Financial market research and analysis

A relief rally boosted Asian stock markets overnight, after Friday’s US jobs report hit all the right notes. The impressive number of jobs created versus the weaker than forecast wages data meant that the strengths and weakness of the report whetted risk appetite perfectly. The economy is clearly booming but future inflation concerns have eased following January’s report, allowing the stock markets to charge higher.

313k jobs were created in February, versus 205k forecast. Average wages grew 0.1%, lower than the forecast 0.2%, meanwhile unemployment remained at 4.1%.

The NFP was seen as the final obstacle for investors before jumping into equities after a volatile month. As a result, the Dow closed up 440 points, whilst the S&P 500 climbed 1.7%, both notably closing above their 50-day moving average. Meanwhile, the tech heavy Nasdaq charged 1.8% higher to close at a fresh record high.

Despite the stock market’s rally, there are concerns that market participants are reading too much into this one report. Whilst labour demands are currently being met with labour supply, the labour market keeps on tightening, which should eventually feed through into higher inflation expectations.

Fed still set to hike in March

Perhaps the most important take away from the report is that is was sufficiently strong for the Fed to stick with plans to hike in March. February’s inflation and consumer spending figures will be in focus this week; however as with the NFP it would take to serious miss in both readings to throw the Fed off course.

A strong Non-farm payroll inspired close in the US, boosted Asian stocks overnight, with the spill over effect helping lift Europe to a positive open. Closer to home, the FTSE is expected to open higher, adding on to its 5-day winning streak last week, the longest winning streak for the index this year.

Low expectations for Tuesdays’ Spring Statement
This week is notably short on UK economic data to drive trading and investors are likely to be disappointed if they are expecting volatility from the Chancellor of the Exchequer’s Spring Statement on Tuesday. With no tax changes and no spending increases planned it will be difficult for the event to be anything other than bland and low key.

Dollar slips as trade woes persist

In the Forex market, developments following Trumps signing of his tariffs have ensured a weak start for the dollar, which is looking to slip below the key psychological level 90.00 versus a basket of currencies. Trump’s clarification on tariff conditions were not what Europe had been hoping for, with Trump even threatening to tax German cars should the bloc not bow to his demands. So far Canada, Mexico and Australia have secured exemptions from the tariffs, but the European Union is still firmly in the firing line.