DJIA rallies to a close above 17,000 on solid jobs report

Friday, July 04, 2014

European markets rallied higher after the ECB left rates unchanged, a move that was largely expected by market participants. However, further details given by Mario Draghi in the press conference afterwards offered greater insight into future ECB thinking. Details emerged of the shift from monthly meetings to a six week cycle as well as publishing the minutes of the meetings from January 2015, a step change from business as usual and a move seen more congruent with the US Federal Reserve’s policy.  

The DJIA rallied to a close above 17,000 for the first time ever as data released yesterday confirmed labour markets in the US were making steady progress. Non-farm payrolls were the highlight in what was a packed session for economic data yesterday, with 288K positions added in June, massively outstripping expectations of a 215K addition. The unemployment rate declined further in June, dropping to 6.1% from 6.3% in May, supporting risk assets higher. Both the S&P 500 and DJIA posted steady gains for the third straight session ahead of the long weekend as investors were optimistic for the growth outlook in the third quarter.

The dollar index added 0.3% yesterday, on track to post weekly gains after pulling back towards 79.740 earlier on in the week. The solid jobs report bolstered the view that the US economy continues to go from strength to strength and further fuelled speculation among market participants that the Fed may bring forward a rise in interest rates.

After a data heavy week, the day ahead will be largely devoid of any notable macroeconomic releases as US markets are closed as they celebrate Independence Day. Yesterday’s data intensive session saw global markets push higher and with the absence of US traders we expect a relatively subdued session as investors continue to mull over the flood of data. Today’s only notable macro release was in the form of German factory orders which came in at 7 a.m. Orders for May fell 1.7%, slightly more than expectations of -1.1% while stock futures are currently swinging between gains and losses.

DJIA extends gains, closes above 17,000 for the first time

DJI Index Dow Jones Industrial 2014 07 04 07 53 53

Unemployment drops from 6.3% to 6.1%

USURTOT Index U 3 US Unemployme 2014 07 04 07 52 02 

DXY on track to post weekly gains after steep losses early on in the week

DXY Curncy DOLLAR INDEX SPOT 2014 07 04 08 04 39

 

Events for today

US Market Holiday

0700

DE

May

Industrial Orders

All times UK Local Time

 

More from: Kash Kamal