Stock markets in Europe are showing solid gains as traders are in risk-on mode. Dealers in this part of the world are taking their cues from the solid finish seen in the US on Friday, where the S&P 500 registered yet another record high. The impressive gains witnessed in the US were driven by the mixed jobs report. In June, 850,000 jobs were added, according to the non-farm payrolls report. At the same time, the unemployment rate unexpectedly ticked up to 5.9%. It seems the update was a great result from the point of view of the equity markets, as the headline reading showed the economy is recovering but at the same time, the nudge up in the unemployment rate indicates there are some pockets of weakness in the economy, so the Fed are more likely to leave rates at record lows for longer.
The services data released today painted a picture of a robust global economy. The services PMI readings from the eurozone and the UK were solid, while the Caixin survey of Chinese services showed only a small expansion, so it could be a sign that China’s recovery is fading.
Today, the markets are experiencing low volatility as the NYSE is closed due to a public holiday. The US dollar is essentially flat on the session. At the end of last week, the greenback rallied ahead of the jobs report as dealers clearly had high hopes for the announcement. Once the details were published, the dollar slipped as it appears the increase in the unemployment rate overshadowed the healthy headline number. Even though the jobs update was far from stellar, the US economy is still clearly improving, and it is still likely the US central bank will hike rates at some stage in the next 24 months. It is worth noting, the uptrend in the dollar since late-May is still in place.
Early last week, gold dropped to its lowest mark in over two months, but it quickly reversed, and it is still in that bullish trend. The tame dollar today has given a helping hand to the metal. We have seen a solid run in industrial metals too, as copper and palladium have are both up over 1%. Oil is largely unchanged on the session as traders await the decision from OPEC+ with respect to output. It is understood the UAE are not in favour of the proposed plan to lift output by 400,000 barrels per day.
