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Markets shrug off trade war fears and Spanish vote as US jobs beat forecasts - business live | Markets shrug off trade war fears and Spanish vote as US jobs beat forecasts - business live |
(35 minutes later) | |
Investors pretty much knew that the US was about to slap steel and aluminium tariffs on the EU, Mexico and Canada, so in true market fashion, it was sell on the rumour and buy on the fact. | |
The EU however said it was pressing ahead with a complaint to the World Trade Organisation about the US move, and had also opened a challenge against China over intellectual property. | |
News that a week of political turmoil in Italy had ended with a new coalition government also helped sentiment, while the no confidence vote in Spain’s (now ex) prime minister Rajoy was helped by the fact that a new euro-friendly administration was in place almost immediately. | |
So markets are ending the week on a positive note, with Italy’s FTSE MIB up 2.53%, Spain’s Ibex 1.83% better and Germany’s Dax ahead by 1.4%. In the UK the FTSE 100 is 0.5% higher, while on Wall Street the Dow Jones Industrial Average has climbed 221 points or 0.9%. | |
On the economic front, the US created more jobs than expected in May, something previewed by a Trump tweet ahead of the official release. | |
In Europe, eurozone manufacturing fell to a 15 month low. In the UK, however, the latest manufacturing PMI survey came in slightly betteer than expected, although the recovery was said to be unconvincing. | |
On that note it’s time to close for the week. Thanks for all your comments, and we’ll be back on Monday. | |
Kudlow "I don't think he gave anything away" | |
Question needs to be asked then - would he have tweeted anything if it was a bad report. Think we all know the answer to that question. https://t.co/LZf5u0CQ89 | |
US factories grew strongly again last month, but slightly more slowly than expected. | |
The final Markit manufacturing PMI came in at 56.4 compared to the intial estimate of 56.6 and April’s figure of 56.5. | |
US Manufacturing PMI (May F) 56.4 versus 56.6 flash/expected - Sharp increases in output and new orders - Staffing levels expand at quicker pace - Inflationary pressures remain elevatedhttps://t.co/ul2zqkR5jX pic.twitter.com/XpmejKNZt0 | |
White House economic adviser Larry Kudlow has spoken about the Trump tweet on the jobs figures: | |
*KUDLOW SAYS TRUMP KNEW ABOUT MAY JOBS DATA THURSDAY NIGHT*KUDLOW SAYS TRUMP TWEET NOT INTENDED TO SIGNAL STRONG REPORT pic.twitter.com/rVzPm5ZTOh | |
Despite the growing trade tensions after the US imposed its tariffs on the EU, Canada and Mexico, Wall Street has followed European markets higher, helped by a better than expected jobs figure. | |
The Dow Jones Industrial Average is currently up 210 points or 0.86% while the S&P 500 opened up 0.5% and the Nasdaq Composite was 0.6% higher. | |
Looking forward to next month, where there won't be a tweet ahead of NFPs and the lack of one will be interpreted as a bad number. | |
Here is our story on the US jobs data, and the president commenting on the figures before their official release: | |
Donald Trump broke with years of protocol on Friday, commenting on the US’s latest jobs report an hour before its official release. | |
The Bureau of Labor Statistics announced at 8.30am that the US had added 223,000 new jobs in May as the unemployment rate slid t0 3.8%, its lowest level since April 2000 and one of the lowest levels since after the second world war. | |
Trump, who has taken credit for job market growth despite the fact that it began under Obama, said on Twitter he was looking forward to the release of the monthly jobs report just over an hour ahead of its release. | |
Following his tweet, treasury yields moved sharply higher. The monthly report is one of the most market sensitive pieces of economic information released by the government and is carefully guarded ahead of its release. | |
For anyone other than the president, the comment would likely lead to an investigation or likely firing. The report is given to senior White House officials the day before its release but is usually closely protected. | |
Jason Furman, chairman of the Council of Economic Advisers under Obama, said Trump should never again be given sight of the figures before their release. | |
Our full story is here: | |
And more Trump. The president has turned his attention back to trade, and Canada: | And more Trump. The president has turned his attention back to trade, and Canada: |
Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade! They must open their markets and take down their trade barriers! They report a really high surplus on trade with us. Do Timber & Lumber in U.S.? | Canada has treated our Agricultural business and Farmers very poorly for a very long period of time. Highly restrictive on Trade! They must open their markets and take down their trade barriers! They report a really high surplus on trade with us. Do Timber & Lumber in U.S.? |
Former US treasury secretary Summers has strong views on the Trump tweet which came ahead of the official announcement of the jobs numbers: | Former US treasury secretary Summers has strong views on the Trump tweet which came ahead of the official announcement of the jobs numbers: |
If during the Clinton or Obama Administrations there had been a statement from @POTUS or anyone senior official in the morning before the Employment Report it would have been a major scandal—with all sorts of investigations following on. | If during the Clinton or Obama Administrations there had been a statement from @POTUS or anyone senior official in the morning before the Employment Report it would have been a major scandal—with all sorts of investigations following on. |
More from ING Bank. Economist James Smith says the jobs data means a June rate hike is still on the cards. He said: | More from ING Bank. Economist James Smith says the jobs data means a June rate hike is still on the cards. He said: |
Rising employment and an above-consensus wage growth figure will reinforce expectations for a rate rise in a couple of weeks, although Fed voters will also have a firm eye on the latest trade developments. | Rising employment and an above-consensus wage growth figure will reinforce expectations for a rate rise in a couple of weeks, although Fed voters will also have a firm eye on the latest trade developments. |
President Trump said shortly before today’s US jobs report that he was “looking forward” to seeing the numbers. And with the economy having added 223k jobs in May, he is likely to be fairly chuffed. | President Trump said shortly before today’s US jobs report that he was “looking forward” to seeing the numbers. And with the economy having added 223k jobs in May, he is likely to be fairly chuffed. |
The unemployment rate fell to 3.8%, a new post-crisis low, and in fact came within spitting distance of 3.7% once rounding is taken into consideration. This decline came as almost 300,000 job hunters found employment in May according to the household survey. | The unemployment rate fell to 3.8%, a new post-crisis low, and in fact came within spitting distance of 3.7% once rounding is taken into consideration. This decline came as almost 300,000 job hunters found employment in May according to the household survey. |
But for the Fed, the key positive in this month’s report is that wage growth beat estimates, taking the year-on-year rate back up to 2.7%. This comes as firms appear to be finding it harder to fill positions. The proportion of small businesses finding it hard to fill job openings continues to flirt with all-time highs, while it’s taking around twice as long to fill vacancies than it did during depths of the financial crisis. We think wage growth could test 3% again this year as these skill shortages gradually filter through to the official numbers. | But for the Fed, the key positive in this month’s report is that wage growth beat estimates, taking the year-on-year rate back up to 2.7%. This comes as firms appear to be finding it harder to fill positions. The proportion of small businesses finding it hard to fill job openings continues to flirt with all-time highs, while it’s taking around twice as long to fill vacancies than it did during depths of the financial crisis. We think wage growth could test 3% again this year as these skill shortages gradually filter through to the official numbers. |
All of this means that a rate hike is still highly likely from the Fed in a couple of weeks’ time. Our base case is that the committee will hike a further two times after that in 2018, although of course there’s no doubt that Fed officials will be keeping a firm eye on the brewing global trade war, and this is the main risk to our view. | All of this means that a rate hike is still highly likely from the Fed in a couple of weeks’ time. Our base case is that the committee will hike a further two times after that in 2018, although of course there’s no doubt that Fed officials will be keeping a firm eye on the brewing global trade war, and this is the main risk to our view. |
As far as the jobs numbers are concerned, we suspect it is probably too early to see the effect of Trump’s metal tariffs in this month’s data, but things could start to look a little more concerning over coming months. | As far as the jobs numbers are concerned, we suspect it is probably too early to see the effect of Trump’s metal tariffs in this month’s data, but things could start to look a little more concerning over coming months. |
There are reportedly only around 300,000 workers directly employed in both the steel and aluminium production industries. By comparison, some estimates have put the number of jobs in companies reliant on steel/aluminium inputs at around 6.5 million – in industries covering aircraft to beer cans. On this basis, the risks stemming from the metals tariffs are likely to be a net negative for the overall jobs market. | There are reportedly only around 300,000 workers directly employed in both the steel and aluminium production industries. By comparison, some estimates have put the number of jobs in companies reliant on steel/aluminium inputs at around 6.5 million – in industries covering aircraft to beer cans. On this basis, the risks stemming from the metals tariffs are likely to be a net negative for the overall jobs market. |