Stocks and USDJPY gain after strong US data

Summary:

• NFP beat provides sweet spot for US stocks?

• USDJPY rallies on ISM beat

• DE30: Thyssenkrupp jumps as shareholders approve breakup

• UK manufacturing misses, GBP mixed

• CBOE refiles Bitcoin ETF application

Given the Fed’s reiterance on Wednesday that they remain data dependent, today’s US job report was viewed even more closely, and the central bank will have liked what they saw. The headline employment change of +304k represents another blow-out beat and was well above the 165k expected. This number is still clearly positive despite the prior reading being revised lower by 90k - the biggest since 2014 - and now stands at 222k from 312k previously. Even with the revision the figures represent the best 4 months of jobs growth since September 2016. The rise marks the 100th consecutive month of job creation in the US, going back to October 2010 and is more than twice as long as the next longest stretch of continuous employment growth, which was the 48 months ending in June 1990.  The S&P is close to a 2-month high after reacting positively to the release and as long as the market remains above 2676 then further upside could lie ahead.

The DE30 has failed to join in the rally, with the market seemingly treading water and little changed on the day. Looking into the German index we may notice that Thyssenkrupp has been by far the best performing stock so far today rising more than 4%. The gains came after CEO Guido Kerkhoff informed that major shareholders supported plans to break up the company. Furthermore, the company said that it expected to pay higher dividends in the medium-term after the planned separation was completed. Investors were not spooked even as the firm signalled that the first quarter performance could deteriorate in annual terms.

we got the latest look at the UK manufacturing sector this morning and the data was worse than expected with a January PMI reading of 52.8. There’s a temptation to link everything back to Brexit when it comes to the UK at present and despite the ongoing political merry-go-round the weakness here really is, far more due to a slowing global economy with the latest Brexit developments actually softening the blow due to the stockpiling of products.The report found that the UK is stockpiling goods at the fastest pace in the surveyors 27-year history - and that’s a record not just for the UK but for all major economies - with manufacturing firms clearly making contingency plans with just two months to go until the UK is scheduled to leave the EU  

Against a backdrop of clear slowing manufacturing activity in Europe and the Far East, the US has bucked the trend somewhat, with the most recent ISM release coming in better than expected. The data for January showed a print of 56.6 compared to consensus forecasts of 54.0, and marked a decent pick-up on the prior reading of 54.3. This indicator has been pulling back of late, with the prior print of 54.3 marking a large drop from 59.3 for the month before that, but today’s data offers some welcome respite for the struggling manufacturing sector globally. The USDJPY has now completed a round trip from the 109.55 level seen before the Fed with the better than expected ISM number providing a catalyst for the latest gains.

Friday’s trading on the cryptocurrency market has begun quite flat as most of major cryptos have experienced only slight gains or losses. According to CoinMarketCap, the capitalization of the whole market stands a little below the $115 billion mark whereas the largest virtual currency Bitcoin accounts for roughly 53.3% of this value. The CBOE has refiled VanEck SolidX Bitcoin ETF application, as Gabor Gurbacs, a head of digital strategy in VanEck, reports. The joint proposal was submitted in the previous year, and the US Securities and Exchange Commision (US SEC) postponed its decision about it several times. The final deadline was set on January 27, 2019. As a result of the government shutdown in the United States, the application was withdrawn by the CBOE. However, Jan van Eck, CEO of VanEck, told to CNBC that it planned to refile its proposal in the future.  As we could note, a discussion about this application could start once again. However, the SEC has not yet published the proposal in the Federal Register. The US SEC will have 240 days to make a decision.