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Cash Rate Announcements from the RBA and the RBNZ on the Agenda, U.K. Manufacturing Production Awaited

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Nov, 05th 14:35

U.S. shares continued to close at fresh record highs on Friday, bolstered by a strong surge in technical sector as tech giant Apple reported quarterly earnings that topped market forecasts. Investor sentiment was also boosted by upbeat services and orders data that helped offset a soft October jobs report.

Indeed, at the close in NYSE, the Dow Jones Industrial Average gained 0.1%, to 23,539.19, the S&P 500 closed 0.27% higher, to 2,587.84, and the Nasdaq Composite climbed 0.74% to 6764.44. For the week, the Down jumped 0.5%, the S&P ticked 0.3% higher, which marked their eight straight weekly gain, the longest streak since November 2013 for both.

The tech-heavy Nasdaq advanced 0.9% on the week, recording its sixth positive week in a row. The rally of the stock benchmark index was fueled after the iPhone maker late Thursday reported earnings that easily beat estimates.

Shares of Apple jumped more than 2.6% to close in on a $900 billion valuation after posting fourth-quarter sales of $52 billion overall. More than half of Apple revenue came for iPhone sales. The result beat expectations calling for sales of $50.69 billion in the three-month period ended September. Meanwhile, profit was reported to soar to $10.71 billion, topping analyst forecasts of $9.7 billion.

U.S equities and the U.S. dollar strengthened after the Bureau of Labor Statistics on Friday reported that the U.S. economy added 261,000 jobs in October while the unemployment rate fell to 4.1% from a nearly 17-year low of 4.2% recorded in the previous month. The decline in jobless rate was partly due to a 765,000 plunge in the number of people in the labor force.

September’s initially reported loss of 33,000 jobs was revised to an 18,000 gain while August’s gain of 169,000 jobs was also revised upwards to 208,000.

Besides, the Institute for Supply Management published its report on non-manufacturing activities that showed the ISM services index rose to 60.1% from 59.8%, reaching the best level since Aug. 2005.

Next week’s calendar will be relatively light for the U.S. The University of Michigan is scheduled to release preliminary data on November consumer sentiment on Friday amidst expectations calling for the index to edge higher to a fresh 13-year high of 101.0 from the reading of 100.7 recorded in October, which was the highest level since the start of 2004.

Turning to the British Pound, Sterling nudged higher on Friday after posting the largest one-day decline since the June 2016 Brexit vote on Thursday as the Bank of England raised rates its key interest rate but also indicated that this rate hike would be the last for a while.

Sterling tumbled against most of its peers and dropped nearly 1.5 percent versus the U.S. dollar on Thursday, sending the pair GBPUSD to as low as $1.30500 – the lowest level since October 02nd. The currency pair looked set to record its biggest daily tumble in almost 21 weeks.

Led by Governor Mark Carney, the BOE’s Monetary Policy Committee voted 7-2 to raise the benchmark rate by 0.25 percent to 0.5 percent for the first time in 10 years given a surging inflation which sits at 3%, above the bank’s 2% target.

However, as British economic growth has slowed and the advance in consumer prices have not stemmed from strong demand, not to mention uncertainties over the process of leaving the EU, the central bank reiterated that any future interest-rate increases will be limited and gradual. The more dovish outlook than investors anticipated put pressure on the pound.

The Office for National Statistics is due to publish data on UK manufacturing production for September on Friday. Analysts forecast the report to show a 0.3% increase in manufacturing output.

The Australian dollar dropped on Friday, extending its downward rally to a third consecutive week. In the week ahead, the Reserve Bank of Australia is scheduled to announce its interest rate decision on Tuesday amidst expectations that the central bank would keep rates unchanged at the current record-low of 1.5% for the 14th straight meeting. On Friday, the bank is to publish its quarterly monetary policy statement.

Like the RBA, the Reserve Bank of New Zealand’s monetary policy update is due on Wednesday. Analysts forecast that the bank will hold its benchmark interest rate at the current all-time low of 1.75%