By James Langton

(September 3 – 09:00 EST) – Traders were shocked by a better than expected jobs report in the U.S. this morning. That looks set to fuel a strong opening rally in stocks.


Economists were expecting non-farm payrolls to rise 225,000. When they came in up just 124,000 traders reacted. S&P futures shot from up two points to up 20 points in a matter of seconds.


Additionally the unemployment rate fell to 4.2% from 4.3%, as expected, while average hourly earnings rose just 2¢ in the month, after 10¢ increases in each of the last few months.


Traders have been keying on this report all week as a critical sign of future interest rate direction in the U.S. But after yesterday’s comment by U.S. Federal Reserve Board governor Kelley the possibility of yet another 25 basis point interest rate increase is pricing its way into the market.


Trading has been desperately thin all week ahead of this morning’s labour data, and once traders have settled their positions this morning, trading will likely dry up again through the afternoon.


Ahead of the U.S. jobs data, the European markets have been up, trading lightly. News that the U.K.’s third-largest bank, National Westminster Bank PLC, is in talks to acquire its fourth-largest insurer and asset manager, Legal & General Group PLC. There’s also talk that Airbus may be moving toward privatization. So far, London’s FTSE 100 is up 24.50 points. The CAC 40 has added 35 points in Paris. While Frankfurts’ DAX is up 33 points.


Asian markets mostly stayed on the sidelines ahead of U.S. jobs data. The markets were also helped by the Yen’s weakness after Japanese Finance Minister Kiichi Miyazawa suggested that it may resume its Yen sales. The Nikkei lost just 1.26 points. Interest rate jitters were fet a little more deeply in Hong Kong where the Hang Seng index dropped189 points on the news.


The Forzani Group Ltd., the Calgary-based sports equipment retailer, is reporting that it has doubled its second quarter earnings per share, for the period ended August 1, up to 6¢ per share from 3¢ in the period last year.


Canadian Western Bank is reporting earnings per share of 48¢ fully diluted, in the third quarter ended July 31, up from 43¢ per share.