US unemployment figures feed of market optimism – Market Analysis

By: Miguel A. Rodriguez

09:45, 14 September 2020

US unemployment claims show progress

Stock markets continue to maintain their slightly positive tone after recovering most of their losses caused by the outbreak of the pandemic. 

US macro data

The problem to be solved now is unemployment, which has been mitigated by the governments with aid programs that need to be extended and increased given the extent of the economic inactivity situation. 

The figure published today Initial jobless claim has shown some recovery with 963K vs. 1120k expected, a decrease in applicants for unemployment benefits that could be the beginning of a comeback in the labor market. 

The employment figures, closely linked to those of consumption, will be the keys that indicate to the market what the state of the economy is and to which the stock markets will be very attentive.

Tomorrow is an important day of figures with the publication of Retail Sales for July and Industrial Production, both in China and in the United States. 

Above all, the Retail Sales figure will put us in context on how domestic demand evolves, which is the central hot spot to anticipate the development of the economy in these countries. The effect of social distancing and confinement on consumer behavior is still uncertain; it undoubtedly has depressive effects; the key is to know its intensity. 

For tomorrow, 1.9% (MoM) rise in July in Retail sales is expected in the United States, after a positive 7.5% last month. Any number higher than expected would serve as support and boost to the stock markets, mainly to the indices that contain more cyclical values such as USA500 or USA30.

USA500 is day by day approaching the reference level that is the 3400 area. From a technical perspective, it can continue its bullish moment and does not find any type of obstacle or intermediate resistance.


USA30 broke through intermediate resistance at 27627, reaching new highs since March this year and, like USA500, is heading towards all-time highs without encountering any relevant resistance in its path. 


Negotiations on the US fiscal stimulus package are at a dead-end at the moment. There is no news of progress in this regard. Still, it is an element that must always be taken into account since its approval in the terms initially presented (around 3 trillion dollars) would mean the definitive boost to the stock markets to reach and exceed the highs levels before the crisis. The possibility is still alive.


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