The results of the United States labor report for September far exceeded analysts’ expectations and they realized the strength of the US economy. Despite this, the stock market reaction was not favorable.
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According to the US Bureau of Labor Statistics, 254,000 additional jobs were created in non-farm payrolls in September, which represented a drop of one tenth in the unemployment rate, which stood at 4.1%.
In terms of salaries, average earnings grew 0.4% during the month, leading to a year-on-year increase of US$4. In contrast, the average number of hours worked per week decreased by one tenth and stood at 34.2.
“The data known today (yesterday) continue to point to activity that remains solid. The surprise in job creation was concentrated in private payrolls, and cyclical sectors continue to show good performance. The above, added to other recent data such as the upward revisions in growth and the savings rate, reinforces our conviction in the health of the US economy,” said Mauricio Guzmán, head of Investment Strategy at SURA Investments.
Reactions
However, the news of the improvement in employment in the North American economy was not necessarily well received by the main stock markets, because the robustness of the labor market reduces the probabilities of a new cut of 50 basis points at the next meeting of the United States Federal Reserve (FED).
The Dow Jones index, although it rose 0.48% in the first hours, closed with a drop of 0.94%, a similar behavior was recorded by the S&P 500 index (-0.96%) and the Nasdaq 100 (-1.17%).
This behavior also dragged down the local stock market, whose S&P/BVL Peru General and S&P/BVL Peru Select indices ended at -0.28% and 0.39%, respectively.
According to Sura Investment, fixed income markets reflected a general increase in treasury rates, due to the fall in the price of these securities.
DATA
Sura Investments recommended investment in risk assets, favoring variable income (stocks) over fixed income (bonds).
Regarding fixed income, it indicated that it continues with a neutral recommendation, considering that the 50 basis points expected in FED rate cuts for the remainder of the year are already incorporated into market prices.
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