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Markets React to Disappointing Non-Farm Payrolls Report, FTSE 100 Ends the Week Higher & Crude Oil Hits $80

Markets shaken as Non-farm payrolls fall below expectations

Markets were left rather disappointed on Friday, as Non-farm payrolls failed to meet expectations for the second consecutive month.

After being expected to come in north of 500,000, figures from the Labor Department showed that payrolls rose by 194,000 in September.

The main contributor to the total was once again the leisure and hospitality sector, which added 74,000 positions last month.

💡 Is it a good idea to trade during news releases?
Trading news releases can be very profitable, but it is not for the faint of the heart. This is because speculating on the direction of a given currency pair upon the release can be very dangerous. Fortunately, it is possible to wait for the wild rate swings to subside.

Then traders can attempt to capitalize on the real market move after the speculators have been wiped out or have taken profits or losses. The purpose of this is to attempt to capture rational movement after the announcement, instead of the irrational volatility pervading the first few minutes after an announcement.

Despite the disappointing jobs number, the unemployment rate in the United States fell by more than expected, coming in at 4.8% versus the expected 5.1%.

Gold prices initially spiked by close to $20, hitting an intraday high of $1,781, before falling to a day’s low of $1,755.

FTSE 100 higher, despite weakening British consumer confidence

In the United Kingdom, the FTSE 100 closed the week higher, despite a survey showing that consumer confidence had fallen.

The survey, which was curated by the Bank of America, reported that confidence had fallen, as a result of inflation, which had surpassed the BOE’s 2% target.

In a statement accompanying the survey, Robert Wood of Bank of America said that “Our proprietary UK consumer confidence indicator continued to drop over the past two weeks, reaching the lowest since February on our 7-day moving average”.

💡 How can the consumer confidence report affect indices?
During an economic expansion, consumer confidence is usually high. Consumers accordingly tend to spend more than they do at other times, especially for bigger-ticket items and durable goods.

If for some reason consumer confidence declines, consumers become less certain about their financial prospects, and they begin to spend less money; this in turn affects businesses as they begin to experience a decrease in sales. 

Expectations have recently risen that there could be rate hikes in the UK, which helped Sterling to its strongest week against the Euro in the last 5-months.

London’s FTSE 100 closed 0.25% higher on the news.

Crude oil prices hit $80 per barrel

Prices of WTI crude rose to a 7-year high in today’s trading session, joining Brent, which also recently reached this feat.

WTI crude hit an intraday high of $80.17 per barrel, a few days removed from this month’s OPEC+ meeting, where the cartel opted to keep output unchanged.

This comes despite a surge in demand for energies, as we head into the winter, plus with bottlenecks in the supply chain disrupting the distribution of fuels.

As such, today’s climb in WTI prices was its highest since 2014 and comes on the back of the release of Non-farm -payrolls.

Markets will now wait to see if the Federal Reserve will begin to taper, or even push forward its rate hike schedule, to help quell rising consumer prices.

 “I always define my risk, and I don’t have to worry about it.”

– Tony Saliba

Eliman Dambell

Senior Market Analyst