The Dow Jones closed 116 points higher on Friday, the S&P 500 added almost 0.2% and while the Nasdaq finished marginally lower, following job data that showed the labor market is cooling, to give Fed room to pause the tightening cycle. The US economy added 187K jobs, exceeding market expectations of 170K but following a 110K downward revision to the prior two months of payrolls. Also, the jobless rate rose to 3.8%, the highest since February 2022 and above forecasts of 3.5%. Meanwhile, the ISM report showed the manufacturing downturn eased more than anticipated in August pressuring tech companies. Tesla fell by 5% after the EV maker cut prices for two of its models in the US. On the earnings front, Dell Technologies, MongoDB, and Lululemon jumped 21.1%, 3%, and 6%, respectively on better-than-expected quarterly results. On the other hand, Broadcom fell by 5.5% and VMware lost 2.8% on disappointing updates. On the week, the Dow is up 0.6% so far, the S&P 500 1.9% and the Nasdaq 2.6%.
The German DAX lost 0.6% on Friday, driven by Volkswagen (-4.2%), Porsche AG (-3.4%), BMW (-3%), and Mercedes-Benz Group AG (-2.3%) after a survey from Germany’s Ifo Institute showed that almost half of the automotive manufacturers complained that the lack of orders was impeding production. Meanwhile, the benchmark Stoxx 600 was little changed as a 2.6% loss across auto stocks offset a 1.9% gain in oil and gas stocks. An unexpected increase in the US unemployment rate, coupled with slightly weaker-than-expected wage growth, reinforced expectations that the Federal Reserve might have concluded its interest rate hikes.
The CAC 40 index closed 0.27% lower on Friday, extending losses for a third consecutive session, Renault was the largest loser, falling 6.3%, following UBS’s decision to downgrade its recommendation from ‘neutral’ to ‘sell’. Among individual stocks. The result pressured other shares in the auto sector, with Stellantis sliding 2.2%. On the other hand, gains for commodity-backed shares supported the CAC 40 to close 0.9% higher in the week. Arcelormittal (+2.3%) posted the biggest gains, tracking the rally for global steel benchmarks. Total Energies (+1.4%) was also among the top performers, driven by the rise in oil prices caused by lower supply and anticipation of new production cuts by OPEC+.
The FTSE MIB dropped 0.6% to close at 28,660 on Friday, as Istat revised downwards the estimate of the GDP growth rate in Q2. Additionally, traders digested the US Non-Farm Payrolls release, which showed that the biggest economy in the world added 187,000 jobs in August 2023. While this figure exceeded consensus, it marks the third consecutive month with job gains falling below the 200,000 threshold, suggesting a gradual easing of labor market conditions. Within the FTSE MIB, energy stocks were among the top performers, driven by crude oil's trajectory towards its most significant weekly advance since April. Furthermore, Telecom Italia witnessed a 2.7% increase ahead of the impending reorganization and spin-off of Netco. Conversely, Ferrari and Stellantis emerged as the worst performers, both losing more than 2%. The latter is being heavily impacted by tensions in the US between car manufacturers and unions. Over the week, the index rose around 1.6%.
The IBEX 35 dropped to 9,452 on Friday, erasing the morning advances, as investors digested the latest economic data, such as the US unemployment and wages figures and global manufacturing PMIs. Consequently, the financial sector came under the pressure, with Banco Santander (-2.3%) being the biggest laggard. Also, the renewables Acciona Energia and Solaria Energia lost around 1.8% each. On the other hand, Repsol limited the decline, up by 3.7% thanks to the upgraded "overweight" recommendation from Morgan Stanley and increasing oil prices. Additionally, steelmakers ArcelorMittal (2.2%) and Acerinox (0.7%) rose following China's positive PMI reading and its fresh package of support measures. Weekly, the index ended 1.2% higher.
