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Irrepressible Optimism May Prevail On Wall Street

The major U.S. index futures are currently pointing to a higher opening on Friday, with stocks likely to extend the upward move seen over the course of the previous session.

The upward momentum on Wall Street comes as traders seem irrepressibly optimistic despite the release of a report from the Labor Department showing weaker than expected job growth in the month of December.

The Labor Department said non-farm payroll employment climbed by 145,000 jobs in December after spiking by a revised 256,000 in November.

Economists had expected employment to increase by about 164,000 jobs compared to the jump of 266,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate came in at 3.5 percent in December, unchanged from the previous month and in line with economist estimates.

After ending Wednesday's trading mostly higher, stocks saw some further upside during trading on Thursday. With the continued upward move, the major averages ended the session at new record closing highs.

The major averages finished the day firmly in positive territory. The Dow climbed 211.81 points or 0.7 percent to 28,956.90, the Nasdaq advanced 74.18 points or 0.8 percent to 9,203.43 and the S&P 500 rose 21.65 points or 0.7 percent to 3,274.70.

Easing concerns about the conflict between the U.S. and Iran contributed to the continued strength on Wall Street amid signs of de-escalation.

President Donald Trump indicated in remarks on Wednesday that the U.S. would not respond militarily to the Iranian missile strikes on Iraqi bases housing U.S. troops.

Trump had previously threatened a harsh response to any attack by Iran but now says he will only impose new sanctions on Iran's already struggling economy.

The latest developments seem to confirm earlier views that the notable pullback by the markets last Friday was as a temporary blip in the recent upward momentum that has continually propelled stocks to new record highs.

Nonetheless, overall trading activity was somewhat subdued ahead of the release of the Labor Department's monthly jobs report on Friday.

Economists expect employment to increase by 164,000 jobs in December after spiking by 266,000 jobs in November, while the unemployment rate is expected to hold at 3.5 percent.

With the more closely watched monthly report looming, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended January 4th.

The report said initial jobless claims dropped to 214,000, a decrease of 9,000 from the previous week's revised level of 223,000.

Economists had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week.

Despite the advance by the broader markets, most of the major sectors ended the day showing only modest moves.

Software stocks extended the strong upward move seen in the previous session, however, with the Dow Jones U.S. Software Index climbing by 1.1 percent to a new record closing high.

Oil, oil service and tobacco stocks also saw some strength on the day, while gold stocks moved to the downside amid a continued decrease by the price of the precious metal.

Commodity, Currency Markets

Crude oil futures are slipping $0.17 to $59.39 a barrel after edging down $0.05 to $59.56 a barrel on Thursday. Meanwhile, after falling $5.90 to $1,554.30 an ounce in the previous session, gold futures are inching up $1.20 to $1,555.50 an ounce.

On the currency front, the U.S. dollar is trading at 109.65 yen versus the 109.52 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1102 compared to yesterday's $1.1106.

Asia

Asian stocks ended broadly higher on Friday amid easing U.S.-Iran tensions and ahead of release of the U.S. Labor Department's jobs report for December later in the day.

China's Shanghai Composite index ended marginally lower at 3,092.29 but rose 0.3 percent for the week, marking its sixth straight weekly gain ahead of the signing of a Sino-U.S. trade deal next week. Hong Kong's Hang Seng index inched up 0.27 percent to 28,638.20.

Japanese shares rose as the yen hit a two-week low versus the dollar on the back of easing tensions in the Middle East. The Nikkei average gained 110.70 points, or 0.47 percent, to 23,850.57, while the broader Topix index closed 0.35 percent higher at 1,735.16.

Tech stocks advanced, with Advantest rising 1.1 percent and Tokyo Electron gaining 1.5 percent. China-linked shares such as Komatsu and Fanuc rose 1-2 percent. Uniqlo chain operator Fast Retailing fell 2.8 percent after cutting its full-year profit outlook.

Japan household spending decreased 2 percent year-on-year in November, following a 5.1 percent decline in October, a government report showed.

Australian markets hit record highs as U.S.-Iran tensions ebbed and China confirmed plans to sign the Phase 1 trade deal with the U.S. next week.

The benchmark S&P/ASX 200 index climbed 54.80 points, or 0.80 percent, to 6,929, while the broader All Ordinaries index ended up 50.50 points, or 0.72 percent, at 7,041.90.

Energy stocks finished mostly higher despite crude oil futures settling near four-week lows on Thursday.

The big four banks rose between 0.4 percent and 1.2 percent while insurers Suncorp Group and QBE Insurance Group added 0.6 percent and 0.9 percent, respectively.

In the healthcare sector, CSL rallied 2.8 percent and Cochlear advanced 1.3 percent.

Mining heavyweights BHP and Rio Tinto ended narrowly mixed while gold miner Evolution lost as much as 6 percent, Newcrest declined 1.4 percent and Northern Star Resources tumbled 3 percent.

Coles Group rallied 2.9 percent, Wesfarmers added 1.4 percent and Woolworths gained 1.6 percent after official data showed Australia's retail turnover increased 0.9 percent on a monthly basis in November, driven by a strong growth in Black Friday sales.

Separately, data from Australian Industry Group revealed that Australia's service sector contracted in December. The Performance of Services Index fell 5.0 points to 48.7 points in December.

Seoul stocks posted strong gains for the second straight session amid signs that
the United States and Iran may avoid an all-out war despite persisting tensions between them. The Kospi average surged 19.94 points, or 0.91 percent, to close at 2,206.39. It marked the first time for the index to close higher than the 2,200 threshold since Dec. 27.

Europe

European stocks held steady on Friday as caution set in ahead of the all-important U.S. jobs report due tonight, which could give investors additional clues on the health of the world's largest economy and the interest rate outlook.

Economists expect employment to increase by 164,000 jobs in December after an increase of 266,000 jobs in November. The jobless rate is expected to hold at 3.5 percent.

Federal Reserve Vice Chairman Richard Clarida said at an appearance before the Council on Foreign Relations in New York on Thursday that the U.S. economy is in a good place and the central bank isn't about to switch course.

Closer home, France's industrial production grew at a slower pace in November driven by the weakness in manufacturing sector, the statistical office Insee said.

U.K. hiring conditions improved at the end of the year with an increase in permanent job placement, the Report on Jobs from IHS Markit showed.

The pan European Stoxx 600 was marginally higher at 419.75 after rising 0.3 percent the previous day.

The German DAX and the U.K.'s FTSE 100 were little changed with a positive bias while France's CAC 40 index was declining marginally.

Shares of Ryanair Holdings jumped 6.5 percent. The budget air carrier upgraded its profit guidance for the year to March 2020, saying the festive period was "characterized by higher than expected close-in bookings at better than expected yields."

easyJet rallied 3.5 percent and British Airways owner IAG jumped 4 percent.

On the flip side, fashion brand Superdry slumped 14 percent after issuing a dramatic profit warning.

B&M European Value Retail plunged 8.2 percent after sales growth slowed in the key Christmas quarter.

JD Sports Fashion lost 2.8 percent. The company said it remains confident that the full year Group headline profit before tax will be in the upper quartile of current market expectations.

U.S. Economic Reports

After reporting a substantial increase in U.S. employment in the previous month, the Labor Department released a report on Friday showing the pace of job growth slowed by more than expected in the month of December.

The Labor Department said non-farm payroll employment climbed by 145,000 jobs in December after spiking by a revised 256,000 in November.

Economists had expected employment to increase by about 164,000 jobs compared to the jump of 266,000 jobs originally reported for the previous month.

Meanwhile, the report said the unemployment rate came in at 3.5 percent in December, unchanged from the previous month and in line with economist estimates.

At 10 am ET, the Commerce Department is scheduled to release its report on wholesale inventories in the month of November. Wholesale inventories are expected to inch up by 0.1 percent.

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