By James Langton
(June 2 – 09:00 ET) – Stocks are poised for a ferocious rally this morning after an extremely bullish U.S. labour report. The numbers confirm the view that the economy is slowing, rate hikes are biting, and that future hikes may be unnecessary.
The unemployment rate rose to 4.1% in May. Non-farm payrolls increased by 231,000, but that was all due to the hiring of temporary census workers. In the private sector 116,000 jobs were lost. As well, average hourly earnings declined US1¢.
Equity traders couldn’t have hoped for more, and the futures market exploded to the upside in frenzied buying that saw Dow futures up more than 200 points before settling back a little. Nevertheless a strong opening rally appears likely. The market was expecting 425,000 new jobs to be created with U.S. unemployment possibly slipping to 3.8%.
In Europe traders liked the numbers, too, but they were already in an up trend led by telecoms and techs. In France the CAC 40 is up 81 points to 6680. Germany’s DAX has gained 101 points to 7374. London’s FTSE is up 102 points to 6573.
In merger news Unilever NV has reportedly increased its offer for Bestfoods to US$20 billion. There’s an unconfirmed report that American Airlines and Northwest Airlines Corp. are in merger talks.
Japan’s biggets copper company, Nippon Mining & Metals Co., has called off its proposed merger with Japan Energy Corp., an oil refiner.
Asian markets rallied overnight on yesterday’s U.S. economic data. The Nikkei closed up 106 points to 16,800. The Hang Seng added 343 points to 15284.
There’s no major economic data out in Canada today, but the market doesn’t need it.