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Traders see truth behind non-farm figures
The temporary euphoria that was experienced at the 1.30pm announcement was short-lived as traders turned their attention to the finer details of the US jobs report. The usual herd mentality triggered a move higher on the back of the December figure, and the upward revision to the previous month added fuel to the fire.
When the dust settled, traders twigged that the US jobs figures may not have been as impressive as shown on the surface. The disappointing participation rate and weak wage growth numbers stuck out like a sore thumb, and that is when stocks took a U-turn sound bound.
Dow bull run slowed by jobless figures
The Dow Jones is down 199 points, at 17,707, as the solid non-farm payrolls figures told one story while the wage growth figures told another. In traditional non-farm Friday spirit, the US index futures leapt on the back of the headline figures.
However, after a closer inspection of the report, it revealed an underwhelming participation rate and unimpressive wage growth numbers. Today’s jobless numbers won’t put a halt to the bull run that the Dow has been experiencing, but it will certainly put the brakes on it.
The penny has dropped for dealers, and they can now see the US recovery for what it really is, good but not great.
Brent comfortable around $50 level
Copper was hit by poor PPI figures from China overnight, and metal traders will be keeping a close eye on the Asian giant as its appetite for minerals is waning.
Brent’s brief flirtation with $51 is over, and the oil is quickly moving back towards the $50 mark. Brent oil seems to have found stability around the $50 level, but it strikes me as a pit stop before the next jaunt lower.
Gold is enjoying one of its few positive days, but it can’t rely on tumbling equities forever.
Euro problems continue with ECB and Greek news to come
The euro received another blow today, but this time it was from across the Atlantic Ocean. The single currency was pushed around by the strength of the almighty dollar, and the US jobs report highlights the divergence between the two currencies.
The problems for the euro are only going to intensify as we approach the European Central Bank meeting and Greek election. The pound was left shaken, but not stirred, in the wake of the non-farm payrolls, as the low participation rate in the US took the shine off the headline figures.