Article / 05 January 2018 at 8:00 GMT

Morning Markets: Dow breaks 25,000, Japan extends gains

Head of Editorial Content / Saxo Bank
Denmark

Morning Markets


Watchlist

  • EU: Flash Estimate Inflation (1000 GMT)
  • EU: PPI (1000 GMT)
  • Canada: Labour Force Survey (1330 GMT)
  • US: Non-Farm Employment Report (1330 GMT)
  • US: International Trade in Goods and Services (1330 GMT)
  • US: ISM Non-Manufacturing Report (1500 GMT)

Equities continue to ride high with the Dow Jones Industrial index breaking north of 25,000 for the first time ever and Asian shares following suit, with Japanese stocks at their highest levels since the 1990s. 

The ongoing rally is supported by strong macro data including Wednesday's ISM Manufacturing beat in the US and Thursday's ADP jobs figures, while USD traders look towards today's December nonfarm payrolls figures for confirmation.

High commodity prices, particularly copper and iron ore, have boosted Australian mining shares and helped to push the overall ASX/S&P 500 index 0.7% higher overnight. Crude oil, meanwhile, cooled its heels late Thursday with Brent pausing ahead of the key $70/barrel mark.

Today's December US jobs numbers (1330 GMT) are accompanied by a French consumer confidence and provisional CPI release at 0745 GMT with an EU flash inflation estimate and PPI release at 1000 GMT. 

Market signals

Asian session

  • The Dow closed above 25,000 on Thursday for the first time ever on strong jobs data
  • The S&P 500 and Nasdaq hit record highs as well
  • The US private sector added 250,000 jobs in December
  • Japan's services PMI came in at 51.2 in December, down from 51.2 in November
  • Japan's composite PMI was unchanged; it came in at a robust 52.2
  • Strong winter demand from China has driven natural gas prices to a three-year high
  • Beijing has boosted liquefied natural gas imports to curb smog from coal-fired power
  • Trump aims to open most Federal waters to offshore drilling in biggest lease sale ever
  • Australia racked up a $628m trade deficit in November; it was $302m in October
  • Share indices in Tokyo, Seoul, Sydney and Hong Kong were all in the green
  • US employment report expected to show nonfarm payrolls up 190,000 in December

Forex ahead

  • The NZD hit its highest levels in more than two months on improving risk sentiment 
  • AUD lost ground on the news of Australia's worsening trade deficit
  • EURUSD was steady, trading at $1.2061, near a three-year high.
  • GBPUSD was slightly up, at $1.3552.
  • The JPY held range at 113.10 per dollar.

From the Floor

Yen retreats. "GBPJPY and EURJPY are sitting near cycle highs," says Hardy.

NFP in focus. "Yesterday's ADP numbers point to a strong nonfarm payrolls release today," says Garnry.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

Dow dynamo
Bleak New York weather failed to put a damper on trading as the Dow Jones surged past the 25,000 milestone for the first time on Thursday, writes Michael O'Neill.

Inflation conundrum

With inflation remaining moribund in the US, Eurozone, and Japan, why is the US dollar in particular being singled out and sold off, asks Mac McKegg?

A look at the gold charts

Surging risk assets may not be the conventional backdrop to an uptick in gold but the chart situation could be promising for dip buyers, says Steve O'Hare.

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The outlook for Japan looks promising, given the release of upbeat services and composite PMI figures for Asia's second largest economy, and gains in the Nikkei 225. Photo: Shutterstock

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