Spreadex Market Update

Shocking rise in nonfarm payrolls sends Dow Jones back to 27000, Europe extends gains



In a baffling turn-up for the books, America actually CREATED jobs last month, sending the already giddy markets into a state of triple-digit ecstasy.

Earlier in the week analysts were forecasting that more than 9 million jobs had been lost in May. Then, after a far stronger than expected ADP reading on Wednesday, that was revised down to 7.75 million.

Well, in actuality, the US added 2.5 million jobs last month.

Excitement around that astonishing beat should, admittedly, be tempered somewhat by a revision to April’s figure from -20.537 million to -20.687 million, that initial mind-blowing number becoming somehow even worse.

Yet, with the unemployment rate falling from 14.7% to 13.3% – it was expected to hit 19.4% –the markets finally had some concrete evidence to support the rally that has defined the start of June (just ignore the fact wages contracted by 1%; investors have).

It is far too early to tell if this kind of jobs-rebound can be sustained over the coming months, or whether it is a one-time bounce. However, for the already optimistic markets, this was exactly what they were looking for.

The Dow Jones went bananas for these numbers, surging 700-plus points, briefly touching 27000 for the first time since the end of February/start of March. In a sign of how far the index has come, the Dow is now far closer to the 29500-crossing all-time highs it saw around Valentine’s Day, than the sub-18200 lows struck in late-March.

Of course this only improved Europe’s good mood. The FTSE passed 6450 as it rose 1.8%, while the DAX neared 12800 thanks to a 350 point increase. Best of all, the CAC climbed 3.1%, pushing it back above 5160.

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