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Morning Market Wrap: U.S. Stocks rally on positive jobs report

3 Jul 2020
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On Thursday, US jobs data was released, with the numbers coming in better than expected, which provided positive momentum for US shares.

To the specifics, and non-farm payrolls rose by a record 4.8 million in the month of June, substantially above what surveyed economists were expecting at 3.23 million. More so, the jobless rate, which was forecast to decline to 12.5%, dropped from 13.3% to 11.1%. It was not only jobs data released, with US factory orders also released for the month of May, showing an increase by 8%, while the trade deficit increased by US$4.8 billion to US$54.6 billion.

All in all, the data released provided a positive backdrop to the beginning of the trading day in the US, with many US equities gapping up on the open. The S&P500 opened up around 28 points higher at 3143.64, traded to a high of 3165.81, before selling off into the close, to finish the day at 3130.01. Even though the index failed to hold onto the gains on the open, for the day, the S&P500 added 0.45%. The Nasdaq Composite closed half a percent higher, while the Dow Jones Industrials added 92.39 points (+0.36%) to close at 25,827.36. The selloff into the close was partly attributed to news surrounded the spread of Covid-19 in the US, particularly in Florida which reported over 10,000 new cases for the day. Quite extraordinary when one considers this daily figure is more than the entire number of confirmed cases in Australia since the pandemic began.

It has been a strong week for the ASX200 so far, with Thursday representing the third straight positive session in a row, with the market closing 1.66% higher at 6032.71. From a technical perspective, the market has closed above previous resistance at 6000, which had provided a barrier over the past 2-3 weeks. For upward momentum to remain, we would not want to see prices close back below this level. ASX SPI200 futures are up 35 points in overnight trading, pointing towards further gains on market open on Friday.

*Note: These prices are based on futures and/or CFD pricing and may therefore differ slightly from spot pricing.

To commodity markets, and base metal prices were largely firmer, with copper gaining 0.3%, on reports that BHP may scale back production from some of its mines in South America due to the pandemic. Nickel prices gained 0.8% while lead was up 0.6%. Spot gold prices recovered from earlier losses to close up 0.28% at US$1775.04 an oz, while crude oil gained US$0.83 (+2.1%) to finish at US$40.65 a barrel.

 

This article was written by Oliver Gordon – Account Manager, Rivkin Securities Pty Ltd. Enquiries can be made via [email protected] or by phoning +612 8302 3623.

Rivkin does not ever provide financial advice. Please consider your own circumstances before purchasing any of our products or acting on our general advice, for any Rivkin product or recommendation.

SHOW COMMENTS / QUESTIONS (5)

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Comments

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Riki S.

Hi Oliver – nice article.

As long as the US has a dysfunctional approach to virus reality and subsequent management, the economic risks are significant. There’s a complete and utter disconnect between the US equity market and the real economy, regardless of the typical forward looking perspective. The market sentiment is emotive, better to look at what’s happening in the bond market for something that is likely to resemble the underlying forward impact – if they push through recent low levels, then watch the …. hit the fan!

Brian S.

Why has ZEN dropped so much today? Doesn’t their latest report show that take over is still proceeding with the offer of $1.01 ?

Daryl L.

I bought more at this price Last Week! Good opportunity to park some $s for a Great return. VL recently confirmed this.

Shannon Rivkin

Hi Daryl,

Completely agree with you! Should be a stress-free parking spot.

Regards,
Shannon

Shannon Rivkin

Hi Brian,

I’m sorry I’m only getting back to you now as this question somehow slipped through the cracks. The short answer is that we have seen risk spreads blow out across all arbitrage investments. I don’t think this means the bid is less likely to go through but rather that the return required from investors is higher for their capital investments. The conditions attached to the deal look likely to be satisfied, so we remain happy for members to buy/hold at current levels.

Regards,
Shannon Rivkin

We are glad you liked it

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