Dow futures +0.27% at 34700
S&P futures +0.3% at 4333
Nasdaq futures +0.6% at 14650
FTSE +0.1% at 7130
Dax +0.4% at 15660
Euro Stoxx +0.18% at 4087
S&P 500 hits fresh record high
The closely watched US non-farm payrolls revealed that 850,000 jobs were created in June, beating missing forecasts of 700k. The stronger than expected result comes after two straight months of forecast missing prints.
The unemployment rate unexpectedly rose to 5.9% in June, up from 5.8% in the previous month and worse and higher than the 5.7% expected. This might seem like bad news but it does mean that more people are returning to the labour market which is also good news given that vaccines are at a record high.
Meanwhile average earnings rose 3.6% YoY, UP from 1.9% in May and in line with forecasts. On a monthly basis earnings unexpectedly fell.
The data comes as consumer prices rise to historically high levels, but the Fed has made it clear that it will not start tightening monetary policy until the jobs marker shows substantial strength.
Today’s numbers indicate that the recovery in the labour market is on the right path but not powering ahead too quickly. Given the markets’s reaction of surging stocks and an easing US Dollar the market is not reading this as a report which will prompt the Fed to move sooner to tighten monetary policy. Instead this is a continuation in progress towards the Fed’s goal of full employment.
Where next for the S&P500?
The S&P500 futures charged higher to a fresh all time high of 4327 ahead of the NFP release. The bullish MACD keeps buyers hopeful of further gains. It would take a move below 4200 the ascending trendline and the 50 sma to negate the near-term uptrend. A move below 4140 the June low to see the sellers gain momentum.
FX – USD eases from recent high
The US Dollar is easing back from a 3 month high following the US NFP.
GBP/USD trades firmly sub 1.40 after falling steadily all week. Sterling trades under pressure amid rising Delta variant cases in the UK. Concerns are growing that Freedom Day, the final lifting of covid restrictions could be delayed or watered down as new daily covid cases top 27,000 a level last seen on 29th January.
EUR/USD struck its lowest level since April on US Dollar strength despite strong PPI wholesale inflation data for the bloc. Eurozone PPI rose 1.3% MoM in June, up from 0.9% in May and ahead of 1.2% forecast.
Oil holds Thursday’s gains after no OPEC+ deal was agreed
Oil rallied 2.4% on Thursday after the OPEC+ failed to agree to increase oil production. Oil prices are edging mildly lower today but are holding onto the lion’s share of the gains. Oil is set to gain over 1% across the week, the sixth consecutive week of gains.
The United Arab Emirates a key member in the OPEC+ alliance blocked a deal to raise output at the 11th hour. Bitter infighting resulted in the meeting being postponed and cast doubt on whether a deal to boost production can be agreed at all.
Oil prices have surged across the past 6 week, jumping over 10% in June alone. Soaring demand as economies reopen, combined with limited supply amid ongoing OPEC output cuts is keeping the market tight, boosting prices.
US crude trades -0.48% at $74.46
Brent trades -0.43% at $75.35
15:00 US Factory orders
18:00 Baker Hughes