Friday Morning Cheat Sheet: 3 Stories Moving Markets

Markets declined in Asia on Friday. The Nikkei closed down 0.21 percent, and Japanese investors finished the day chewing on news that the nation’s $1 trillion public pension fund will increase its weighting in foreign and domestic equities. The yen strengthened dramatically against the dollar and was trading at 95.5880. In Hong Kong, the Hang Seng index fell 1.21 percent, while the S&P/ASX 299 declined 0.91 percent.

Markets were mixed in Europe in mid-day trading. Germany’s DAX was off 0.16 percent, London’s FTSE 100 was off 0.06 percent, and the STOXX 50 index was up 0.03 percent.

U.S. futures at 8:35 a.m.: DJIA: +0.15%, S&P 500: +0.30%, NASDAQ: +0.24%.

1) Mixed May Employment Report: Total non-farm payroll employment increased by 175,000 in May, according to the May 2013 Employment Situation report. The gain was more than expected by many analysts, but the headline unemployment rate actually ticked up from 7.5 to 7.6 percent. Last month’s payroll increase of 165,000 was downwardly revised to 149,000. The number of unemployed persons remained “essentially unchanged” at 11.8 million. The labor force participation rate has come down 0.4 percent this year to date.

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Source: U.S. Bureau of Labor Statistics

2) Outlook for the Germany Economy: “The outlook for the German economy has become brighter again following the slowdown towards the end of 2012,” reported the Bundesbank in its June monthly report, released on Friday. “Despite the continued existence of negative factors caused by the tensions in the euro area, the adjustment in the level of investment in machinery and equipment and exports is so far advanced that it could give way to a modest upturn. This is suggested, despite a few setbacks, by the improved expectations of enterprises. Although there has been no fundamental change in the underlying conditions, there has, above all, been no major deterioration either. Moreover, the world economy should pick up again in the course of this year.”

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It’s not a resounding note of optimism, but it is a vote of confidence. Germany is Europe’s largest economy and in many ways sets the tone of economic and business conditions across the region. Optimism from the Bundesbank can go a long way toward restoring market confidence. However, the central bank did scale back 2013 GDP growth expectations by 0.1 percentage points to +0.3 percent, and 2014 GDP growth expectations by 0.4 percentage points to +1.5 percent, citing the slower pace of economic growth outside of the country.

3) A Meeting of Leaders: President Barack Obama will meet with General Secretary of China’s Communist Party Xi Jinping for a two-day summit in, of all places, the Mojave desert. The leaders are expected to discuss everything from cyber crime to economic interdependency, and observers have high hopes that the two men — arguably the two most powerful on the planet — will have productive conversations.

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