Equities surge higher following robust US employment data

Thursday, July 03, 2014

Robust US employment data spread optimism across equity and commodity markets and increased risk appetite. The Dow Jones index surged and breached above 17,000 hitting a record high, while the S&P 500 Index also climbed higher eyeing the 2,000 points.

Following the strong upside momentum in Wall Street, European equities extended recent gains and rallied further. The CAC, DAX, IBEX and the London equity benchmark index rose between 0.7% and 1.2%, while robust Markit Services PMI data have also provided further support.

On the macroeconomic front, the US non-farm payrolls report showed the US economy created 288,000 jobs in June, beating expectations of a modest 215,000 rise. Furthermore, the unemployment rate declined to 6.1% in June compared to 6.3% in May. The ISM non-manufacturing index was reported at 56.0 in June, slightly below expectations of 56.5, while the Markit services PMI final fell slightly to 61.0 in June compared to 61.2 in May. The US dollar rebounded and started to strengthen with the USD index holding strongly above 80.2.

US Unemployment Rate

USURTOT Index (U-3 US Unemployme 2014-07-03 17-30-36

LME Copper extended gains and was higher in today’s session eyeing the 7,200 level, while Aluminium edged higher above 1930. Crude oil prices continued to remain under pressure due to some profit taking after the strong rally in the oil market. Brent front month futures slid lower to retest $110 per barrel. 

As US markets will be closed tomorrow for Independence Day, trading volumes might remain thin. The release of German industrial orders could give some direction.

LME Aluminium 3M

LMAHDS03 Comdty (LME ALUMINUM  3 2014-07-03 17-30-09

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