Friday, January 10, 2020

US equities extend record highs; will today’s NonFarm payrolls surprise investors?

  • Dollar
  • Gold
  • Stocks
  • NonFarm Payrolls
  • US payrolls

Market Recap: US stocks surge to new record highs; traders to focus on NonFarm payrolls later today

Wall Street ended Thursday at record highs as the US stock market continued to rally as fears for escalating political tension between the US and Iran subsided. Apple led gains in the US, surging 2.12% after investment bank, Jefferies, raised its target price for the tech giant from US$285 to US$350 per share as iPhone sales spiked more than 18% in China for December.

Boeing shares recovered after Canadian Prime Minister Justin Trudeau said that the Ukrainian jet (a Boeing 737-800 aircraft) that crashed on Wednesday may have been shot down by an Iranian missile, although it may have been unintentional. Boeing rose as much as 3.1% and ended the day 1.5% higher at US$336.34 per share as it lifted concerns that a mechanical failure could be the cause of the fatal crash.

The dollar extended gains against most major currencies on Thursday, after initial jobless claims declined for the fourth straight week, coming in better-than-expected at 214,000. But continuing jobless claims in the US unexpectedly rose to 1,803,000 from 1,728,000. The worse-than-expected overall jobless claims may be a signal that the US labour market is starting to cool.

Safe haven assets continued to retreat as markets focus on the upcoming trade deal. Gold fell and the yen weakened against the dollar, signalling that demand is shifting back to risky assets. US President Donald Trump said that the second phase of trade talks with China will start immediately after the two superpowers sign the phase one trade deal, although may not be completed until after the US elections in November. US Treasuries recovered on Thursday, with benchmark 10-year yields falling 2bps to 1.85%.

Oil prices extended losses as worries for oil production being affected by the conflict between the US and Iran faded. Brent and WTI crude oil futures were both lower for the third straight session.

In Asia, stocks look set for gains on Friday, with the Nikkei, KOSPI, Hang Seng, Straits Times and ASX200 Indices advancing at the start of the trading session.

Economic highlights for the day ahead include US labour market report for December from the US Bureau of Labour Statistics (BLS) and Canada’s change in employment both releasing at 5.30pm (GMT +4).