Market snapshot: bulls prevailing for now

US markets ended the week on a firm footing as a weak jobs report lessened the likelihood of an interest rate hike from the Federal Reserve later this month.

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Set against expectations of around 85,000, just 29,000 jobs were added in September, compared to a revised figure of 133,000 for August. The 4.1% unemployment rate, which was estimated to remain unchanged, ticked moderately higher to 4.2%, and the combined surprise lessened the consensus for a rate rise this month to around 20%, although a December hike remains firmly on the table. Prior to the Fed interest rate decision, next week's Consumer Price Index will likely be the final deciding factor.

For Treasury yields, the news proved to be only a temporary reprieve. After initially falling, yields rebounded which in turn took equity markets away from their session highs, which had included a new record level for the Nasdaq.

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The larger concerns of spiralling government debt, which has been markedly shown in the likes of France over recent days, has led to a global bond market where elevated yields have become the norm. For smaller companies the issue is more acute, since they tend to rely more heavily on borrowing as they look to build their businesses, while in the US the housing market is in a state of disrepair given these higher implied borrowing rates.

Even so, the end of the week was one in which the bulls prevailed. Tech stocks rallied, including a rise in NVIDIA Corp (NASDAQ:NVDA) which had the usual disproportionate effect on its indices, while the likes of Advanced Micro Devices Inc (NASDAQ:AMD) also added around 3%, and a 2% rise for the iShares semiconductor index reflected the mood.

In addition, the oil price stabilised although remained around $101 per barrel after a report that the G7 had agreed to release 100 million barrels of oil from strategic reserves including a substantial amount of diesel within 20 days.

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One of the strongest pillars for the overall positive returns in the US market this year has been the extraordinary strength of earnings, which have both kept a lid on valuations and in turn supported share price growth.

After a stratospheric first two quarters, the imminent quarterly results season is expected to keep pace, with estimates suggesting earnings growth of around 29% which would result in the third consecutive quarter of an average number of 25% and above. While the season does not begin in earnest until next week when the major banks report, there is nonetheless a smooth path in as PepsiCo Inc (NASDAQ:PEP) and Delta Air Lines Inc (NYSE:DAL) both release numbers towards the end of this week.

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In the meantime, the Dow Jones has added 6.5% in the year so far, with the Nasdaq still testing its record highs with a 17% gain. The benchmark S&P500 is ahead by 12.8%, with the rise largely driven by tech, as evidenced by a lesser 8.7% spike for the S&P500 equal weight index.

BT Group (LSE:BT.A) was an early feature in the FTSE100 after announcing that it has agreed to acquire TalkTalk Telecoms and Platform X Communications from administration for an estimated cash impact of around £400 million and ostensibly to safeguard TalkTalk’s 1.5 million retail and 1 million wholesale customers. The news had a limited impact on the share price, however, and will add to the group’s to-do list where its clearly visible strategic runway is far from complete as BT aims for a transformation in cutting costs, boosting efficiency and providing more focus.

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More broadly, the primary index was off to a positive start, underpinned by a cautiously risk-on approach which was reflected by some strength in mining stocks, while the energy sector also received buying attention.

After a rocky few days which resulted in a net decline of 2% last week, the FTSE100 index is now some 4% away from its record closing high, although a gain of 5.5% in the year so far shows some underlying appeal as an alternative investment destination away from the racier indices elsewhere on the global stage.