Mike van Dulken, Head of Research at Accendo Markets, commented to clients this morning:
FTSE 100 Index called to open +5pts at 7425, up off yesterday’s late test of 7400 but with 7444 breached support turning resistance overnight, putting the index in a tight 45pt range for last session of the week. Bulls need a break above 7450, Bears a breach of 7390. Watch levels: Bullish 7445, Bearish 7390
Calls for a positive start are in contrast to the toughest day for US stocks since mid-August and another largely negative session for equities in Asia overnight. This despite the global bond market sell-off, which has hurt stock prices, showing signs of easing, even as we head towards what could be a strong US jobs report this afternoon. Will it be another case of good data is bad data?
Brent Crude Oil is off its $86.5 highs, which could jeopardize FTSE Energy breakouts (BP, Shell), although oil has held above $85 overnight. On the flipside, GBP holds its rebound vs USD and EUR which could hamper FTSE blue-chips sensitive to currency moves. Copper trades closer to the lows of a 2 week range and Gold flat which could keep Miners under pressure.
In corporate news this morning Unilever has succumbed to shareholder pressure, withdrawing its proposal to simplify its dual legal structure and shift its HQ from London to the Netherlands, which should leave it in the FTSE100. Brookfield Consortium (Brookfield, Peel, Olayan) is mulling a cash offer for Intu Properties.
Centamin Q3 production +27% QoQ (-25% YoY); mined and moved material ahead of expectations; ore grade improved; Cuts Q4 guidance by 5.9%. Rio Tinto and Hancock prospecting open new mine at Home Downs, Australia; Developing new deposit to sustain capacity at existing operation.
In a rare piece of positive news for the UK high street the FT reports BHS may be set for limited return, with its Qatari owners reaching a concession agreement with privately-owned department store Beales of Bournemouth which has shops in the South West of England.
Oxford BioMedica announces additional details of strategic alliance with Orchard Therapeutics. SolGold says results from latest drill holes at Ecuadorian Cascabel project are very encouraging. Motorpoint encouraged by recent trading but continues to closely monitor customer confidence in light of ongoing economic and political uncertainty.
In focus today is the US Jobs Report (NFP: Non-Farm Payrolls; 1.30pm) given the impact of recently strong stateside macro data by way of higher bond yields and weaker equities, especially after Wednesday’s ADP Employment report surprised to the upside (230K vs 185K est.).
Consensus is for 185K NFP job additions in September with Unemployment ticking back down to 3.8% lows. Wage growth may have slowed a touch (2.8% YoY vs 2.9% prev.), but all would remain supportive of further Fed rate hikes. Beware upside surprises adding fuel to the fire of inflationary expectations, sending bond yields even higher and equities even lower.
Before all that, FTSE Housebuilders may be influenced by Halifax House Price data (8.30am), with monthly growth forecast a smidge higher, although the annual pace of price increases likely slowed (3.3% vs 3.7% prev.). Confirmation of a UK Labour Productivity (9.30am) rebound in Q2 may also raise UK inflation expectations, helping GBP, in turn hampering the FX sensitive FTSE.