Friday, 1 February: Data in the US, UK and China generated the direction of trade optimism as February began. Ahead of US jobs data, there was further weaker data out of China where the manufacturing sector PMI fell from 49.7 in December to 48.3. It is the second consecutive month of contraction in the sector, and now the lowest level since February 2016. Any reading above 50 demonstrates expansion; below means contraction. The UK revealed its own manufacturing data earlier this morning, and with Brexit continuing to linger and impact sentiment, a 52.8 reading for January was revealed. It falls from 54.2 in December as new orders slowed and stockpiling increased ahead of the UK’s departure from the EU next month. Sterling ultimately fell in to the red versus the euro and dollar, where it remained for the rest of the day. Completing the hattrick of manufacturing data, US manufacturing came in ahead of expectations at 56.6 (54 expected) versus 54.3 in December.
Moving over to the US where non-farm jobs beat expectations with 304k jobs added in January, versus 170k estimated. It is the 100th straight month of job increases, while the unemployment moved from 3.9% to 4.0%, although this is in part to the well publicised and longest running government shut down. It is estimated about 175,000 unemployed workers were temporarily laid off as part of the shutdown. Wage growth had its 6th straight month of >3% gains and extends the longest pay improvements since the end of the recession in 2009. Over the last 12 months, US workers have seen their pay rises 3.2%.
Despite no deal being on the table as yet, upbeat comments from US president Trump ‘re US/China trade talks resulted in a mostly strong end to the week and beginning of February for equity markets. Both the FTSE 100 and 250 traded higher over the day, closing +0.74% and +0.53% respectively. The CAC in France closed +0.53%, although the export heavy DAX in Germany struggled fir ground (closing flat) as the euro made gains against major currencies. Major indices on Wall Street are in the green as we speak.
The transfer window may be shut for football clubs in the UK but it hasn’t stopped Sports Direct and Newcastle United owner Mike Ashley from putting his hand in his pocket. Never far from a retail bargain, Mike Ashley has snapped up Sofa.com after ScS withdrew from the deal. The purchase will allow Ashley to add Sofa.com concessions to his House of Fraser stores, previously vacated by Scs after they vacated its concession space.