Spreadex Market Update
Non-farm knockout super charges dollar but leaves indices at a loss
Blowing expectations out of the water a non-farm employment change figure of 271k (the best since December) was joined by an impressive 0.4% increase in average hourly earnings (up from 0.0% last month and double the 0.2% forecast) and, at 5%, the lowest unemployment rate since May 2008. It’s the kind of jobs report the Fed would have loved to see back in September when it was on the precipice of a hawkish decision; nevertheless, with Yellen stating that a December rate rise was a ‘live possibility’ and Dennis Lockhart this morning trumpeting the strength of the US economy, today’s figures were a succinct way to tell the markets to get ready for a (likely) end of year lift-off.
In the aftermath the dollar received a shot in the arm it arguably didn’t really need, stomping all over the already weary looking pound and euro. The indices, on the other hand, freaked out; the Eurozone veered between rate rise fearing losses and hurt-euro-loving gains, the latter momentarily allowing the DAX to cross the 11000 mark for the first time since mid-August. The FTSE was a bit less excitable; the index briefly tickled 6400 before a tantrum from its mining stocks put the index back in its place (its place being around 20 points into the red).
And what of the Dow? Well, initially the index yo-yoed between losses and gains, almost caught between the undeniably impressive nature of the jobs report and the severe plumage it adds to the Fed’s resident hawks. Currently it seems to have settled on the latter, dropping by around 60 to 70 points and on track to finish the day 200 points away from 18000 after coming so close to that landmark level earlier in the week.
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