The S&P Index continues its consecutive record high closes to 6; US unemployment is at 4.2%, the lowest since 2001; and German equities get a lift, writes Ian Slattery.
In the US the S&P 500 extended its run of consecutive record high closes to six, after rising for the first four days of last week, achieving its longest unbroken string of gains since 2013. Markets cheered the clearer focus on tax reform, whilst manufacturing and services PMIs both beat expectations. The services index rose to a 12-year high.
Friday’s job report data was mixed, with the US shedding 33,000 jobs last month, although data suggested that much of this was down to the influence of Hurricanes Harvey and Irma. On the upside the unemployment rate ticked down to 4.2%, the lowest since 2001. Wages also grew by 0.5%, buoying hawkish market participants as long-dated treasury bonds lost value on the expectation of monetary tightening.
Friday’s job report data was mixed, with the US shedding 33,000 jobs last month, although data suggested that much of this was down to the influence of Hurricanes Harvey and Irma.
German equities got a lift as a weakening in the euro helped export orientated stocks, whilst the political unrest in Catalonia highlighted the sometimes-fragile nature of EU politics.
The global index posted a positive return of 1.5% last week as gold faltered slightly, returning -0.3%. Copper moved forward again returning 2.5% whilst oil closed below $50/barrel after a negative 4.6% return.
The influential US ten-year bond yield moved to 2.36% from 2.25%, on the back of increased rate expectations. The German equivalent stood at 0.46% from 0.45% a week ago.
The EUR/USD rate closed at 1.17 from 1.18 a week previously.
THE WEEK AHEAD
Wednesday 11th October
The big focus from the US will be the publication of September’s Federal Open Market Committee (FOMC) meeting minutes, where markets will look to see a reinforcement of the recent hawkish stance.
Thursday 12th October
European Central Bank (ECB) President Mario Draghi takes part in a panel discussion on monetary policy, which also features Fed representative Lael Brainaird.
Friday 13th October
In the US, September’s Consumer Price Index (CPI) report is released where the consensus expects a 0.6% rise in inflation and a 1.7% rise in retail sales (both month-on-month).
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