The FTSE 100 has continued its winning streak after the US Non-Farm payrolls beat expectations despite concerns of a Brexit induced global slowdown and the US being near full employment.
There were 255,000 jobs added in July, beating analyst estimates of 180,000. June figures were also upwardly revised to a bumper 292,000. The unemployment rate remained steady at 4.9% and wages grew by 0.3% compared to the previous month signalling the quality of jobs were improving, something there had been question marks on in prior jobs reports.
The strong reading has raised expectations that the Federal Reserve now has enough data, pointing to a robust and expanding US economy, to justify a rate hike later this year. In reaction to the release, the dollar soared against the euro and pound as market participants priced in the chances of Janet Yellen’s Federal Reserve raising rates for the first time since December 2015 before the end of the year.
Stocks Rally
Signs of a stronger US economy also supported global equities on Friday afternoon and the FTSE 100 rose to the highest level of 2016 as shares in companies who operate largely in dollars, such a mining and pharmaceutical companies, outperformed the wider benchmark.
Fears of a slower UK economy have been unable to hold the FTSE 100 back due to the index being dominated by large multinational companies who are yet to feel any major detrimental effects of economic contractions in the UK.
Those companies listed in London who gain significant proportions of their revenues overseas have rallied sharply since the EU referendum due to the impact of a weaker pound on earnings, helping the FTSE 100 to rally over 15% from intra-day lows of 5750 June 24th.
Wall Street also enjoyed gains in the wake of the payrolls data as the S&P 500 set another record high of 2182 – the S&P 500 has broken to new all time highs on numerous occasions over the past month.