Spreadex Market Update
Rate-hike delaying non-farm nightmare hammers dollar and spooks Dow Jones
With the Fed’s hawks increasingly vocal ahead of June’s meeting in less than a fortnight today’s non-farm release was always going to be a biggie. Yet no-one seemed to expect just how odd the report was going to be. The headline figure fell to a miserly 38k, a quarter of what was forecast and the worst reading since September 2010; that was joined by a less surprising drop in wage growth, from 0.3% to 0.2% month-on-month. However, complicating matters was the unemployment rate, which, at 4.7%, hit a low not seen since the end of 2007. The rest of the afternoon’s data was just as mixed, with a 9 month high factory orders figure and a slightly improved Markit services PMI countered by a 26 month nadir from the ISM non-manufacturing PMI.
While the figures themselves painted an incredibly messy picture of the US economy the markets reacted in only one way: poorly. The Dow Jones plunged over 100 points after the bell, the rate-hike delaying nature of the data (July replacing June as the key Fed meeting) outweighed by the sheer ugliness of those jobs figures. The dollar, meanwhile, took a hammering from the pound (with cable jumping 0.8%) and the euro (up 1.6%), the latter’s rise causing a sharp 1.5% downturn from both the DAX and the CAC.
Only the FTSE escaped a truly disastrous afternoon, and even then the UK index still saw its 1% in gains dissipate to a 0.2% dip into the red, the solid state of its commodity sector preventing it from matching the Eurozone/US bloodbath.
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