Nonfarm payrolls increased by 211,000 in November, according to US official figures, while the unemployment rate held at a seven-and-a-half year low of 5%.
Helal Miah, investment research analyst at The Share Centre, said: “After yesterday’s heavy selling following Mario Draghi’s reluctance to give away more, it was important for the market not to get much of a surprise from the US unemployment data announced this afternoon.
“Thankfully, there hasn’t been too much of a surprise. Investors should appreciate that these are relatively good numbers as it illustrates that the growth trajectory of the US economy is still on. What is more encouraging is that both the September and October employment numbers were revised upwards.
“The implication is that it makes the Federal Reserve’s decision to raise interest rates at the next meeting easier. Prior to this data, the markets had been pricing in a high 70% percentage likelihood of a rise which will no doubt increase more now. The US dollar’s appreciation against other major currencies immediately after the data release reflects this.
“We believe that while interest rate rises are imminent, it should not stall the economy as it will only rise very gradually and will be very accommodating. We therefore believe that equities still remain the most attractive asset class for both capital growth and income.”
Chris Beauchamp, senior market analyst at IG, agreed: “Heading into the close, UK and European markets are still stuck in the red, while US markets have rebounded after the monthly jobs report.
“It was always going to take a major disappointment in today’s non-farm payrolls to even hint at the Fed swerving away from a December rate increase. Today’s 211,000 number, just ahead of the 200k forecast, does not fall into that category. Indeed, it leaves the general perception of an imminent rate increase unchanged, with the upward revision to the previous month’s figure perhaps even strengthening it.
“US indices have risen, as the market continues to feel more and more comfortable with an increase in rates. In Europe, the picture is very different – Mario Draghi’s failure to live up to inflated expectations has left continental markets firmly on the back foot, with a rising euro doing its best to make life difficult for stock markets.
“As December progresses, we may see them move from anger to acceptance, but for now the continent is not the place for equity market bulls.
“The week ahead has key numbers contained within it, most notably from China and the UK, but overall it is the relatively quiet period between the ECB and the Fed. US retail figures at the end of the week will likely go toward confirming a pending Fed move, but perversely this may continue to provide support to equities, as markets realise that there is life beyond a rate increase.”
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