The FTSE 100 has found enough support during the previous week to make its way towards its recent highs and actually took a step further and hit the 6,600 points barrier. It seems that the fuel added by Fed’s bullish comments over the US domestic economy was more than enough to sustain the momentum in the stock markets.
However an interesting development occurred last Friday and I believe it is worth mentioning it and also explaining the way that I think it will affect the stock market during this week. As we know the Non-Farm Payrolls report is scheduled for the first Friday of each month and on Friday it was time to find out how many jobs the US economy added during the previous month.
Analysts expected a robust printing this time, not as strong as the really impressing figures of the previous report but nevertheless traders were prepared for another encouraging NFP printing. However the actual numbers printed below expectations and it didn’t take long for investors to start wondering whether the US domestic economy can continue on the same path of growth now that the QE3 stimulus package is over.
We’re starting to see some evidence of these doubts during today’s session and it is my view that with the first NFP report of the post-QE3 era missing its mark the stock market might take a step back and wait for more data. I think that the week ahead will be marked by some consolidation at least until Wednesday.
During the first 2 days of the week the calendar is extremely barren but on Wednesday the Inflation Report from the Bank of England means that the FTSE 100 can pick up momentum towards either side so the safe bet would be to wait and see how bullish or otherwise the report will be before committing into any serious trades.
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