Markets Trade Sideways After Jobs Jump

Equity and commodity futures prices rocketed higher in the minutes following the 8:30am ET release of the US Employment Report from the Department of Labor, a positive surprise where 200,000 fewer jobs were lost than feared. Then after capturing the initial order flow that led to early gains in the first ten minutes, the enthusiasm died out as prices reversed hard for the next 35 minutes. After stunned traders backed off, the rest of the session saw low volume sideways action.

At the close, the DJIA (8,763.13 +12.89 +0.15%), S&P 500 (940.09 -2.37 -0.25%) and NASDAQ Composite (1,849.42 -0.60 -0.03%) were about flat.

The Toronto Composite (10,569.29 +92.05 +0.88%) and the Toronto Venture Board (1,137.99 +4.83 +0.43%) fared better.

Earlier Friday, equity prices were stronger in Austral-Asian markets except for Shanghai (2,753.9 -13.4 -0.48%). Japan’s Nikkei 225 (9,768.0 99.1 +1.02%), Hong Kong (18,679.5 +176.8 +0.96%), Aussie All Ordinaries (3,969.0 +36.5 +0.93%) and India’s BSE 30 (15,103.6 94.9 +0.63%) all made solid gains.

Then, the European equity bourses are lifting. The French CAC (3,339.05 Jun 5 +0.82%), German DAX (5,077.03 Jun 5 +0.24%) and UK FTSE 100 (4,438.56 Jun 5 +1.18%) all closed higher on the day, although with prices weakening into the close.

In US trading, the sectors that performed best were Industrials and Technology (XLI +0.85%, XLK +0.99%), while the commodity price-sensitive and financial stocks pulled the indexes down. Basic Materials (XLB -1.43%), Financials (XLF -0.88%), and Energy (XLE -0.82%) were hurt by Banks ($BKX -2.14%) and REITs ($DJR -1.29%), and Oil Services ($SOX -1.90% groups.

There were 44 Cara 100 company stocks that lifted, led by BHP (BHP +5.7%), Mobile TeleSystems (MBT +4.6%), Boeing (BA +4.1%), Nucor (NUE +2.6%), Amazon (AMZN +2.4%), and optionsXpress (OXPS +2.3%). The losers were led by precious metals companies Kinross Gold (KGC -6.6%), Silver Wheaton (SLW -5.3%), Buenaventura gold (BVN -4.6%), and Goldcorp (GG -4.4%). Applied Materials (AMAT -4.9%) and Brunswick Corp (BC -4.0%) was also weak.

The $USD closed sharply higher on the day (80.73 +1.30 +1.63%), which can be seen in the reversal in the Euro before the US Jobs Report (1.4185 +0.0007 +0.05% 07:18am ET) and then at the close (1.3961 -0.0217 -1.55%). Traders were asking what happened to gold dropping from 977.43 -0.08% at 07:31am ET to 955.70 -22.52 -2.30% at the 5pm close of spot trading, but they must have been blind to the action in the forex market.

In a volatile US bond market, the US long Bond ($USB 113.22 -2.67 -2.31%) got hammered for the second day in a row. The yields ballooned again, as follows for 30-year (4.656 +0.61 +1.33%), 10-year (3.862 +1.46 +3.93%), and 5-year (2.853 +2.92 +11.40%). Treasury bill yields moved sharply higher (0.180 +0.45 +33.33%). Traders were considering one of two scenarios for higher yields: (i) economic recession possibly coming to an end sooner than later, and (ii) higher risks in the market requiring a higher yield.

Spot (cash) market prices for precious metals Friday (i) pre-Employment data, and (ii) at the close, were as follows: Gold (i) (977.43 -0.79 -0.08% 07:31am ET) (ii) (955.70 -22.52 -2.30% 17:13pm ET); Palladium (i) (258.50 +8.5 +3.40% 07:17am ET) (ii) (252 +2 +0.78% 17:01pm ET); Platinum (i) (1285 +4 +0.31% 07:30am ET) (ii) (1271 0 0.00% 04:07pm ET); and Silver (i) (15.69 -0.16 -1.01% 07:31am ET) (ii) (15.2387 -0.6113 -3.86% 17:00pm ET). At 9:30am ET, spot silver was trading at about 15.15 and gold at 959, which shows how fast these prices sank following the boom in the $USD that followed the US Employment Report.
In fact, as noted in Friday morning’s blog, trading in gold and silver went crazy starting right at 8:00am ET, first straight up, then prices plummeted – even before the 8:30am ET report release time. It was as if some traders knew in advance of the data.

Dollar futures were lower and the Euro higher (1.4185 +0.0007 +0.05%) at 07:18am ET, but closed very much in the opposite direction, with the Euro collapsing (1.3961 -0.0217 -1.55%).

Crude Oil futures, which had been largely unchanged earlier Friday (68.85 +0.04 +0.06% 07:19am ET), closed down with the stronger $USD (68.440 -0.435 -0.64%).

US equity futures for the DJIA closed the week at 8762 (+32 +0.37%).

Comments

[KIT:]

www.adpemploymentrepor...

No suprise ADP report over 500k for MAY 2009

200K + is just some Green Shoot futilizer

Jun 08 12:36 AM

[cyclops:]

Jobs JUMP???!!! Birth/death model added 230k non-existent jobs to the total. Who believes that we added those jobs to construction and retail - Raise your hands!

Jun 08 08:39 AM