This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The number of people on the payrolls in May increased by 175,000, slightly higher-than-expected, but at the same time the unemployment rate unexpectedly ticked up to 7.6%.
Initially, equity markets dipped over worries that more people on the payrolls might indicate a stronger US economy, but the news of higher unemployment actually pushed stocks higher. Investors were concerned that the US Federal Reserve might reduce the size of its stimulus package, but with unemployment rising the Fed are more likely to keep the current policy unchanged.
Over the past three weeks, global equity markets have come off highs due to profit-taking and speculation that the Fed might curtail its bond-buying scheme, but we could see the beginning of an uptrend after today’s reports.
The Dow opened around 70 points higher at 15,110, with traders now more confident in a continuation of the stimulus package from the US central bank.