Before the release of the August US Nonfarm Payroll, global stocks mostly rose because of the positive manufacturing data from China and Britain while investors await US employment data. This looked to be a premonition, as once the US employment data was released, stocks remained higher.
On Thursday, the August result of an official monthly survey of Chinese factory managers, a monitor for manufacturing activity, was released. This is a 1-100 scale where 50 marked the threshold between contraction and expansion. The result came in at a better-than-expected 50.4. The result reflects improved expectations among Chinese factory managers, as well as upticks in production and orders.
Meanwhile, the equivalent index in Britain rebounded in August, from a 41-month low in July of 48.3 to a 10-month high of 53.3. This suggested that manufacturers were helped by the drop in the pound and regained their poise after the initial shock of the Brexit. Also in Britain, FTSE 100 was up 0.2% at 6,793 while Germany’s DAX rose 0.5% to 10,642. France’s CAC 40 was up 1% at 4,481 and US futures promised gains on the open on Wall Street, with both the Dow and S&P futures up 0.2%.
US Nonfarm Payroll
On Friday, although the heightened expectations of the Fed raising US interest rates has somewhat elevated global sentiment, the persistent concerns over the health of the global economy are still lingering in the background, especially since the US manufacturing data has disappointed investors. It slipped into a new territory at 49.4 for the first time since February.
On the case of the US Nonfarm Payroll, According to Reuters, a figure below 150k could renew concerns over the health of the US economy and potentially erode optimism towards September being a live meeting to act, while a repeat of May’s dismal employment report figure of 38k could temporarily sabotage all efforts taken by the Fed to act.
A sense of anticipation has firmly gripped the financial markets as investors hoped that the NFP could provide clarity on the Federal Reserve’s plan for a rate hike in 2016. As it is, it once again disappointed investors. The US jobs growth was weaker than expected in August, slashing prospects of a rate hike by the Feds this month. It did not fall, however, it rose by 150,000 jobs, below the expected 180,000 but remained unchanged at 4.9%.
The dollar dropped to 102.88 yen, effectively raising stocks. US S&P E-mini futures rose 0.3%, having been flat. The STOXX Europe 600 extended gains to 0.7%.
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