Stocks in the US finished a volatile session flat on Friday, as traders digest the latest economic data and assess the future path of the US monetary policy. All the major indexes ended near the flatline, halting a 9-week win streak, with the Nasdaq 100 booking its six-day of losses. Fresh data showed that in December the US economy added 216K payrolls, way above estimates of 170K, while wages accelerated to lift Treasury yields and scale back the extent of rate cuts projected by the Fed this year. Among stocks, Nvidia and AMD shares pulled through the volatility to add over 1.8% each. Airlines rebounded for a second day in a row, breaking a seven-day losing streak, following the Japan Airlines crash in Tokyo. American Airlines, Delta and United gained over 3.1%. Conversely, healthcare shares underperformed, with a 1.5% decline for United Health. The S&P and the Nasdaq wrapped up the week 1.8% and 3.8% lower, respectively, and the Dow Jones lost 0.7%.
Frankfurt's DAX 40 trimmed losses and closed 0.3% lower at 16,570 points Friday, after touching its lowest level since December 4th, as investors assessed a slew of economic data and its implications for the monetary policy outlook of the ECB and Federal Reserve. December's report unveiled that the bloc's inflation increased less than anticipated last month, reaching 2.9%, while the core rate eased to 3.4%, the lowest since March 2022. Meanwhile, US non-farm payrolls surged by 216,000 in December, surpassing market forecasts of 170,000, affirming the resilience of the world's largest economy despite elevated interest rates. In other economic developments, Germany's retail sales plummeted by 2.5% in November, exceeding market predictions of a mere 0.1% decline. For the week, the DAX lost 0.7%, marking its most significant drop since late October, attributed to recalibrated forecasts concerning the scale and timing of interest rate cuts anticipated in the coming year.
The Shanghai Composite fell 0.85% to close at 2,929 while the Shenzhen Component dropped 1.07% to 9,116 on Friday, extending losses from the previous session, with both benchmarks posting their sharpest weekly falls in at least a month. Those losses came as economic and policy uncertainties in China dampened investor sentiment, with fleeting hopes that authorities would introduce fresh stimulus this year to support growth. Mainland stocks also tracked weakness in global markets as investors scaled back expectations on early and steep interest rate cuts from major central banks this year. Notable losses were seen from heavyweight firms such as ChongQing Changan (-2.6%), COL Group (-8.3%), Longi Green Energy (-1.8%), ZTE Corp (-1.6%) and Jiangsu Hengrui (-4.2%).
The BSE Sensex closed 0.25% higher at 72,026 on Friday, mainly driven by IT shares, while traders eagerly awaited the US jobs report due later today. Domestically, investors anticipated preliminary estimates of GDP growth for the current fiscal year. Among individual stocks, Tata Consultancy Services, Larsen & Toubro and Infosys were the top performers, rising 1.9%, 1.6% and 1.4%, respectively. Conversely, Nestlé India was the biggest laggard, falling 1.7%, as its share prices have been cut down to one-tenth of the previous rate, amid its stock split. On the week, the Sensex shedded 0.3%, primarily dragged by heavyweight IT stocks, due to weak earnings outlook and lower expectations regarding early rate cuts by the Fed following the FOMC minutes release.
The S&P/TSX Composite index added 0.3% to close at the 20,937 level on Friday, but finished the week mostly flat. Markets assessed the latest jobs data for insights on US and Canadian monetary policy outlooks after the Canadian unemployment rate for December remained unchanged as lower participation offset the increased number of unemployed persons, putting pressure on the Canadian central bank to adopt better borrowing conditions. Meanwhile, the rise in crude oil benchmarks supported the resource-heavy Toronto index, with the energy sector rising by an average of 0.5%. Lenders also booked gains, after TD Bank (0.4%) and Canadian Imperial Bank (0.6%) advanced. On the corporate front, Constellation Software’s earnings beat estimates by a good margin, lifting their shares by 0.4%. Still, a hot US jobs report lifted government bond yields and prevented stronger gains for Canadian equities.
