US stocks mixed as jobs data paves way for higher interest rates

“The strong gains in the labor market last month should further bolster the claim that the United States is currently not in recession,” LPL Financial chief economist Jeffrey Roach said in a note.

The jobs report is good news for the economy, said Brad McMillan of the Commonwealth Financial Network. “More people working, at higher wages, is a sign of economic strength. And with all the headlines, we can definitely use the good news.

That said, McMillan said interpreting the data for the markets is more complicated. “With the Fed raging to keep raising rates, this will negatively affect stock market valuations. But with growth likely to be stronger, earnings should grow faster.

“Overall, this combination has been historically positive, but we can certainly expect some short-term turbulence as markets adjust.”

The yield on the US 10-year note jumped 14 basis points to 2.83% in New York; the two-year yield closed at 3.23%.

Market Highlights

ASX futures down 11 points or 0.16% at 6903

  • AUD -0.9% to 69.11 US cents
  • Bitcoin +3% to US$23,187.07 as of 7:30 a.m. AEST
  • On Wall St: Dow +0.2% S&P500 -0.2% Nasdaq -0.5%
  • In New York: BHP +2.4% Rio +2.3% Atlassian +16.6%
  • Tesla -6.6% Apple -0.1% Amazon -1.2% Netflix -1.4%
  • In Europe: Stoxx 50 -0.8% FTSE -0.1% CAC -0.6% DAX -0.7%
  • Spot gold -0.9% to US$1,775.50 an ounce in New York
  • Brent +0.7% to $94.79 a barrel
  • Iron ore +2.9% to $106.95 per ton
  • 10-year yield: United States 2.83% Australia 3.08% Germany 0.95%
  • US prices from 4:59 p.m. in New York

United States

Pfizer is in advanced talks to buy drugmaker Global Blood Therapeutics for around $5 billion, the the wall street journal reported, citing people familiar with the matter.

Pfizer is aiming to strike a deal in the coming days, but other suitors are still in the mix, according to the report.

Amazon to acquire iRobot, maker of the Roomba robotic vacuum cleaner, in a cash deal worth around $1.7 billion as part of the world’s largest online retailer’s latest push to expand its stable of smart home devices.

Amazon will pay US$61 per share, valuing iRobot at a 22% premium to the stock’s last closing price of US$49.99.

Europe

The pan-European STOXX 600 fell 0.8%, dragging down 0.6% on the week, on concerns over gloomy economic data from the region, rising geopolitical tensions and fears that interest rates could rise. Higher interest will not tip the economy into a recession.

“The data released this week adds to the evidence that a recession is imminent,” said Jack Allen-Reynolds, senior economist for Europe at Capital Economics.

Figures this week also showed eurozone retail sales fell in June and ex-factory prices continued to rise, while eurozone business activity contracted in July to the first time since the beginning of last year.

“Forward-looking indicators suggest the worst is yet to come…If we’re right, the European Central Bank will raise interest rates more aggressively than the market currently expects, and the economy will underperform. consensus forecasts.

Eurozone government bond yields have surged, with Germany’s 10-year bond yield recently rising 9 basis points to 0.89%.

The company’s results were mixed on Friday, with Deutsche Post up 4.6% after posting double-digit revenue and profit growth.

The London Stock Exchange Group gained 1.6% as it said cost and savings targets for the integration of its $27 billion acquisition of data firm Refinitiv remain unchanged and it was launching a buyout. shares of £750 million.

Allianz fell 1.6%. The insurer spent around 140 million euros on restructuring to liquidate a US fund unit at the center of a multi-billion fraud, and posted a worse-than-expected 23% drop in quarterly profit.

Goods

Iron ore futures rose on Friday, with the benchmark Singapore contract rebounding from a five-session selloff, as a recovery in steel margins in China eased concerns over weak demand for the steel ingredient.

Iron ore, however, was expected to suffer weekly losses amid concerns over China’s struggling real estate sector, COVID-19 restrictions, steel production cuts and Sino-U.S. tensions over Taiwan.

The September iron ore contract on the Singapore Stock Exchange rose 3.6% to $109.55 a tonne, as of 0700 GMT, after hitting its lowest level since July 25 at 104.70. dollars on Thursday.

On the Dalian Commodity Exchange in China, the most traded contract of January 2023 ended day trade up 2.6% at 723 yuan ($107.18) a ton.

“Fundamentals have improved slightly,” analysts at Zhongzhou Futures said in a note, citing a rebound in steel margins that caused some of China’s top steelmaker’s idle blast furnaces to restart.

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