US open Tech rallies on US non farm payroll shock

US futures

Dow futures -0.07% at 34511

S&P futures +0.3% at 4213

Nasdaq futures +1.4% at 13788

In Europe

FTSE +0.5% at 7103

Dax +1% at 15333

Euro Stoxx  +0.4% at 4010

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Tech stocks soar as treasury yields drop on NFP miss

US futures point to a mixed start after a huge downside surprise in the US non-farm payroll report. The number of new jobs added in the US in April was just 266k well down from the 990k that was expected. The two previous months also saw a downwards revision of 78k jobs in total.

The unemployment rate unexpectedly rose to 6.1%, up from 6%. Expectations had been for a decline to 5.8%.

Meanwhile the average wages jumped 0.7% higher MoM in April, well ahead of the 0.1% forecast. This suggests that the lower paid section of the work force didn’t return to work in the way that was expected. This could be due to covid travel restriction in April or childcare issues if schools hadn’t returned.

One big miss is not necessarily the start of a new trend so more data is needed. With no Fed meeting in May, there will be another NFP before the FOMC in June.

Treasury yields have slumped to 1.52% as interest rate expectations ease. This has helped reverse the rotation out of growth and into value which had been in play so far this week. The Nasdaq is outperforming its peers, whilst the Dow which is more closely associated to value stocks in pointing to a softer start.

Earnings

Peloton trades +6.7% premarket after reporting a 135% increase in subscriptions in the quarter. The stocks tumbled 14% in the previous session after recalling its treadmills on safety concerns.

Beyond Meat trades -7% pre-market after reporting a wider quarterly loss than expected.

Where next for the S&P500?

The S&P is extending gains after pushing above its descending trendline and the 20 & 50 EMA on the 4 hour chart in the previous session. The RSI is indicative of further upside, in positive territory and pointing higher keeping bulls hopeful of fresh all time highs. On the flip side, the sellers need to break below 4120 to negate the near term current uptrend.

FX – US Dollar weaker after NFP

The US Dollar is tanking lower after the weak NFP numbers.

EUR/USD trades higher on the weaker USD and after data from Germany continues to impress. German industrial production came in ahead of forecasts in March +2.5% vs -1.9% in February. The data is the latest in a string of macros releases this week from the bloc which have come in ahead of expectations.

GBP/USD sees follow through buying after the BoE kept rates on hold as expected, but upwardly revises the growth outlook for the year. The BoE now expects the UK economy to expand by 7.25% this year, up from a previous expected 6.5%

GBP/USD  +0.4% at 1.3950

EUR/USD  +0.5% at 1.2129

Oil set for weekly gains

Oil is edging higher ending a week of strong gains. The black stuff is set to book gains of over 2% across the week, lifted by higher demand expectations as economies reopen and strong dsta from China.

China, the largest importer of oil saw the Caixin services PMI print at 56.3 whilst exports grew 32.3% YoY. With the economic recovery in full swing, Chinese energy consumption is rebounding.

This came following the strong US jobless claims numbers which showed that claims fell to the lowest level since the start of the pandemic.

US crude trades +0.06% at $65.10

Brent trades +0.1% at $67.96

Learn more about trading oil here.

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Looking ahead

21:30 Baker Hughes Oil Rig Count