Disappointing non-farms knocks markets back

A surprisingly downbeat reading on non-farms has put markets on the back foot, casting a shadow over the coming week despite further news of a ceasefire in Ukraine.

City of London
Source: Bloomberg

Miners see heavy losses

The post-ECB slump was intensified by the 142K print on non-farms, taking the shine off the US economic recovery.

Miners took a beating in London, with Fresnillo and Randgold Resources both down heavily. The former had seen a gain of around 30% so far in 2014, well ahead of the abysmal performance of silver itself, but such a gap between the two was fundamentally unsustainable in the longer term, and Fresnillo shareholders should prepare themselves for additional downside if the share price really does want to play catch-up (or, ‘catch-down’) in the months to come.

The loss of 6900 on the broader index will worry some, but the market had definitely got ahead of itself this week prior to the European Central Bank meeting, so short-term weakness is to be expected next week, especially as economic data is thin on the ground.

S&P 500 retreat continues

The S&P 500’s retreat from 2000 continues, with the Dow Jones looking shaky above 17,000 too. However, August is a notoriously volatile month on job numbers, and with the average revision for the month standing around 77,000 it is entirely possible that next month will see today’s print revised higher.

Apple’s share price is slightly higher on the day, marking an end to two days of declines, but with much of the upcoming announcement already in the price further declines look likely. Even so, with a cash pile still relatively unused and Samsung still yet to assume the mantle of equal competitor, the shares look to have long-term value behind them.

EUR/USD back above $1.30

With the ECB meeting out of the way, brave souls have entered the fray and pushed the euro higher versus the dollar. The reasoning is simple – with no new measures set to be announced and positioning still broadly bearish the atmosphere is ripe for some kind of short squeeze, taking EUR/USD back above $1.30.

Eurozone data is in short supply next week so the bears will find it hard to muster additional support for the euro continuing its decline into the $1.20s. Meanwhile, although the dollar is slipping back below ¥105, the broad trend still seems to indicate further upside, particularly if we get a dovish reading on Bank of Japan minutes next week.

Gold could see more losses

The mild retreat in the US dollar has been to the benefit of commodity prices with both gold and silver prices finding a little respite in afternoon trading. News that a ceasefire had been agreed in Ukraine had little impact.

Gold’s losses this week have seen technical levels punctured and there is a heightened bias for further downside in the coming weeks. Copper price moves were also fairly subdued, owing to growing metal supplies and the weak US payrolls number.

Yesterday’s ECB announcement will take a while to bed in but we may well see increased demand for industrial metals in the eurozone in the coming months. 

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