A green outlook for US?

Two weeks ago, US economic data showed that more jobs were created in June than in any month since October of last year. The headline number of 287,000 jobs was exceedingly strong. However, it’s important to recognise that previous months were quite weak. The picture is good but not great. That being said, it was a very solid report that goes ways towards making up for May's disappointing job growth. It also helps to relieve fears that US economic growth is slowing materially.

On Monday last week, the US equities also broke above the level last seen more than a year ago and hit a new all-time high. The big move comes just ahead of earnings season which may be an indication of positive sentiment by investors, to cause a break through that price ceiling.

The positive outlook in the US has been attributed to a number of things. For one, US economic data has improved markedly and suggests the economy is growing more strongly than many investors had expected. Also, the latest financial results of big US companies have shown that a higher than expected earnings.

The market is further supported by the fact that investors have generally been very cautious lately. One recent survey of investment managers suggested that these managers were holding more money in cash than at any time since 2001, rather than having it invested in equities. It might sound illogical, but all this cash on the sidelines can help equities move higher because investors that have put it aside for a rainy day often chase a stock market that’s performing well as they convince themselves that their fears were misplaced and so they put their cash to work again.

Weekly Closing Wrap

Equity Markets: The pan-European STOXX 600 was down by 0.1 percent while the similar FTS Eurofirst 300 was flat at the close. Banca de Sabadell lost 7.5 percent. The Dow Jones Industrial Average  was up 0.13 percent, at 18,540.52. The S&P 500 was up 0.3 percent, at 2,171.66 and the Nasdaq Composite was up 0.47 percent, at 5,097.85.

Currency Markets: The dollar rose 0.5 percent against its currency basket touching a high of 97.487, its highest since March 10. The euro  was last down 0.45 percent to $1.0975. Sterling was the biggest mover among major currencies. It fell 1.15 percent against the dollar to $1.3080. The dollar added 0.10 percent to 105.97 yen. The Australian dollar was down 0.52 percent at $0.7453 and New Zealand dollar was down 0.13 percent to $0.6987.

Commodities Markets: Brent was down 1.8 percent, at $45.37 a barrel.mU.S. West Texas Intermediate crude fell 1.8 percent, to $43.93. Both benchmarks were on track to a weekly loss of more than 4 percent.  Spot gold shed 0.5 percent to stand at $1,324.66 an ounce. Palladium lost 0.7 percent to $677.75, having touched its highest since late October 2015 on Thursday. Silver, which hit a near two-week low on Thursday, was down 0.6 percent to $19.63 an ounce, while platinum lost 0.3 percent to $1,095.00.

Treasuries: Benchmark U.S. 10-year Treasury notes were down 4/32 in price for a yield of 1.578 percent, up from 1.565 percent the previous session. U.S. 30-year bond prices fell 2/32 in price to yield 2.304 percent, up from 2.301 percent late on Thursday. U.S. two-year notes were down 1/32, yielding 0.714 percent, up from 0.69 percent late on Thursday.