Jobs growth and trade talks drive US market gains
United States (US) equity markets gained last week, buoyed by a stronger-than-expected jobs report on Friday night and President Donald Trump’s announcement that US and Chinese officials will hold trade talks this week.
The trade talks began in London overnight and are ongoing, focusing on resolving disputes over tariffs, rare earth mineral exports, technology restrictions and student visas.
China appears to have approved increased rare earth exports, signalling goodwill, but no major tariff breakthroughs or comprehensive agreements have been confirmed. This leaves US equity markets, which are pricing in further de-escalation in trade tensions following the trade talks in Geneva last month, on edge.
US jobs report insights
Friday night’s much-anticipated jobs report revealed the US economy added 139,000 jobs, exceeding the 125,000-consensus expectation. However, the impact was tempered by a cumulative downward revision of 95,000 for the previous two months.
Meanwhile, the household survey showed the unemployment rate remained steady at 4.2% due to a decline in the participation rate to 62.4% from 62.6% previously. Without the fall in the participation rate, the unemployment rate would have risen above 4.5%.
Upcoming economic releases
- US consumer price index (CPI) report for May
- Producer price index (PPI)
- The preliminary reading of the Michigan consumer sentiment index for June.
Federal Reserve (Fed) speakers are now in the blackout period ahead of next week’s Federal Open Market Committee (FOMC) meeting.