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10 JUNE 2013: US JOB DATA CALMS EQUITIES

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments

Global equities pushed higher and the dollar steadied with the release of the US employment report for May. The Dow Jones shot up more than 200 points scoring its best day since January 2, and the S&P 500 ended a two week losing streak on Friday after an extremely volatile week with big price fluctuations in currencies and equities. The job data was in line with expectations. 175,000 more jobs were added. The unemployment rate increased from 7,5 to 7,6 %.

Japanese shares rebounded strongly on Monday spawning worries about near-term tapering of US Federal Reserve, FED, stimulus and weak Chinese data. The job data didn’t suggest an imminent tapering, but coming US economic data shall be followed closely. Retail sales later this week will be a new indicator. The Asian Pacific MSCI-index which lost 1,1 % on Friday, was slightly up in early trading.

USD extended its gains against JPY at 98,22 after briefly falling below 95 on Friday. The weaker Yen contributed to a doubling of Japan’s current account surplus in April, compared to 2012. Bank lending posted its biggest annual rise in three years. The third biggest economy grew 1,0 % in the first quarter of 2013, underscoring steady recovery driven by a pickup in global growth and the sweeping stimulus policies of Shinzo Abe’s government.

The Dollar index, DXY, added 0,2 % to 81.880 after plunging to a three- month low on Thursday. The Euro is also stronger against the Yen. Euro/USD dipped below 1.32 at 1.3193 after a strong performance on Friday, following heavy selling of long Dollar positions. The Australian Dollar slumped to USD 0.9411 after disappointing data from China, which is Australia’s biggest export market. The Chinese economy grew at its slowest pace for 13 years. Oil prices are steady with Brent above USD 104 a barrel. Gold is at USD 1385.

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