There was a lot going on this Friday, with relief at the appointment of an Italian government seemingly coming out on top as the main driver of trading above a whole host of other macro-issues jostling for dominance.
Following its European peers higher, and bouncing back after the blow of Trump’s EU/Mexico/Canada metals tariffs announcement, the Dow Jones jumped 220 points higher after the bell. And the Dow arguably would have been even more jubilant if it wasn’t for the hawkish hue of May’s non-farm jobs report.
All three key figures beat estimates: wage growth hit 0.3%, the unemployment rate fell to an 18 year low of 3.8%, and the headline non-farm number breezed past forecasts to come in at 223k. This helped send the dollar up 0.8% against the yen and 0.3% against the euro; the greenback was, however, less successful against the pound, where it fell 0.2% following the morning’s better than expected UK manufacturing PMI.
Over in the eurozone the region’s indices continued to gallop higher following the formation of an Italian government, equities investors broadly choosing to ignore the US-EU trade tensions and the ousting of PM Mariano Rajoy in Spain. The DAX and CAC rose 1.3% and 1.5% respectively, finally catching up with their Spanish and Italian counterparts.
Yet the euro wasn’t quite as ready to look beyond the non-Italian dark cloud currently lurking over the eurozone. The single currency shed half a percent against the pound and 0.3% against the dollar, undoing much of yesterday’s growth.
As for the FTSE, a 1.4% decline from Brent Crude, which is back below $77 per barrel, meant the UK index couldn’t keep up with the gains seen elsewhere. Instead the FTSE had to settle for a still solid 0.5% rise, one that allowed it to remain the right side of 7700.
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