Spreadex Market Update
Falling US wages puts a dampener on non-farm party
Whilst US non-farm employment change figures were marginally better-than-expected, and the unemployment rate declined, there was an ugly surprise at the centre as average hourly earnings fell 0.2%. This is significant, as if the US economy’s purported growth isn’t being felt in the wallets of average Americans, then the feasibility, and wisdom, of a Federal Reserve interest rate hike comes into question. Following the bullish comments of the Fed earlier in the week, this figure will be a disappointment; however, it also buys the Fed some time, meaning that it doesn’t have to rush into the rate hike people were clamouring for at the end of 2014.
This data led the Dow lower after a morning that allowed the worldwide markets to stagnate in the unpleasant worldwide sentiment that had crept in at the start of the day. The main culprit for this bearish feeling was, as so often it is, the Eurozone. The realities of the Eurozone’s deflation, and the meaning behind its fall in factory orders, was reflected by investors, and with no repetitive comments from Draghi to provide a white knight for the region, the Eurozone indices were mired in their own disappointments.
Despite the UK’s positive manufacturing figures this morning, the FTSE couldn’t escape the dark clouds over the global markets, and continued to shed more the impressive gains it had made yesterday. Whilst the FTSE will still be up compared to the start of the week, with Brent Crude once again teetering just above $49 per barrel, it is not the close to the week the FTSE would have hoped for after yesterday’s rally.
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