US NFP Report Props up Europe

Friday afternoon, the investors were cheered when the United States released key labor data which showed their labor force added 287,000 new jobs in the month of June.

After the news hit the wires, all the major stock exchanges in Europe moved higher. In France, the CAC 40, rose 1.8 percent and the headline bourse in Germany rose over two percent. In the United Kingdom, the FTSE 100, lagged a bit finishing up around 0.9 percent while the FTSE 250 fared better closing up 1.75 percent to end the week.

Financial markets throughout Europe had been on a volatile rollercoaster the entire week as investors still digest the shocking vote that led to the Brexit. The United Kingdom has yet to enact Article 50, thanks to internal political strife and will probably wait until elections are held before proceeding. The EU would like them to make a quick exit. This will lead to further volatility the days ahead.

US NFP Surprises to the Upside

On Friday the non-farm payroll report (NFP) impressed as it showed the US economy added 287,000 jobs in June. Economists expected a print of 175,000. The unemployment rate came in at 4.9 percent, which was above expectations.

This report was key in light of the shocking slowdown in May, which was one of the reasons cited by the Federal Reserve (Fed) for leaving interest as is at their last policy meeting. They would watch the next NFP closely, but now the Fed has to contend with the shocking Brexit result which could give them further pause. This means rates could remain on hold a while longer. Investors still have hope for a hike before the end of the year, if they assume job data from now until then remains steady and consistent. This means a good and steady wage growth as well, which has been lagging a bit. There are also concerns over a shrinking force. Still this Brexit, not the NFP, could cause the Fed to unnecessarily delay tightening, causing undue stress on the economy and financial markets.