Stock markets rise as 4.8 million Americans back to work! What’s next?
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The June U.S. Non-Farm Payroll jobs report recorded a blowout month with nearly five million Americans returning to work. According to data from the Bureau of Labor Statistics this helped the headline unemployment rate drop to 11.1%. Global stock markets immediately moved higher on the news announcement as signs point to a broad based labor market recovery. But is it enough for stock markets to continue pushing higher? Let's take a look!
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<a href="https://admiralmarkets.com/analytics/traders-blog/june-non-farm-payroll"><img data-resize="auto" data-resize="auto" data-resize="auto" data-resize="auto" style="width:auto;" data-src="https://fxmedia.s3.amazonaws.com/articles/remote/dfe48e60e07e111348786e787e2c3b9d.jpeg" rel="" alt="June US Non-Farm Payroll"></a>
</p><h2>June's blowout jobs report</h2><p>
According to some analysts, hiring in June was strong in nearly every sector of the economy, with 34% of Covid-19 related job losses regained. While June saw nearly 5 million Americans returning to work, investors also cheered the upward revisions from May from 2.5 million to 2.7 million jobs added to the economy.
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However, some analysts point to the fact that the report doesn't account for the number of rising infections in the past few weeks and the reversal of some states and businesses to re-open. While more than 16 million Americans are still out of work, investors did cheer the better than expected drop in the unemployment rate from 13.3% in May to 11.1% in June. This also beat analyst forecasts of 12.4%.
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Immediately after the report the US dollar ticked higher against nearly all major currencies but the moves were muted. Bigger moves were seen in global stock markets with the positive tones also helped by news of drugmakers Pfizer and Gilead Sciences advancing in the race for a coronavirus vaccine. Both news announcements helped the S&P 500 stock market index to break through key resistance lines which now opens up some interesting trading opportunities.
</p><h2>How to trade the S&P 500 index </h2><p>
Below is the long-term, monthly price chart of the <a href="https://admiralmarkets.com/start-trading/contract-specifications/instrument/_sp500_" target="_blank">S&P 500</a> stock market index:
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<img data-resize="auto" src="https://fxmedia.s3.amazonaws.com/articles/remote/b85f035fa02b0191a7b7fbd4defac1c0.png" rel="" alt="MetaTrader 5 SP500 charts" />
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<em>Source: Admiral Markets <a href="https://admiralmarkets.com/trading-platforms/metatrader-5" target="_blank">MetaTrader 5</a>, SP500, Monthly – Data range: from 1 May 2005 to 2 July 2020, accessed on 2 July 2020 at 2:30 pm BST. Please note: Past performance is not a reliable indicator of future results.</em>
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With Admiral Markets UK Ltd, traders can speculate on the price direction of the S&P 500 index, among other markets by using Contracts for Difference (CFDs). This product allows users to trade long and short while utilising leverage. You can learn more in the '<a href="https://admiralmarkets.com/education/articles/forex-basics/what-is-cfd-trading-contracts-for-difference-explained" target="_blank">What is CFD trading?</a>' article.
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The combination of the better than expected June U.S. Non-Farm Payrolls report and advancements in the race for a coronavirus vaccine helped the price of the S&P 500 index breakthrough key levels of resistance, as shown in the chart below:
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<img data-resize="auto" src="https://fxmedia.s3.amazonaws.com/articles/remote/65f4660f575fdf3120fee150c5e430a4.png" rel="" alt="MetaTrader 5 SP500" />
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<em>Source: Admiral Markets MetaTrader 5, SP500, Daily – Data range: from 26 November 2019 to 2 July 2020, accessed on 2 July 2020 at 2:45 pm BST. Please note: Past performance is not a reliable indicator of future results.</em>
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In the chart above, the price action of the S&P 500 index has been contained in between a wedge chart pattern which is shown from the two black lines on the chart. Now that buyers have managed to break through the top level of resistance, traders will be looking for clues that they can hold above this level and build to the upside.
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Traders may look to the lower time frames such as the four-hour and one-hour chart to look for clues of buying strength such as higher high and higher low cycles or bullish momentum technical indicators. If buyers do remain in control, traders may be eyeing the previous swing high point as a potential target area which is around the $3,228 price level.
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Some key risks still remain such as the rising rate of infections which is slowing the reopening of many businesses and ongoing US-China trade tensions. For now, however, investors are focused on news that is getting the economy going again which the June jobs report shows. How will you be trading it?
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One way to help you is to download the Trading Central Technical Ideas indicator completely FREE by upgrading your MetaTrader 5 trading platform to the Supreme Edition provided by Admiral Markets.
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This indicator provides you with actionable trading ideas and technical analysis on a wide range of asset classes. To get it free, just click on the banner below and download it today:
</p><p><a href="https://admiralmarkets.com/trading-platforms/metatrader-se" target="_blank"><img data-resize="auto" src="https://fxmedia.s3.amazonaws.com/articles/MT5_SE_dark-2.png" rel="" alt="Download MetaTrader 5 Supreme Edition " /></a></p><p><em><strong data-redactor-tag="strong">INFORMATION ABOUT ANALYTICAL MATERIALS:</strong></em></p><p><em>The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:</em></p><p><em>1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.</em></p><p><em>2.Any investment decision is made by each client alone whereas Admiral Markets AS (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.</em></p><p><em>3.With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.</em></p><p><em>4.The Analysis is prepared by an independent analyst Jitan Solanki, Freelance Contributor (hereinafter "Author") based on personal estimations.</em></p><p><em>5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.</em></p><p><em>6.Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.</em></p><p><em>7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the</em><a href="https://admiralmarkets.com.au/risk-disclosure"><em> risks involved</em></a><em>.</em></p>
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