The US labour market data and factory orders failed to revive confidence in equity markets this afternoon.
The much talked about labour market figures were somewhat mixed this afternoon. As expected, the number of Non Farm payrolls fell for the first time this year, dropping by 125,000 in June.
Although this was mildly better than the 130,000 median estimate surveyed by Bloomberg the figures for private sector job creation weren’t all that great in my view.
By 3:30pm (London time) the Dow Jones was 19.03 points (-0.20%) lower at 9713.50, the S&P 500 fell 0.08 points (-0.01%) to 1027.29 while the Nasdaq 100 shed 2.83 points (-0.16%) to 1731.58.
The private sector created 83,000 jobs in June, far less than expectations for an increase of 110,000. Also worth noting is that 21,000, or roughly 25%, of the private sector jobs came from temporary help hires.
In addition, the prior month’s private sector payrolls were downwardly revised to show a 33,000 increase instead of an originally reported 41,000 rise. The change in manufacturing payrolls was also substantially below estimates.
A decrease in average hourly earnings over the month of June was also worrying. Average hourly earnings declined by 0.1% in June and the average weekly hours worked was reduced. On a year-on-year basis, average hourly earnings increased 1.7% in June, however. That’s smaller than the 1.9% gain seen the prior month.
Interestingly, the headline unemployment rate fell from 9.7% to 9.5% as the size of the labour force shrank by 652,000. The ongoing difficulties in the labour force can be seen by looking at the number of people who have been jobless for more than 6 months. This stood at 6.8 million in June, or roughly 47% of the total number of people unemployed. This compares to 1.3 million when the recession began.
While the data was enough to help Wall Street open marginally higher, the details suggest there are still deep structural challenges to overcome, and expectations are that it will be some time before conditions improve.
As a matter of fact the relief provided by the payroll data was short-lived, especially following the bleak figures for factory orders. Total orders for US goods fell by 1.4% in May. This is in addition to data showing a drop in business conditions for the US manufacturing sector in June.
Elsewhere, GM provided the market with a positive surprise today. The automaker reported that sales in China surpassed the US for the first-half of the year. Sales in China totalled 1.21 million vehicles while in the US 1.08 million was sold.
This is the first time in its 102 year old history that GM has sold more vehicles in an overseas market than the US market. GM’s growing presence in China helps the company diversify its revenue streams, shielding the car maker more from dire developments in the US that may negatively impact earnings. GM is now considering going public again as early as the fourth quarter this year.
Meanwhile, Blockbuster plunged 22% to $0.18 after the struggling video rental chain said it will begin delisting its common shares from the New York Stock Exchange after shareholders rejected a reverse stock split proposal.
The reverse stock split was required to boost the share price so that it could comply with the exchange’s listing requirements. The delisting will be effective from next Wednesday.
Looking ahead, the US equity markets will be closed on Monday for Independence Day.
IG Index
- Live Prices, Charts, Indices, Equities, Commodities, Forex and more >> read the
IG Index Review.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
The above content does not constitute investment advice. Neither Online-Spread-Betting.com nor IG Index accepts any responsibility for any use that may be made of the above.
Note - Spread Betting carries a high level of risk to your capital and you can lose more than your initial investment, it may not be suitable for all investors. Ensure you only speculate with money that you can afford to lose and that you fully understand the risks involved and seek independent financial advice where necessary.
'Spread Betting News 2 Jul 2010', Article by IG Index, last update: 2-Jul-10
Related articles:
Spread Betting Daily, 9-Feb-12,
The daily afternoon spread betting update featuring the key stock market indices, forex, shares and commodities markets. Daily updates focus on the spread betting markets as the UK closes and the US continues to...see: Spread Betting Daily
Spread Betting News Daily, 8-Feb-12,
The afternoon spread betting update from IG Index - a look at the spread betting markets with the UK closing and the US markets just...see: Spread Betting News Daily
Looking to improve your trading results? Get free trading tips and trading analysis as well as the latest trading offers »
Trading News.
Risk Warning:
Spread Betting carries a high level of risk
to your capital and you can lose more than your initial investment,
it may not be suitable for all investors. Ensure you only
speculate with money that you can afford to lose and that you fully
understand the risks involved and seek independent financial advice where necessary.
Disclaimer:
Online-Spread-Betting.com does not endorse the information and
analysis available on this site. It is provided purely for information
purposes and is delivered as a personal view of the writer. Under no circumstances
is the information hereon to be used or considered as, an offer to sell, or a
solicitation of any offer to buy. The website content does not constitute investment
advice and neither the individual contributor nor Online-Spread-Betting.com accepts any
responsibility for any use that may be made of the content.
* Tax Free Trading:
Tax law is subject to change. It may also differ if you pay tax in a jurisdiction outside the UK.
