill Lynch (NYSE:BAC), lifting shares of the aerospace giant by 1%.
Stocks
BHP Billiton (LON:BLT)
Shares of the mining company have made strong gains recently, pushed higher by upbeat Chinese economic data that showed increased demand for industrial metals, and investor confidence following the company’s announcement about plans to sell their North American shale oil assets. The stock now sits just below its 52 week high of 1,495.50p. However, the stock was just downgraded by Royal Bank of Canada, with analysts citing a mature asset base as a potential concern for mid-term profitability. RBC may be correct, but if China’s manufacturing sector continues to recover and improve it will almost certainly spell increase profitability for BHP Billiton.