Morning Note: An update on today's market news.
Market News
Last week ended with a broad flight from risk assets, amid mounting signs of job-market weakness and geopolitical worries. US non-farm payroll growth was slower than expected, raising potential trouble signs for the US labour market. The July data came in at 73k, versus 105k expected, while May and June combined were revised down by 258k. The unemployment rate ticked higher to 4.235%, the highest since October 2021.
The dollar fell, while Treasuries rallied after a report – short-term yields plunged the most since 2023 – prompting traders to boost bets that the Federal Reserve will lower interest rates. Two cuts are now priced in by the end of 2025. The 10-year Treasury yield is currently 4.25%. Gold rose and has continued to do so (to $3,360 an ounce) as Trump said the US is moving two nuclear submarines to respond to “provocative” statements from former Russian President Dmitry Medvedev.
US equities also fell on Friday – S&P 500 (-1.6%); Nasdaq (-2.2%) – with the market caught between the negative news of weak payroll data and the positive news of a rate cut sooner than expected. Big tech was broadly lower, with Amazon and Apple both down after earnings. The futures market currently implies some of the losses will be recouped at the open this afternoon.
In Asia this morning, equities were mixed: Nikkei 225 (-1.2%); Hang Seng (+0.8%); Shanghai Composite (+0.5%). The FTSE 100 is currently slightly higher at 9,069, while Sterling trades at $1.3275 and €1.1475. Close Brothers (+20%) and Lloyds Banking Group (+6%) have been marked high following the Supreme Court ruling on motor finance commissions. The FCA will consult banks on a redress scheme for mis-sold car loans that may cost at least £9bn.
Brent Crude fell back below $70 a barrel after OPEC+ agreed to another major output increase, stoking concerns about global oversupply. Goldman Sachs analysts said “OPEC+ policy remains flexible and the geopolitical outlook uncertain” and retained forecasts for Brent to average $64 a barrel in the fourth quarter.
Source: Bloomberg
