Investing.com | Aug 07, 2017 07:00AM ET
by Pinchas Cohenh3 Key Events/h3
On Friday, Asian equities were led to their highest levels in nearly a decade on a record close for the Dow, as well as a rebound from the dollar, after the US jobs report came in better than expected. It seems there is a level of persistent optimism—by equity investors, as opposed to currency and bond traders—regarding the US economy and its ability to keep up with global growth.
Investors are impressed with the manner in which the Dow managed its newest conquest. It didn’t just register a new all-time-high, but achieved a record close on Friday above the key 22,000 level, even if investors left themselves in vulnerable position for a whole weekend—especially considering the precarious situation the US political landscape is currently in. Perhaps this is yet another example of equity investors’ disregarding political risk, the new-normal since the Brexit vote.
In the jobs report, the US managed to exceed expectation surpassing the estimated 180,000 new jobs with a total of 209,000. This time around it finally included the lower part of the professional pyramid—low-wage positions in industries such as the restaurant sector and health-care services. The report also reveals a tepid yet rising trend in wage growth, from 0.1 percent in May, 0.2 percent in June, to 0.3 percent in July. Should this trend continue, another rate hike in December would be back on the table.
Toyota Motor's (T:7203) earnings, compounded by a weak yen, led Japan’s TOPIX to close at a two-year high. Gains were seen also in indices across Australia, South Korea and Hong Kong.
In Europe, German industrial production unexpectedly fell in June for the first time this year. Euro investors seem unfazed, as they still drove up the currency, as Europe is seeing its strongest growth since the 2008 recession.
Travel and leisure shares, including Lufthansa and EasyJet, led declines in European stocks, erasing gains by ArcelorMittal (LON:0RP9), BHP Billiton (LON:BLT) and Anglo American (LON:AAL), who were led up by iron ore and steel prices.
Oil stayed steady at $49 a barrel, as investors wait under the $50 key level for upcoming OPEC talks discussing potential cuts to reduce the global glut of crude.
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