NFP report lifts Dow above 17,000

After an excellent non-farm payrolls report, the FTSE has touched three-week highs and the Dow Jones has climbed above 17,000 for the first time.

US flag
Source: Bloomberg

FTSE hits three-week high

The non-farms number smashed expectations, allaying all concerns about the US economy in the second quarter, while a drop back in the unemployment rate was a further positive sign.The economic foundations of the rally remain in place, so now the focus will turn to earnings season and any additional merger activity.

The European Central Bank did its bit too, reassuring on interest rates and offering enough hints about quantitative easing to keep the market happy. For the FTSE 100, the big level of 6880 is still to be broken, but with a rallying mining sector there is every chance that this time will finally see us cross this line.

Dow hits 17,000

US traders can pack up and prepare for Independence Day celebrations contented this evening, having finally achieved Dow 17,000. Of course, markets are never happy so now we wait for the S&P 500 to hit 2000, not even 20 years after the index reached 1000.

This is a testament to the optimistic outlook of global markets and the underlying strength of the US economy, although there will be those warning that stocks are too pricey at current levels. Central bankers still seem to be giving a clear signal that policy will remain loose – clearly, the bull market isn’t done yet.

Gold drops after NFP report

Gold has endured its usual NFP volatility, dropping sharply in the wake of the strong number, although a modest rebound then occurred. However you view the NFP number, whether pushing equities higher on US growth optimism or causing the dollar to bounce on expectations of an earlier Fed rate hike, the end result is negative for gold and has cut away much of the upward momentum that had given the metal a lift back towards $1330. 

Oil has been abandoned in the general rush for equtities too, as receding Iraq concerns and hopes of more output from Libya took away the key catalysts driving the upward move.

EUR/USD could drop to $1.3500 

The substantially better NFP reading was good news for the dollar and the supporters of the US economy, treating us to the sight of a rallying US currency and more buoyant stock markets.Wage growth was not as encouraging, which points to inflationary growth staying anaemic, backing up Janet Yellen’s ‘noise’ assertion.

The nascent rally in EUR/USD has been cut off in its prime after Mario Draghi made appropriately dovish noises, leaving open the chance of another drop to $1.3500.

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.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.