• NFP report well above expectations
• US confirmed 51 thousand new Covid-19 cases yesterday,
• European shares finished session deeply in green
Positive moods prevail today in global financial markets as early-stage study showed positive results from Pfizer and BioNTech coronavirus vaccine and recent data out of the US showed job growth accelerated while layoffs remained elevated.
US Nonfarm payrolls increased by record 4.8 million jobs in June, while the unemployment rate fell more than expected to 11.1%. The U.S. labor market extended its recovery from April’s collapse in June, creating over 1.5 million more jobs than expected as lockdown restrictions across the nation were eased. Meantime the number of Americans filling for unemployment benefits eased slightly to 1.427 million, however reading still came in above analysts’ expectations of 1.355 million. Today's number was more than double its peak during the 2007-09 Great Recession, lifting the total reported since March 21st to 48.7 million. Number of jobless claims is declining since hitting a record high of 6.86 million at the end of march, but have been consistently coming above market expectations.
The strong employment growth is due to the fact that the US economy has re-opened faster than expected. Many employees returned to their previous positions. The increase is mainly visible in the services sector, which previously suffered the most during shutdown. Return to normality also causes the coronavirus to spread more quickly, due to the loosening of restrictions,. Some scientists believe that virus can accompany humanity not for months, but even for years if the right treatment or vaccine is not found. In fact, it will only be known in the coming months whether such early opening of the economy was a good idea. Meanwhile, looking more closely at the data, it turns out that not everything is so colorful. US jobless claims data showed that the number of people who submitted their application for the first time again exceeded 1 million and continuing claims are still close to 20 million. In addition, permanent unemployment is rising. This means that some employers do not intend to restore all of the workplaces in the near future.
Earlier investors welcomed the news from the US, that both the House and the Senate agreed for an extension of a $660 billion lending program which aims to provide financial help to small businesses and the Democrats proposed to extend the $600 weekly payments to laid-off workers until the jobless rate falls below 11%.
However rising numbers of new Covid -19 cases is creating even more skepticism around a V-shaped economic recovery. Yesterday number of infections in the US rose by record 51thousand, with Arizona, Texas and other Southern states being the most affected states. Florida reported more than 10,000 new cases on Thursday, the biggest one-day increase in the state since the pandemic started, according to Reuters. Over in the Middle East the number of cases crossed the 1 million mark. Also Austria and Australia are reporting rising number of new cases. Still major European indexes finished today's session in green. DAX rose 2.80%, CAC 40 climbed 2.5%, FTSE 100 added 1.3%. Positive moods can be spotted on Wall Street as well. Dow Jones rose 0.85%, S&P500 added 1.05% and NASDAQ 100 increased to an all-time high of 10420.
WTI oil prices managed to stay above $40 a barrel and Brent is trading around $42.56 a barrel as investors digested a report saying that Saudi Arabia had threatened its OPEC partners with another price war if they don’t comply with the most recent agreement on output restraint.
US markets will be closed tomorrow in observance of Independence Day, so traders should expect muted trading and lower liquidity. On the data front, a lot of Services PMI readings from the Euro zone and China will be released tomorrow.
GBP/USD - cable erased early gains to trade flat at $1.248 on after negotiations between the EU and the UK ended today, a day earlier than expected. Both sides confirmed that divergences remain on a number of important issues. Still, talks should continue as planned next week. Should downbeat moods prevail, support at 1.2297 may come into play. Source: xStation5
