Equity markets jolted by US job news

European indices are still on the up, but US markets are more hesitant as questions about a September Federal Reserve move continue.

US flag
Source: Bloomberg
  • Markets follow Japan’s lead
  • FTSE 100 bolstered by strong corporate earnings
  • Strong US job openings stifle US gains

This morning’s overflowing bullish optimism is looking slightly less enthusiastic, but overall equity markets continue to rebound, putting the difficult days of August behind them. Japan’s index enjoyed one of its best days in years, and China continues to hint at more policy action.

That was enough to spur a sustained rebound in risk assets, although the FTSE 100 has still to close above the 6260 area that marked its high-water mark during the late August bounce.

UK housebuilders appear to be in rude health, as Barratt Developments becomes the latest of the sector to update with news. The share price reaction by the end of the day has been minimal however, which suggests that investors are still ambiguous about whether the strong rally here has run its course, particularly given the ongoing debate about interest rates. 

US indices surged out of the starting gates, but then ran into trouble as a survey of job openings in the US came in well above expectations. More openings suggest that wage pressures will start to build, giving some more ammunition to those that think a September move from the Fed is still a necessity.

With over a week still to go until we know for certain, and the Fed itself in its ‘blackout period’, it looks like markets will have to step up their attempts to second-guess what Janet Yellen and co will do next. This suggests that September is about to get a lot more volatile. 

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