American Stocks and Foreign Exchange Strengthened by

Strong US Jobs Report

Over the last few days the American stocks and foreign exchange has been buoyed on the heels of a strong US jobs report data release on Friday. The impact of that release has caused a ripple through multiple markets in a generally positive direction.

Jobs Report Summary

The report itself confirmed the widely-held prediction that the US economy is on the rise – though its quantum exceeded most forecasts. In particular the increase in nonfarm payroll of 255,000 jobs in July was far above the expected region that ranged from 150,000 to 200,000.

Most of the jobs increase was in the Professional Services sector that saw an increase of about 53,000. Other sectors that also saw sharp rises included the Healthcare & Social Assistance, Leisure & Hospitality, and Government sectors. The two sectors that showed a bit of weakness however was Mining that lost 7,000 jobs and Education that was down 13,600 jobs.

Immediate Impact of the Data on Markets

Before the data was released US markets had already begun to edge upwards due to the expectation of a strong data release. However seeing as it exceeded forecasts and was above the general consensus, the market has responded with a further surge that many did not anticipate.

On the heels of the data, both the S&P 500 and Nasdaq rose to a new all-time highs. In particular S&P 500 futures were up 0.11%, while Nasdaq 100 futures rose by 0.18%. The Dow Jones Industrial also saw an increase of 0.12%.

As far as foreign exchange goes, the US Dollar saw gains against most major currencies – especially the Japanese Yen. The latter has been alarmingly strong of late due to its popularity as a safe-haven currency, but the strong US Dollar managed to peg it back somewhat rising to 102.49 Yen from its original 101.79 Yen on Friday itself.

Part of the resurgence of the US Dollar is also due to continued speculation over when the Fed will raise the interest rate. Because of the stronger-than-expected jobs data, the expectation is now that an interest rate hike will come sooner rather than later – though it must be said that the Fed has been particularly wary of being too reactionary.

Overall US-based equities received a boost from the data as well – though the biggest gains were probably by oil. The resurgence of oil is likely only partially due to the strong data however, as the possibility talks among OPEC nations over a possible oil freeze in September seems to be on the cards. In the past such talks have generally resulted in a standstill with Saudi Arabia and Iran unable to come to an agreement however.

Uncertainty As Markets Readjust This Week

Now that the initial kneejerk reaction has subsided the markets are already starting to readjust themselves since the week began on Monday. Both the S&P 500 and Nasdaq fell as the week started by 0.09% and 0.15% respectively. That still puts them above their value prior to the data release, though it does normalize things somewhat. Similarly the Dow Jones Industrial fell 0.08% as well.

In contrast to the performance of US-based stocks, the US Dollar still seems to be going strong and has appreciated against most major currencies. Monday saw the US Dollar climb 0.6% against the Yen in particular, in what continues to be the yardstick of its performance. The renewed speculation on if or when an interest rate hike will take place is likely to influence how much the US Dollar appreciates over the next week.

Along those same lines US equities also continued to gain ground. That increase will be tested this week as several consumer companies report their results, and there is speculation as to whether those will be positive or not. The expectation is that equities could continue to see an increase, assuming there are no surprises in the results. The movement of oil in particular is going to be tied to if or when OPEC announces a meeting. Should that announcement fail to materialize then oil may take a bit of a hit.

On the whole while the markets have readjusted somewhat, the impact of the US jobs report and the spate of renewed speculation it seems to have triggered is still causing uncertainty. Aside from the consumer companies results there are no other specific events that are likely to cause a firm movement in any direction however.

As for US stocks, the jobs data and the fact that it confirms the strength of the US economy should continue to buoy it. All in all Monday’s losses seem to have simply normalized the gains after the initial reaction, and they seem set to continue their uptrend in the wake of it. If you want to trade on multiple markets including equities, financial derivatives, foreign exchange and more – be sure to head over to etxcapital.co.uk.