European markets sap gains after poor US jobs data

Joshua Raymond, Market Strategist at City Index commented: "European markets sapped gains and turned into negative territory after Non Farm Payroll figures badly missed estimates.

Jobs data disappoints

The Non Farm Payroll figures were much worse than expected and it puts a bit of a bump in the road towards the US labour market recovery that had been hoped after November's strong reading.

However, November's reading was nudged up in today's report to a growth of 4,000 jobs and this has helped to minimise the negative effect of the December's reading on equities.

As soon as the jobs data figures were released, we saw a rush from investors to move out of equity positions and as a result European Indices lost ground with the DAX falling below 6000 and the FTSE falling below 5500. The key will be to see whether investors are optimistic enough to come back and buy from these dips to help the major Indices close above these levels, which would indicate that they may not been too disheartened by today's economic data and indeed we have already started to see elements of this.

Make no mistake, a stronger jobs market will be critical to the US economic recovery and this is why the jobs data is so important when investing in equities and why the markets have reacted to today's reading with a degree of volatility.

Dollar weakens

The US Dollar immediately weakened as a result of the jobs data also and this may help to increase demand for commodities in the short term.

Much of the recent US Dollar revival has been a direct consequence of November's fantastic jobs data and therefore with December's data really disappointing, the recent dollar gains could come under threat of consolidation."