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Markets pensive ahead of NFP report

European equity markets are treading water, awaiting the latest set of volatility-stimulating US non-farm payrolls. 

City of London
Source: Bloomberg

Equity markets were boosted by the bullish optimism of European Central Bank president Mario Draghi yesterday, with indices rising as the euro sank. Now that a start date to the eurozone’s quantitative easing policy has been announced this could signal the start of traders refocusing their attention back to the UK.

The Budget is on 18 March, only a short distance away, and even more importantly the volatility that a hung parliament would bring – if no clear majority is achieved in May’s general election – does not appear to be being factored in by the FTSE yet.

This morning’s action has been considerably more lacklustre as US economic data looms on the radar and European traders take their foot off the gas. Although currency markets are still factoring in a third-quarter interest rate rise from the Federal Reserve, it is data like today’s non-farm payrolls that will need to convince in order for that timeline to avoid being pushed a little further down the road.

Speculation that Weir Group – the Scottish based engineering group – is attracting more than just admiring glances from US equity consortiums, who might be tempted to pay up to £28 a share, have seen the company jump to the top of the FTSE performers list this morning.

George Osborne appears to have been enjoying one of the investment communities favourite past times as he has embarked on some hindsight trading with the UK taxpayers’ position in RBS.

The appetite for European investments by Chinese funds continues to be strong as Fosun International has taken up a 5% stake in UK travel operator Thomas Cook, causing its shares to shoot 17% higher.

It is the first Friday of the month and once again European markets appear to be marking time in anticipation of the volatility that today’s non-farm payrolls figure might bring. US equity markets have not been as buoyant as their European counterparts over the last week, and a confidence-boosting set of good figures might be what they require in order to regain momentum.

Corporate data has been a little thin on the ground of late, but with next Tuesday’s annual Apple shareholders meeting likely to shed light on its outlook and plans for the rest of the year, this could be set for a boost in the near future.

Ahead of the open we expect the Dow Jones to start five points lower.

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