US Non-Farm payrolls: What happened

Ishaq Siddiqi at ETX Capital fills us in on the market reaction:

"US payrolls just hit the tape and it’s a mixed bag but markets are responding by pushing higher into the black. The US created 175k jobs last month, more than the 169k expected by the market, so an encouraging headline reading. BUT, the unemployment rate edged up to 7.6% from the expected 7.5%, building the case for no immediate Federal Reserve tapering of asset purchases.

"The Fed have stated that the unemployment rate must edge down to around 6.5% before unwinding asset purchases so an uptick, as slight as it is, would indicate the US labour market remains in a fragile state and this buys liquidity addicted more time to reap the benefits of the loose money environment. The dollar jumps above Y96 in reaction to the report and US stock futures shot up. The DJIA is tipped to open around 45 points higher while the S&P500 up around 6 points.

"Closer to home, Europe’s markets have pushed higher on the US jobs report. Earlier, Germany’s stock market underperformed peers after the country’s Bundesbank cut growth forecasts for 2013 and 2014 but said the worst is over for the euro zone’s largest economy.

"Data from Germany wasn’t too bad today, with industrial output increasing for the third straight month in Aril and export data gaining momentum too back in April. Japan’s market fell overnight in Asian trade but pared session losses to trade slightly lower.

"The yen rose as a result, sparking Japan’s finance minister to say the government are monitoring the yen’s recent move but are unlikely to intervene to tame the currency’s recent strength. Japan’s GPIF earlier this morning provided the Nikkei with support which helped it close off session lows after adjusting the mix of domestic equities and bonds, raising equities slightly by just 1% and cutting bonds exposure by 7% .

"This however was a little underwhelming for investors who had hoped the GPIF would raise allocations for domestic equities more than just a meagre 1%. Traders will be eyeing next week’s BOJ policy meeting for further clarity on the recent events in Japan."