LONDON (Alliance News) - US futures markets indicate stocks will open higher in New York, while the dollar has dropped against other majors, following the release of highly-anticipated September US non-farm payroll numbers.
The report showed that 148,000 jobs were created in September, well below the 180,000 that economists expected to be added and lower than the previous month's gain of 193,000 jobs. However, the headline rate of unemployment ticked down to a four-and-a-half year low of 7.2%, from 7.3% in August.
The highly anticipated report was originally due for release on October 4 but was delayed due to the 16-day government shutdown. The pound and euro, which had been flat-lining ahead of the release, jumped on the disappointing report which sent the dollar tumbling on the assumption that the reading givens no reason for the Federal Reserve to begin to taper its economic stimulus programme.
The pound shot up 80 points, or about 0.5%, to a high of 1.62116 against the dollar while the euro gained a similar amount, posting a high against the dollar of 1.37485 as the greenback lost ground almost everywhere.
US stock futures, which has also been flat ahead of the numbers, are now pointing higher. The DJIA and the S&P500 are both currently indicated to open about 0.3% higher as investors bet that the
flow of cheap money from the Federal Reserve will be around for longer.
Analysts had been warning that the recent US government shutdown and long stalemate over the country's debt ceiling, which have only been resolved until January and early February, would cause the Fed to delay the start of stimulus tapering. They expect the Fed to wait for further signs of a sustained economic recovery before stating to withdraw the flow of cheap money to the economy.
"We think that the Fed is going to want to see the latest CPI data, which is released on the same day as the next FOMC meeting on October 30th," said Forex.com research director Kathleen Brooks.
UK stocks also moved slightly higher in the wake of the US number. Leading in to the US opening bell the FTSE 100 is up 0.5% at 6,685.65, the FTSE 250 is down 0.2% at 15,498.99 and the AIM All-Share is up 0.1% at 803.61.
Airlines are the biggest losers, with EasyJet leading the fallers on the FTSE 100, down 2.5%, and International Consolidated Airlines down 1.6%. The sector is suffering a read across from disappointing morning results from Lufthansa. The German airline revised its operating profit expectations down to be in the range of EUR600 million to EUR700 million for 2013, including one-off restructuring costs of 200 million euros and project costs of 100 million euros.
US retail sales numbers just released show an increase of 2.9% for the week ended October 19, although the numbers have been largely overshadowed by the payroll data. Still to come Tuesday, the Richmond Fed Manufacturing index at 1500 BST.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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International Airlines (IAG)
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