Dow Surges Over 2% After Jobs Data
US stock markets surged on Friday after the unemployment rate jumped to its highest level in seven months, the Dow led the way closing up 2.12% on the day with the S&P and Nasdaq trailing in its wake, finishing the day up 1.45% and 1.07% respectively. The leap in the unemployment rate came despite another strong Non-Farms print, 339k against the expected 193k. Both the dollar and US treasury yields had strong reactions with the DXY up 0.5%. Safe haven Gold took another hit, dropping back near weekly lows, whilst Oil jumped over 2% ahead of the weekend’s OPEC meeting.
Confusion Reigns After Mixed US Data
Investors looking for clear direction on the release of Friday’s Non-Farm employment data were sadly disappointed. The headline number came out much stronger than expected with an additional 339,000 jobs being added to the US economy against the expected 193,000, indicating continued strength in the US job market and putting pressure on the Fed to raise rates. However, at the same time, the unemployment rate came out at 3.7% against the expected 3.5% which would normally result in the opposite reaction. Great news for market commentators as we have seen both data sets used to explain the consequent moves in the market ie. Stock markets rallied and the dollar and US yield rallied. In reality, the truth is that is just adds to the mix that Fed members have to wade through next week when deciding whether to raise rates or pause – which is in itself a more hawkish turn on what was on a few weeks ago a decision between raise rates or stop. The upshot for traders in the short term is likely to be more confusion and more volatility.
The Week Starts on a Positive Note
Asian stock markets were set to follow Wall St’s lead today after the major US indices rallied on Friday. There is little on the macroeconomic calendar to change that sentiment in the short run so traders are expecting risk-positive moves in the short term. In the European sector, the focus will move temporarily to Switzerland with the release of the latest CPI data due. The expectation is for an increase of 0.3% m/m. In the New York session, the latest US ISM Service PMI number is due, expected to print around the 52.6 level.
