European markets post gains after mixed jobs number

The trading day started somewhat positively with investors happy to make small buys into commodity related equities such as the miners, whilst banking stocks also attracted some speculative buys.

US jobs data mixed
However much of the focus for the day was on the US jobs data as investors awaited further clues as to the strength of the US economic recovery.

The jobs numbers were in fact rather mixed and as such so was the initial market reaction. Non Farm Payrolls badly underperformed market consensus with only an addition of 35,000 jobs when the market was expecting closer to 150,000. Private Payrolls also added far few jobs than the market expected, with 50,000 created, far short of the 113,000 expected. However, the US Unemployment Rate fell once again to 9.0% when it was expected to increase to 9.6%. and this has helped to minimise some of the negative sentiment from the payroll numbers.

Much of the weak payrolls data can be attributed to the shocking weather conditions endured across multiple states in January and so whilst the numbers themselves are not good at all, taking them with a pinch of salt may be needed. In truth therefore the numbers are fairly mixed and as such Indices initially were left largely unchanged albeit within some initial volatile swings.

What today’s jobs number does show is that there remains some real fragility within the US employment market and this does seem to reinforce Ben Bernanke’s comments yesterday which insinuated continued Fed support in light of high unemployment. This is why equity markets have not reacted with much negativity to the numbers. That said, if the US unemployment rate does continue to subside, as it recently has, and inflationary pressures escalate, as yesterdays US services data suggested, this does threaten an interest rate hike sooner than the market has been anticipating.

Broker upgrades trigger individual equity moves
In terms of individual equity movers we have seen a number of moves on the back of various broker upgrades in stances. Utility firms Severn Trent and United Utilities were two of the standout gainers in London with shares rallying between 3%-4% after Bank of America/Merrill Lynch upgraded their stance on both stocks to a ‘buy’. Supermarket chain Morrison’s was also the top retail performer on the FTSE 100 after shareholders were encouraged to add to positions from upgrades at both UBSand Bernstein. Shares rallied 2% on the back of the broker move.

SuperGroup shares boosted by CNC acquisition
Fashion chain SuperGroup shares also drew much investor attention and buyer demand after the retailer, a popular choice amongst celebrities like David Beckham, acquired its French and Benelux franchise CNC Collections for up to €40m in a move the company heralds as a game changer. SuperGroup shares have been one of the standout success stories for UK retailers over the last year, with its shares trebling in value since going public in March last year. Today’s news seems to continue alongside that success story and shareholders have reacted positively to the news, adding more shares to their portfolio’s.