Spreadex Market Update

Markets ease Trump/covid losses despite rough nonfarm jobs report



The initial panic sparked by Trump’s case of the covids seemed to cool somewhat as the day went on, despite a pretty awful nonfarm jobs report providing fuel for the fire.

Already analysts were expecting the nonfarm number to drop under 1 million, down to 900,000 from an upwards revised 1.489 million in August. Instead jobs creation more than halved month-on-month, September’s headline reading coming in at just 661,000. Unbelievable pre-covid, but now a bitter disappointment given the scale jobs lost across March and April.

Helping to dull the impact was the 6th better than forecast unemployment rate reading in a row, which skipped past the estimated 8.2% as it fell from 8.4% to 7.9%. On the other hand, wage growth limped behind, slipping from 0.3% to 0.1%, rather than rising to 0.5% as expected.

Oddly, the jobs report – which arguably hammers home the need for further stimulus, something that could be held up if Trump’s covid-positive diagnosis spreads – failed to intensify the day’s losses.

Now the Dow Jones was still down 200 points after the bell, leaving it just above 27,600. Yet, that’s around half the decline forecast at the start of the session, and suggests investors have gotten over their initial shock following reports suggesting Trump’s symptoms are ‘mild’.

This caused the European indices to calm down in response. Even with Brent Crude dropping 3.8%, and the pound up 0.4% against the dollar and 0.6% against the euro, the FTSE reduced its losses from 0.7% to just 0.2%.

The CAC was on a similar trajectory, left with a manageable 0.2% decline despite the threat of a total lockdown in Paris.

Only the DAX struggled to improve its performance, stuck with a 0.6% drop as it sat the wrong side of 12,650.

Nothing is set in stone, however, and the Dow Jones could still have a wobble before the session is over. It’s also going to be fascinating to see how the markets wake up on Monday morning, following what is set to be another major weekend in terms of geopolitical headlines.

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