Update 05-06-2020: Shocking rise in nonfarm payrolls sends Dow Jones back to 27000, Europe extends gains

In a baffling turn-up for the books, America actually CREATED jobs last month, sending the already giddy markets into a state of triple-digit ecstasy.

Earlier in the week analysts were forecasting that more than 9 million jobs had been lost in May. Then, after a far stronger than expected ADP reading on Wednesday, that was revised down to 7.75 million.

Well, in actuality, the US added 2.5 million jobs last month.

Excitement around that astonishing beat should, admittedly, be tempered somewhat by a revision to April’s figure from -20.537 million to -20.687 million, that initial mind-blowing number becoming somehow even worse.

Yet, with the unemployment rate falling from 14.7% to 13.3% – it was expected to hit 19.4% –the markets finally had some concrete evidence to support the rally that has defined the start of June (just ignore the fact wages contracted by 1%; investors have).

It is far too early to tell if this kind of jobs-rebound can be sustained over the coming months, or whether it is a one-time bounce. However, for the already optimistic markets, this was exactly what they were looking for.

The Dow Jones went bananas for these numbers, surging 700-plus points, briefly touching 27000 for the first time since the end of February/start of March. In a sign of how far the index has come, the Dow is now far closer to the 29500-crossing all-time highs it saw around Valentine’s Day, than the sub-18200 lows struck in late-March. Of course this only improved Europe’s good mood. The FTSE passed 6450 as it rose 1.8%, while the DAX neared 12800 thanks to a 350 point increase. Best of all, the CAC climbed 3.1%, pushing it back above 5160.

Update 03-06-2020: ADP nonfarm and ISM service PMI beats beef up already meaty gains

As the latest US services PMIs join those from China and Europe at the strong end of expectations, and May’s nonfarm employment change reading vastly undershoots some scary forecasts, the Dow Jones roared out of the gate on Wednesday.

Both the final Markit and ISM services PMIs came in higher than estimated, at 37.5 and 45.4 respectively – a long way off China’s 55.0 beat, but nevertheless more good news on a day that has only bolstered the market’s June optimism.

The real headline figure on Wednesday was the ADP nonfarm employment change reading. In a sign that we are truly in bizzaro-world, news that 2.76 million jobs were lost in May was reason to celebrate, so much better it was than the 9 million forecasts. The number for April was also revised lower, from 20.236 million to a still eye-watering 19.557 million.

Hoping that this will lead to a better than expected set of official nonfarm on Friday, the Dow Jones climbed more than 300 points after the bell, pushing it past 26050 for the first time since March 6th.

The muscular US open beefed up the already meaty gains seen in Europe. The FTSE doubled its growth, surging 150 points to hit 6375, a level the index last saw just shy of 3 months ago.

The Eurozone indices put their UK and US peers to shame. The CAC crossed 5000 with a 3.3% increase, while the DAX galloped 430 points higher, gunning past 12400 to strike a fresh 14-week peak.   Again, no thought given to the domestic situation in the US. Nor the still-increasing death tolls in the US and UK. Nor the as-yet-unresolved tensions between the US and China.

Update 01-06-2020: Dow can’t match European gains, sterling looking strong against dollar and euro

Though the Dow Jones couldn’t quite bring itself to join in with the day’s gains, it didn’t prevent Europe from clinging onto its growth.

An improved, but still contracting, ISM manufacturing PMI – coming in at 43.1 against the 43.5 expected – just about helped lift the Dow into the green, the index eking out a 40 point rise.

That’s way below the 100 point increase forecast at the start of the day, American investors perhaps getting all they could from last Friday’s Trump press conference when it happened.

For Europe, however, the relief was delayed until Monday morning, explaining the difference between regions. The FTSE rose 90 points, sitting pretty at 6150, with the DAX climbing 220 points to re-cross 11800, and the CAC up 1.4% to 4750.

The FTSE likely would have been higher if the pound weren’t so strong. Sterling added 1.1% against the dollar and 0.8% against the euro, setting asides its Brexit concerns to focus on the various lockdown-easing measures that begin in the UK this Monday (and those that will follow in the next couple of weeks).

Source: SpreadEx