Fantastic Non Farm Payrolls spark equity surge

Joshua Raymond, Market Strategist at City Index commented: "European markets immediately reversed losses of 0.5% to post gains of as much as 1% after Non Farm Payrolls shocked the market to show a fall of just 11,000 payrolls, the smallest decline since the start of the US recession.

Non Farm Payrolls Shock

The Non Farm Payrolls number is quite incredible and it's a massive shock to the markets, but a fantastic one nonetheless. What it does is indicate that the US Jobs market may have taken a significant turn for the better and this can have much wider positive implications in other key sectors such as banking and retail.

The market had been expecting a decline of 130,000 but the fact that the decline was just 11,000 also suggests that maybe investors have been too conservative with their recovery aspirations and perhaps the economic picture is much better than we are currently anticipating.

Equities surge

Investors had been consolidating their positions in preparation of today's non farm payrolls and as soon as the figure was announced, investors rushed to buy back into equities on the optimism that the global economic recovery is now in full swing. The FTSE 100 quickly reversed losses of 0.5% to rally 70 points in a matter of minutes and this exemplifies just how much weight US jobs data has on the wider equity market.

Revival of Optimism?

The real question now is whether investors will use these gains as another opportunity to lock in profits or will the jobs data revive optimism that the economic recovery has been underestimated and push equity markets on further to end 2009 on an even greater high?

Much of this will depend on whether the FTSE 100 can break above 5400 and if we can carry this momentum, there is every chance we continue to the upside."

For more information, visit cityindex.co.uk.