Global Equity pare gains as solid employment data fails to impress

Global equity markets drifted despite solid employment numbers from the US suggesting there is life in the US labour market yet.

As indices traded off their highs, investors seemed unimpressed by a fall in the unemployment rate for the third consecutive month. Much anticipation surrounded the non-farm numbers after yesterday’s positive Jobless Claims data, and although the numbers failed to beat expectations, the fundamentals pointed to an improving US economy as payrolls grew at the fastest rate since last May. Investors seem reassured if a little underwhelmed as yesterday’s solid move suggested decent employment numbers had already been priced in, hence the afternoon retreat.

Adding to the retreat has been investor’s locking in their equity gains from the last two days just in case the situation in Libya and the Middle East escalates over the weekend when the markets are shut. Notable increases in the prices of both Brent and Nymex crude oil has also weighed on equities in the afternoons session.
Investors in European insurers had reason to cheer as Aviva, Standard Life and Prudential all featured on the FTSE leader board as upgrades from a host of investment banks boosted sentiment in the sector. The positive sentiment didn’t extend to the banking sector however, which saw slight reversals after the last two days of gains; such risk sensitive stocks remain volatile as investors realign their positions heading into the weekend.
Although concern over geopolitical issues seems to have abated, the possibility of escalation over the weekend will check investors from becoming too bullish. The volatile situation in Libya and the continuing circulation of rumours of disruption elsewhere in the region will keep investors on their toes. Many oil experts have suggested that WTI could reach $110 dollars a barrel if it consolidates above the $100 mark, and such a move would surely be detrimental to global equity markets.
Despite equity markets actually posting gains since mid February, at the height of the Egyptian crisis, should the tensions spread to more vital oil producing nations such as Saudi Arabia, traders could expect to see a far more dramatic correction from a market spooked by the spiralling oil prices.

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