Spreadex Market Update
Dow rises and dollar sinks as duff non-farm jobs report (likely) delays Fed rate hike
After weeks of wondering whether the central bank will raise rates in September the markets likely got their answer this Friday, even if the FOMC meeting isn’t for another fortnight. The headline non-farm figure came in at a meagre 151k, well below both the 180k expected and (upwards revised) 275k in July, nipping in the bud hopes of 3 consecutive months of muscular jobs growth. The rest of the report wasn’t much better; the unemployment rate remained at 4.9%, while wage growth slipped back to 0.1%.
There is something of a caveat to attach to August’s non-farm figures; for the past 6 years now the month’s data has underperformed expectations, so the Fed may treat it as an expected result of the summer lull. However, that still pushes a rate hike closer to December than September, with the central bank’s doves able to point to the contraction territory manufacturing reading from the ISM on Thursday as well as this non-farm miss.
Understandably this was all treated with jubilation by the global indices and despair by the dollar. The Dow Jones jumped 100 points after the bell, crossing 18500 in the process as the greenback shed more than half a percent against the pound. And even with their own currencies on the rise (sterling also taking 0.6% off the euro) the European indices celebrated the likely rate hike delay, the FTSE and DAX surging 1.7% and 1.1% respectively.
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