After sliding Wednesday and stabilizing Thursday, US markets have started to bounce back in early morning trading on Friday. With investors shifting their focus back to earnings reports and generally responding positively to them, index futures were trading flat to up 0.2%, but have slipped back underwater in the last few minutes following the release of disappointing North American employment and wage inflation numbers. Overseas market action has been mixed with the Hang Seng bouncing 0.6%, but the FTSE and DAX both falling 0.3%. Commodity action is also mixed with Copper falling 1.5% and WTI Crude Oil rising 0.5%.
US Big Cap earnings season wrapped up with an exclamation mark last night as several large companies significantly beat street expectations. Headliners include Amazon.com ($0.65 vs street $0.35, up 9.1% premarket), Apple ($1.26 vs street $1.20), Booking Holdings* ($37.62 vs street $28.98, up 10.9% premarket), AirBnB ($0.98 vs street $0.80), and Lyondell Basell ($2.44 vs street $2.30). In Canada, Magna ($2.00 vs street $1.64), and Open Text ($1.22 vs street $1.15) have also handily beaten analyst expectations.
Today’s North American employment numbers have dragged on markets as they suggest a return to stagflation. Job growth, in the form of US nonfarm payrolls (187K vs street 200K, last month revised down to 185K from 209K) and Canada jobs numbers (-6K vs street +21K) was quite disappointing, coming in softer than expected. Meanwhile, wage inflation figures for the US (4.4% unchanged vs street 4.2%) and Canada (5.0% vs previous 3.9%), indicate that the sticky parts of inflation may not be falling as fast as investors and central bankers have hoped.
*Shares of Booking Holdings are held in some portfolios managed by SIA Wealth Management.
