US unemployment pushes stocks higher

Equities are in positive territory as traders buy ahead of tomorrow’s Federal Reserve meeting, as a slight raise in US unemployment fuels QE hopes.

Towards the end of May a few members of the Fed started talking about the possibility of scaling back the size of its quantitative easing (QE) programme, which pushed stocks off their highs. However, the latest unemployment update from the US has revealed a 0.1% rise in the level of people out of work, so traders now believe that the Fed will not taper QE.

The latest consumer price index (CPI) and retail price index (RPI) figures from the UK both came in a touch higher than economists were expecting, which indicates that British consumer demand is creeping higher. If inflation becomes too high in the UK, we might see some pull-back in the stimulus package from the Bank of England – however, for now the inflation rate isn’t a concern.

In the US we are expecting the Dow to open 41 points higher at 15,220, as dealers are looking ahead to the Fed meeting tomorrow. 

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.