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Stocks up as tapering succeeds
Stocks have shrugged off the softer-than-expected non-farm payrolls report, as traders decided to focus on the drop in unemployment. This is the second month in a row when the non-farm payrolls figure came in well below expectations, but crucially this month the unemployment rate also dropped. This decline shows us that quantitative easing has worked and that tapering is justified; however, we are unlikely to see additional tapering in the near future. Although US unemployment has fallen to the lowest level in over five years, tapering too much too soon could be counter-productive.
Financials are in focus as Barclays kicks off the reporting season for British banks on Tuesday. Lloyds has already aired its dirty laundry by revealing another £1.8 billion provision in relation to PPI at the start of the week.
Mineral extractors will finish the week on a high note as metal prices have rebounded.
Dow up due to unemployment
In the US, the Dow Jones is up 54 points at 15,682, as investors have welcomed the drop in unemployment. Traders are slowly but surely coming around to the idea that good news for the economy is good news for the markets. US index futures initially collapsed after a low headline figure but when traders digested the numbers they realised the jobless rate had actually dropped.
Gold falls on NFP
Gold has given up gains made on the back of the non-farm payrolls report; traders are reversing the flight to quality.
Tapering unlikely in near future
The US dollar is off versus most major currencies as dealers do not foresee the Federal Reserve doing more tapering any time soon.