US open: Stocks mixed as NFP beats

US futures

Dow futures +0.24% at 35132

S&P futures +0.05% at 4428

Nasdaq futures -0.5% at 15107

In Europe

FTSE +0.07% at 7126

Dax +0.2% at 15774

Euro Stoxx +0.3% at 4173

Jobs data, earnings & covid in focus

US stocks are pointing to a mixed start on Friday after the July Non-farm payroll came in better than expected.

The NFP revealed that 943k were added to the economy in July, up from 850k in June and ahead of the 870k forecast. The unemployment rate dropped sharply to 5.4% from 5.9% in June.

The reopening of the economy has sparked a surge in labour demand seen over the last few months. Today’s better than forecast reading prompted bets that the Fed could look to taper support sooner. This week we have already seen Fed officials adopt a slightly more hawkish bias and that was before this upbeat report. Fed Governor Christopher Weller had said that with another two strong reports he would back tapering asset purchases – 1 down, 1 to go.

We know that the Fed was looking for substantial progress in the labour market recovery and that it exactly what we appear to be seeing over the past two reports.

The US Dollar jumped higher. The Dow Jones and the S&P also rallied whilst the Nasdaq slid lower revealing a rotation back into value and out of high growth tech stocks which are particularly sensitive to future interest rate rises.

Where next for the Nasdaq?

After breaching the key 15,000 psychological level, the Nasdaq hit fresh all time highs. The trend remains bullish with the Nasdaq above its 50& 100 sma on the 4 hour chart. The price has eased off the all time high and the MACD is in danger of forming a bearish crossover which could support further losses. Immediate support can be seen at 15025 the 50 sma ahead of the 100 sma at 14930. It would take a move below 14785 to negate the near term uptrend, beyond here 14470 could provide some support.

FX – USD rallies EUR weaker after German industrial output falls

USD is heading higher and is set to gain across the week following upbeat NFP report hawkish commentary from Federal Reserve officials this week, who supported the idea of the Fed moving to taper support earlier.

EUR/USD is under performing after weaker than forecast German industrial production. Output unexpectedly declined in June, extending losses from May. Industrial production declined -1.3% MoM, after a downwardly revised -0.8% decline in May.

GBP/USD  -0.2% at 1.3918

EUR/USD  -0.41% at 1.1806

Oil rises but set for weekly losses

Oil prices are heading higher but are still on track for heavy weekly losses. Rising COVID cases in China and the US are stoking demand worries. China has already imposed travel restrictions on some cities in an attempt to curb the spread of the more contagious variant. Japan is also set to extend its emergency restrictions.

Rising tensions in the Middle East are underpinning the oil price as hostilities between Iran and Israel heat up.

US crude trades +1.05% at $69.03

Brent trades +1.03% at $71.96

Looking ahead

15:00 Wholesale Inventories

18:00 Baker Hughes Rig Count

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