Dow breaks 25,000 on strong macro data and oil prices leading energy stocks

Market Analysis /
04 Jan 2018

Donald Trump may or may not have the biggest nuclear button in the world, but his country does currently have one of the strongest equity indices. It’s the same old story for stock markets this afternoon as the Dow Jones has pushed to yet more record highs, this time breaking through the 25,000 level as another strong surge in oil prices, added to a strong ADP payroll print has pushed global equity markets higher. Its currently a brave trader who bets against the strength in stock markets over the short to medium term as the juggernaut rolls on.

 It was a strong reading across both the weekly and ADP jobs numbers today, which in fact has added to a day of macroeconomic beats with PMI’s also printing better than expectations. The ADP payroll, often used as a precursor to the Non-Farm Payroll and jobs report on a Friday came in at 250K vs the 190K we expected, the highest reading since March. If the strength of the number is to be replicated during tomorrows jobs report then a further move away from the 25,000 level on the Dow would be a given.

 The key thing about the Dow’s latest record-breaking move is to confirm the break of this psychological level by closing above it. Often we have seen breaks of levels such as this only for a retracement to happen as traders take profits. A close tonight above 25,000 would confirm the break and leave traders looking forward to tomorrows NFP reading, expectations are for a reading of 190K.

 European markets have been dragged higher by their European counterparts with energy stocks and Worldpay leading the gainers. WTI crude oil has jumped higher following big gains during yesterday’s session, closely followed by Brent crude. WTI is now very close to the $62.68 level which would be the highest traded level since May 2015, and some would say that it’s a sign that the OPEC output cuts are starting to pay dividend.

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