Market Commentaries 2018
The number of jobs created in the US over December came in at 148,000, missing analysts’ expectations of 190,000. Despite this, Novembers job creation figure was revised up to 252,000 which puts average job creation over the last quarter in the US at 204,000 and a total figure of 2.1m jobs created in 2017. Related employment figures shows the all-important wage inflation figure rising to 0.3% from November and 2.5% over this time last year. Markets focussed on the yearly employment figure as an indication the US economy is running close to full employment yet remained puzzled by the persistent lack of inflation. The dollar sold off on the announcement as markets began to cast doubt on three rate hikes for 2018.
After closing strongly last year global equity markets have continued to rally in the New Year with the broader US S&P 500 stock index (representing approximately 80% of the investible US equity market) making a new all-time high as it breached the physiological barrier of 25,000. Similarly, in Asia, Japan's TOPIX index hit a twenty-six year high following the release of positive manufacturing data. Optimism over the corporate tax cuts signed into law by President Donald Trump last month may have been a key driver for equity markets over recent weeks but strong underlying economic growth, both domestically in the US and internationally, combined with solid corporate earnings are also viewed as primary factors contributing to the rally.