US non-farm smashes expectations

After spending most of the morning limply waiting for US data, the markets sparked into life as non-farm smashed expectations.

January’s non-farm saw 257,000 jobs created; even more impressively, December’s figure was revised up to 329,000 from the original 252k. These figures effectively swept away the run of bad data the US has suffered recently, and is another shot in the arm for an already buoyant Dow. The news was slightly marred by the fact that the unemployment rate slipped up to 5.7%; however, average hourly earnings grew by 0.5%, finally addressing an issue that has become a major talking point in the US economy. Yet the market reaction wasn’t as explosive as these figures would suggest, partially due to the lingering doubts over the non-non-farm employment change aspects of the jobs report.

Following such a strong set of figures, the expectation is once again that the Fed should raise interest rates earlier than the currently tabled time; however the institution has plenty of bad data to point to that can counter these admittedly impressive non-farm figures, so the statement from the FOMC’s Dennis Lockhart later this evening will provide an important insight to the way the Federal Reserve is leaning.

Two big losers in this non-farm figure were gold and the euro. Just after gold appeared to be re-consolidating its $1260 per ounce level after shying away from its higher climbs, this dollar surge saw the metal drop to $1236 with more losses to come. And the euro had previously spent much of the week intermittently rebounding against the dollar, but a rampant run from the greenback post-non-farms saw much of these gains wiped out.

In the Eurozone itself, US officials have apparently told Greece to cooperate with the IMF and EU and focus on reforms; it looks like Syriza hasn’t found a useful ally in its American cousins. Despite a Greek/EU meeting being tabled for next Wednesday, the Eurozone indices remained down on the ineffectual performance of its politicians and financial leaders throughout the week.

The FTSE briefly basked in the glow of the USA’s non-farm figures before resuming the lifeless shade of green that has plagued it for much of the day. The issues surrounding the trade balance deficit, a shaky performance from stocks like Tate & Lyle and mixed responses from its energy and mining sectors meant that much of day’s bullish news was overshadowed. This includes the fact that Brent Crude looking set to have gained around $6 in the space of a week, an impressive feat for a commodity that was teetering on the edge of new 5 year lows for much of January.