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Job Market Strength Could Give A Big Thrust To Markets

The major U.S. index futures are pointing to a sharply higher opening on Friday, with sentiment seeing a notable improvement following the release of a domestic non-farm payrolls report. The report showed strong gains for July, underlining the strength of the job markets. Commodities are lower and the dollar is mostly higher. The data that has come at a time when the prospects for the global economy looks bleak and therefore could provide a big thrust, resulting in a shift in gear from the recent lackluster phase.
 
Despite the Bank of England's stimulus announcement, U.S. stocks went about in a listless manner on Thursday before ending narrowly mixed. The major averages opened mixed but fell uniformly lower in late morning trading. After recouping its losses by early afternoon trading, the Dow Industrials moved back and forth across the changed before slipping yet again in late afternoon trading. Thereafter, the index languished mostly in the red before ending down 2.95 points or 0.02 percent at 18,352. 
 
The S&P 500 Index also saw volatility throughout the rest of the session yet ended up 0.46 points or 0.02 percent at 2,164. Meanwhile, the Nasdaq Composite held mostly above the unchanged line before ending 6.51 points or 0.13 percent higher at 5166. 
 
Fifteen of the thirty Dow components closed lower, while the remaining 15 stocks advanced. Disney (DIS) fell steeply, but Visa (V) and Intel (INTC) moved notably to the upside. 
 
Among the sectors, airline and gold stocks saw significant strength on the day, while considerable weakness was visible among biotechnology stocks. 
 
On the economic front, the Labor Department reported that jobless claims rose to 269,000 in the week ended July 30th from 266,000 in the previous week. Economists expected claims to have edged down to 265,000.  
 
The four-week average rose to 260,250 from 256,500. Continuing claims calculated with a week's lag fell by 6,000 to 2.138 million in the July 23rd.  
 
The Commerce Department reported a 1.5 percent month-over-month drop in factory orders for June, a smaller drop than the 1.8 percent decline expected by economists. 
 
Currency, Commodity Markets

Crude oil futures for September delivery are slipping $0.17 to $41.76 a barrel after jumping $1.10 to $41.93 a barrel on Thursday. Gold futures are currently trading at $1,353.30 an ounce, down $14.10 from the previous session's close of $1,367.40 an ounce. On Thursday, gold climbed $2.70.  
 
On the currency front, the U.S. dollar is trading at 101.26 yen compared to the 101.22 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.1101 compared to yesterday's $1.11.30. 

Asia
 
Most Asian markets ended higher, as the BoE stimulus announcement stimulated buying, although the Japanese market ended nearly flat and the Chinese market closed modestly lower. The mood was cautious as traders awaited the U.S. jobs report. 
 
The Japanese market was dragged lower, as a firmer yen offset the broader positive sentiment. The Nikkei 225 Index opened higher and held mostly above the unchanged line for much of the session. However, the index finished the day roughly flat, edging down 0.44 points to 16,255. 
 
Food, construction, chemical, finance and retail stocks saw weakness, while export, resource and utility stocks ended mixed. 
 
Meanwhile, Australia's All Ordinaries Index hovered in positive territory throughout the session, ending up 22.20 points or 0.40 percent at 5,586. Material and energy stocks led the day's advances, while defensive stocks moved to the downside. 
 
Hong Kong's Hang Seng Index closed at 22,146, up 313.86 points or 1.44 percent, while China's Shanghai Composite Index closed 5.73 points or 0.19 percent lower at 2,977. 
 
On the economic front, the latest survey from the Australian Industry Group revealed that growth in the construction of new housing slowed in July after reaching a 10-month high in the previous month.  
 
Separately, the Reserve Bank of Australia left its growth and inflation forecasts unchanged in its quarterly statement on monetary policy, although it said a rate cut will create room for even stronger growth. 
 
Preliminary data released by Japan's Cabinet Office showed that its leading indicator for Japan held steady at 98.4 in June, while economists expected an increase. The current and the lagging indexes rose. 
 
Total labor cash earnings in Japan increased in June after falling in the previous month, a preliminary report from the Ministry of Health, Labor and Welfare showed. Gross earnings climbed 1.3 percent year-over-year in June, reversing a 0.1 percent drop in May, which was the first decline in eleven months. Economists had expected a 0.3 percent increase for June.  
 
Europe
 
European stocks opened higher and rose sharply in early trading. After giving up some of the gains, with Germany's DAX even slipping below the unchanged line, the indexes moved back to the upside. The averages are currently higher, seeing a sharp spike in the aftermath of the jobs report, adding onto the BoE-induced gains on Thursday. 
 
In major corporate news, cement conglomerate LafargeHolcim grew its quarterly profit even as sales declined, helped by cost cutting and asset sales. Allianz reported disappointing quarterly profits. 
 
On the economic front, data released by Germany's Federal Statistical Office showed that factory orders in Germany fell 0.4 percent month-over-month in June, in contrast to a revised 0.1 percent increase a month ago. Economists had expected orders to rise by 0.5 percent. 
 
U.K. house price inflation remained unchanged at a 12-month low in the three months to July, the results of a survey by the Lloyds Banking Group subsidiary Halifax showed. The Halifax house price index rose 8.4 percent year-over-year in the three months to July, the same rate as in the June quarter and the lowest since July 2015. Economists had expected an acceleration to 8.8 percent. 
 
U.S. Economic Reports
 
For the second consecutive month, the Labor Department released a report showing much stronger than expected U.S. monthly job growth. The report released by the Labor Department showing that non-farm payroll employment surged up by 255,000 jobs in July after jumping by an upwardly revised 292,000 jobs in June.
 
Employment had been expected to increase by about 185,000 jobs compared to the addition of 287,000 jobs originally reported for the previous month.

Even with the stronger than expected job growth, the unemployment rate held at 4.9 percent in July. The unemployment rate had been expected to edge down to 4.8 percent.

With the value of imports increasing by much more than the value of exports, the Commerce Department released a report showing that the U.S. trade deficit widened by more than anticipated in the month of June.

The report said the trade deficit widened to $44.5 billion in June from a revised $41.0 billion in May. The deficit had been expected to widen to $43.0 billion from the $41.1 billion originally reported for the previous month.

At 3 pm ET, the Federal Reserve is set to release its outstanding consumer credit report for June. Economists expect a $15.5 billion increase in outstanding consumer credit for the month.
 
Outstanding consumer credit increased by $18.6 billion in May compared to the consensus estimate for a $16 billion increase and the $13.4 billion increase in April. Revolving credit rose by $2.4 billion and non-revolving credit tied to auto and student loans increased by $16.2 billion. 

Stocks in Focus
 
Activision Blizzard (ATVI) reported better than expected second quarter results and raised its guidance for the full year. Take-Two (TTWO) also reported above-consensus results for its first quarter and issued positive guidance for the second quarter and the full year. 
 
Allscripts Healthcare (MDRX) reported in line second quarter adjusted earnings and better than expected revenues. The company's full year guidance was in line. 
 
Fluor's (FLR) second quarter bottom line results trailed estimates but its revenues exceeded expectations. The company's full year guidance was in line. 
 
Kraft Heinz (KHC) reported above-consensus second quarter adjusted earnings per share and in line revenues. 
 
LinkedIn (LNKD), which has agreed to be acquired by Microsoft (MSFT), reported solid second quarter results. 
 
Priceline Group (PCLN) reported second quarter adjusted earnings per share that beat estimates but its revenues were below estimates. The company's full year guidance was in line. 
 
Symantec's (SYMC) first quarter results topped estimates and its second quarter revenue guidance was upbeat. 
 
Weight Watchers (WTW) reported in line second quarter earnings per share, although its revenues trailed expectations.

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