No Friday bounce despite US jobs surge

Heading into the close the FTSE 100 is ten points higher, while on Wall Street an attempted bounce following a stellar NFP report is rapidly fading.

• US job growth comes roaring back, but problems remain.
• Stock markets rally, then fall back, in wake of the news.
• Oil’s ongoing surge helps FTSE oil majors.

The strongest NFP report in five months prompted a brief rebound in stock markets this afternoon, on hopes that the US economic recovery is now becoming firmly bedded in. It hasn’t been an easy ride however, and the sellers, who have held sway all week, are refusing to give up their hold on global stocks without a fight, causing most indices to slip back into the red after the initial bounce. While the headline numbers are good, and very welcome, the underlying picture is decidedly mixed, and with key metrics such as the participation rate failing to budge the Fed will have no reason to act, or even consider acting. The recovery has yet to filter through to all sections of US society, providing no reason for the Fed to move, but giving the Treasury under Janet Yellen even more reason to push forward with policies designed to fix this problem. Powell’s insouciance yesterday continues to be felt in markets, as shown by the hesitancy in equity markets after the immediate post-NFP bounce. 

It has been a good day overall for the FTSE 100, which has rallied 40 points, lifted by banks and oil companies. OPEC’s decision to leave output unchanged prompted oil to rally once more, seemingly-oblivious to the rise in bond yields that is causing such anxiety among equity investors, and making oil stocks one of the most interesting areas for traders right now. So far the dynamics appear to be in place for further gains in oil and oil stocks, and in the FX market make USD/CAD a very interesting one to watch given this is where a strong dollar and strong oil prices come head-to-head.