On Friday, investors were issued a mixed US jobs report in which the headline increase in US jobs missed expectations, and the unemployment rate fell.
The US economy added 209,000 jobs in the month of June compared to an economist consensus of 230,000. The unemployment rate fell to 3.6%, as expected.
The immediate market reaction saw global equities jump and bond yields fall. These moves quickly faded, and US equity futures reversed gains – the cash market started Friday’s session in the red. The S&P 500 was down 0.1% at the time of writing.
The FTSE 100 was underperforming other major European equity indices on Friday, with losses of 0.3% compared to a 0.4% gain in the German DAX.
Interest rate outlook
Today’s jobs report had been highly anticipated as markets clamour for hints of the next move in US interest rates. A softening in the US labour market would warrant a slowdown in rate hikes, whereas continued strength gives the Federal Reserve little choice but to hike rates again to tame inflation and wage growth.
Ryan Brandham, Head of Global Capital Markets, North America at Validus Risk Management, feels that today’s Non-Farm Payrolls are unlikely to stop the Federal Reserve from hiking rates at July’s meeting.
“There is some slight weakness starting to appear in the US labour markets, which could see the USD weaken a touch today and rate hike pricing moderate slightly, but it doesn’t feel like this number alone is enough to derail at hike at the FOMC meeting in July,” Brandham said.
FTSE 100 movers
The FTSE 100 was fairly split between rising and falling stocks on Friday, with 54 of the 100 constituents trading negatively at the time of writing.
The index fell as heavy-weight pharmaceutical and consumer companies AstraZeneca, GSK and Unilever dipped. Eight of the top ten FTSE 100 companies by market cap were down, and just two traded positively.
Ocado was the top riser after Exane BNP raised their price target to 580p and Bernstein cut their price target to 1,350p. Exane BNP has a neutral rating, and Bernstein is overweight Ocado.