Asian markets fell on Friday as investors digested another round of central bank disappointment, this time from the ECB. The Nikkei, ASX 200 and Kospi all fell 1.1%. Sharp shares plunges 28% after shifting its outlook from profitability to a projected 100 billion yen loss. The Hang Seng eased .1% to 19666, and the Shanghai Composite rallied 1%, once again setting its own course, as fears over new housing restrictions faded.
European markets surged, in a surprising about-face from Thursday’s slide. The CAC40 spiked 4.4%, the DAX rallied 3.9%, and the FTSE climbed 2.2%, as analysts picked apart Draghi’s comments from Thursday’s, looking for positive signs up ahead.
The rally picked up steam in the afternoon after US payroll data came in stronger than forecast. The data indicated that the economy added 163K jobs in July, significantly stronger than the 101K estimated by analysts. However, the unemployment rate unexpectedly rose to 8.3% from 8.2%.
The Dow jumped 217 points to 13096, the Nasdaq bounced 2%, and the S&P 500 advanced 1.9% to 1391.
Knight Capital Group shares remained in focus, skyrocketing 57% after TD Ameritrade and Scottrade said they would resume trading with the company. Initially both companies had announced they would stop using Knight Capital as a market maker, following the massive software glitch on Wednesday which cost the company more than $400 million.
Treasuries and Commodities
Bonds sold off as investors rushed into riskier assets. 10-year notes fell 25/32 to yield 1.56%, and 30-year notes dropped 1 30/32 to yield 2.64%.
Silver rallied 3% to 27.801, gold gained 1.2% to 1606 and copper advanced 2.3% to 3.3675.
Ironically, the Dollar tumbled as the upbeat jobs report encouraged a shift back into risk. The largest gainer was the Euro-Yen, which surged 2% to 97.28. The Euro soared 1.7% to 1.2388, and the Swiss Franc rallied 1.6% to .9704. The Australian Dollar climbed 1% to 1.0563, the Pound advanced .8% to 1.5640. and the Canadian Dollar gained .6% to 1.0014. The Yen was also a victim of the flight to risk, slipping .3% to 78.53.
Aside from the employment report, ISM non-manufacturing PMI rose to 52.6 from 52.1, beating forecasts. Average hourly earnings inched up .1%, below estimates of .2%.
No major economic reports are due on Monday.
Earnings are due from Black Hills, Caesars Entertainment, Chesapeake Energy, Dillard’s, Tyson Foods, and Youku.