03 July 2020

US Jobs Report Sends Europe Bulls Charging


News shaping
the markets today


What’s happening: European stocks surged on Thursday to close at a one-week high following stronger-than-expected US jobs data and hopes of a covid-19 vaccine.

What happened: Positive news of a coronavirus vaccine trial lifted market sentiment earlier in the session. The momentum was driven further by the US reporting a higher-than-expected addition of 4.8 million jobs in June.

US stocks also rallied earlier in the session but pared most of the gains, as investors worried about a rise in daily infection numbers. US markets will remain closed today for the Independence Day extended weekend.

Why it matters: Global equity markets began the second half of the year on a stronger note after investor sentiment was buoyed by news of encouraging early-stage human trial results from a covid-19 vaccine being developed by Germany biotech firm BioNTech and US pharma company Pfizer.

The positive momentum garnered pace on Thursday after a strong US jobs report, showing the addition of 4.8 million jobs in June, versus expectations of 3 million. The country’s unemployment rate also declined to 11.1% in June, from 13.3% in May, also surpassing estimates. The recent numbers were released on the heels of an unexpected addition of 2.5 million jobs in May.

Meanwhile, covid-19 cases continued to surge in various countries, with the US recording a record daily addition of 50,000 infections on Wednesday.

Markets also shrugged of Eurozone’s jobs data, which showed an increase in the unemployment rate to 7.4% in May, from 7.3% in April. The ECB also released its GDP projections of an 8.7% contraction in 2020 and growth of 5.2% for 2021.

Investor sentiment was not dampened by the lack of progress in the talks between the UK and the EU on their post-Brexit relationship.

The pan-European STOXX 600 closed higher by 2%, easing slightly from the session highs. Banking stocks were the top performers, rising 4.3% to record their best session since June 5, while all sectors closed in the positive zone.

London’s FTSE 100 gained 1.3% on Thursday, while the German DAX 30 index and French CAC 40 closed higher by 2.8% and 2.5%, respectively.

Shares of Associated British Foods climbed more than 4% on Thursday, despite the British conglomerate reporting a 39% decline in its third-quarter revenue. The company disclosed that all its Primark outlets are now open and said it expects the brand to record an adjusted operating profit between £300 million and £350 million in the full year.

DS Smith’s stock plummeted around 7% on Thursday after the company reported a decline in sales to industrial customers and cancelled its dividend.

What to watch: With US markets closed today, investors will focus on reports from the Eurozone, with services and composite PMIs data due for release today. The final reading of IHS Markit Eurozone services PMI is expected to rise to 47.3 in June, form May’s reading of 30.5. Analysts expect the composite PMI to surge to 47.5 in June, from 31.9 in May.

The Markets Today


Crude oil will be in focus today, after prices rose for the second straight session on Thursday.

Context: Oil futures closed higher on Thursday, to record their highest settlement since March 6, with investor sentiment lifted by an upbeat US jobs report.

Details: The US EIA (Energy Information Administration) reported the highest weekly decline in domestic crude supplies since 2019. After rising for three successive weeks, US crude inventories declined by 7.2 million barrels in the week ended June 26.

Baker Hughes reported that the number of active US oil rigs had slipped by 3 to 185 in the latest week.

The US economy added 4.8 million jobs in June, with the unemployment rate declining to 11.1%.

The EIA also reported a rise in natural-gas supplies by 65 billion cubic feet in the week ending June 26. August natural gas surged 3.8% to end the day at $1.734 per million British thermal units on Thursday.

Brent oil for September climbed 2.6% to settle at $43.14 per barrel on ICE Futures Europe, marking its highest finish since March 6. The global benchmark for oil has gained 5.2% so far this week.

WTI (West Texas Intermediate) crude for August rose 2.1% to end at $40.65 a barrel on the NYMEX (New York Mercantile Exchange), following a 1.4% gain on Wednesday.

What to watch: Energy investors have been monitoring the rise in coronavirus cases, with the US recording a record single-day gain of over 50,000 infections on Wednesday. The resurgence of covid-19 is expected to limit the demand for crude in the coming period. Traders would be slightly assured by reports of crude supplies declining in the recent week. US crude oil futures traded down 0.5% to $40.45, while Brent crude slipped 0.5% to $42.93 a barrel in the Asian session this morning.

Other Markets: US indices trading closed higher on Thursday, with the Dow Jones index, S&P 500 and Nasdaq 100 up 0.36%, 0.45% and 0.52%, respectively.

Support & Resistances
for Today


market snapshot


Futures at 0400 (GMT)

What else to watch today


France’s government budget value, services PMI and composite PMI, Spain’s services PMI, Italy’s services PMI, Germany’s services PMI and composite PMI as well as UK’s services PMI and composite PMI.

ADS Securities London Limited “ADSS” is an execution-only service provider. This material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or investment objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by ADSS that any particular investment, security, transaction or investment strategy is suitable for any specific person. To the extent that any content in this material is construed as investment research, you must note and accept that the content was not prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.  This material may contain links to third party websites, and any content, or use of your personal data by any third party websites is not the responsibility of ADSS or any member of the ADSS Group.