Spreadex Market Update
Non-farm smashes expectations, markets don’t care
With analysts forecasting 240k, non-farm smashed expectations by coming in at 295k causing the US unemployment rate to fall to 5.5%, its lowest level since May 2008. However, there were some nasty surprises hiding in this jobs report; last month’s non-farm figure was revised down to 239k from 257k in an ominous sign for next month; and more importantly, wage growth failed to build on January’s impressive gains, sliding to 0.1% for February.
Yet again this strong non-farm figure causes the hawks to bang the June interest rate hike drum once more. After Yellen argued that jobs growth needs to be consistent before the Fed considers a rate hike, this figure merely adds more fuel to the fire; the doves, though, can point to the latest failure in wage growth as justifiable cause to maintain the Fed’s ‘patient’ outlook. Regardless, this round of jobs data was not enough for investors to get back on board with the US markets, as they failed to escape the slump that set in earlier in the week.
Whilst the US markets struggled, the dollar continued to surge, rolling over the pound, euro and yen like a tank in a field of flowers. As the greenback soared gold plummeted, losing $26 dollars as the day went on to see it trade at $1173 per ounce. The latest collapse of the precious metal, alongside copper completing the $10 decline that started on Tuesday, meant that the FTSE’s mining stocks were in dire straits this Friday afternoon, with Rio Tinto, KAZ Minerals, Acacia Mining and Vedanta Resources all posting losses. This exacerbated the issues the FTSE was having this morning, with the UK index going the way of the Dow as it gradually gave up the gains it had made on Thursday.
As the UK and US markets suffered, the Eurozone indices just kept on moving as they finally sparked into life after lunch. It appears that investors finally shook off the cobwebs and realised that ECB QE was actually beginning on Monday, sending the DAX to fresh highs alongside significant gains for the rest of the region. Now let’s just hope Greece don’t spoil the party on Monday…
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