US employment numbers and European manufacturing data drives markets higher

Global markets made good gains overnight with the US leading the way as both the Dow and the NASDAQ increased by circa 0.7%. Positive sentiment was driven by robust private sector employment data.

However, the main focus will be on the non-farm payrolls figures that are released on Friday. If these are also strong market momentum could be sustained.

The Dow closed at 21,144 points, representing a gain of 135 points, while the NASDAQ was up nearly 0.8% to 6246 points.

On the geopolitical front, President Trump continued to ruffle feathers as he announced his decision to withdraw from the Paris climate accord. With the US being the world’s second largest emitter of carbon, Trump wants a policy that is going to suit the US rather than the rest of the world.

European markets were also robust with the FTSE 100 mainly trading in a tight band between 7540 points and 7560 points before closing at the bottom end of that range, representing a gain of 0.3%.

The index appears to be shaped on a daily basis by polling results leading up to the UK election with Theresa May still expected to win but by a much smaller margin than was the case when the election was called.

However, polling data leading up to the election has been inconsistent, and some polls still have May winning by a substantial margin. Polling data generally in the UK hasn’t inspired a great deal of confidence of late, failing for example to get the Brexit decision right.

Further strong manufacturing data for the month of May drove European markets higher as the DAX rallied 0.4% to 12,664 points. The Paris CAC 40 also performed strongly, increasing nearly 0.7% to 5318 points.

On the commodities front, oil rallied mid-session to move above the US$49 per barrel mark, but plunged late in trading to close at US$48 per barrel.

Gold came off nearly 0.6%, falling below the psychological US$1270 per ounce mark to close at US$1268 per ounce.

Base metals mainly finished in negative territory with nickel taking another hit as it fell more than 1% to US$3.98 per pound, a level it hasn’t traded at since June 2016.

Copper made a slight gain to close at US$2.57 per pound.

Zinc came off approximately 1% to close at US$1.15 per pound.

Lead’s fall was just shy of 1% as it sits just below the US$0.95 mark.

Iron ore continued its fall, losing another 1.8% to close at US$56 per tonne.

The Australian dollar continued its sharp decline, closing at US$0.737.

Some analysts are tipping a return to the circa US$0.72 levels December 2016, particularly if there is a break below US$0.734.

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