Momentum from US jobs data fades in Europe; bank stocks looking solid

Not so much of a manic Monday. The rally on major equities indices set off by Friday’s US jobs data looks to have run its course at the European open, although banking stocks are higher on hopes for a regulatory overhaul in the US and resource stocks are up after strong numbers from Randgold Resources.

Europe’s main equity markets are in neutral as investors refine their view of the implications of the non-farm payrolls report for January, even after it helped the S&P 500 to a close within a whisker of a record

The Xetra Dax 30 in Frankfurt is down 0.2 per cent, failing to get much of a lift from unexpectedly strong factory orders data for December. London’s FTSE 100 is flat, while the region-wide Euro Stoxx 600 is up 0.1 per cent.

Japan’s broad Topix gained 0.3 per cent as a weaker yen gave exporters a lift, while Australia’s S&P/ASX 200 was down 0.1 per cent.

But heavyweight banking stocks are holding on to gains on the prospects of an overhaul by the Trump administration to the Dodd-Frank rules that include prohibitions on financial institutions trading for their own benefit, heralding the biggest regulatory shake-up in six years.

Standard Chartered shares are up 1.4 per cent and Barclays is up 0.5 per cent. France’s Natixis is up 0.8 per cent.

Resource stocks are also providing support after Randgold’s numbers. The gold miner is top of the FTSE 100 and among the best gainers on the Euro Stoxx 600.

Hong Kong’s Hang Seng advanced 0.6 per cent, while on the mainland China’s Shanghai Composite added 0.4 per cent and the technology-focused Shenzhen Composite gained 0.7 per cent.

The US dollar is rising against its main European rivals, with the euro down 0.3 per cent at $1.0751 and the pound 0.1 per cent weaker at $1.2473. The US dollar index is recovering from a modest fall during Asian trade to rise 0.1 per cent at 99.96.

Still, those moves are small, and mark a pick-up for the buck from a drop at the end of last week. Momentum for the dollar rally that followed the election of Donald Trump as US president appears to be leaking away, and speculators are pulling back on positive bets. As Kit Juckes, a macro strategist at Société Générale puts it: “Dollar bulls are bailing out almost as fast as bond bears.”

The Japanese yen is flat at ¥‎112.71 per dollar while the Australian dollar is 0.3 per cent weaker at $0.7659 after data showed an unexpected contraction in Australian retail spending in December.

Gold is 0.2 per cent firmer at $1,222.36 an ounce.

Oil prices are stronger with Brent crude, the international benchmark, up 0.4 per cent at $57.05 a barrel and West Texas Intermediate up 0.3 per cent at $53.98.