Stocks standstill ahead of job data

Equity markets are relatively quiet ahead of the US jobs report at 1.30pm (London time).

Data chart
Source: Bloomberg

Equities have eked out small gains ahead of the all-important non-farm payrolls report later today. Volatility will be low on the run-up to the announcement, and traders should be mindful to read all the data that is released in relation to the jobs report.

The financial markets usually have a knee-jerk reaction to the headline number, but the devil is in the detail and investors will be watching out for revisions to previous month’s number, along with the unemployment rate and the wage growth figures.

Equity markets in Europe are broadly higher as the summit in China to map out their five-year plan continued for its second day, which gave a small boost to Chinese stocks.

Talk of extra stimulus from Beijing and the European Central Bank are still doing the rounds and shorter need to be cautious. The FTSE 100 and the DAX are still in their upward trends, and bulls will be keeping an eye on 6200 and the 9850 region respectively.

Dallas Federal Reserve, president Robert Kaplan, stated the US central banks should be patient when it comes to raising interest rates. Mr Kaplan won’t become a voting member until 2017, but nevertheless his dovish stance helped cool the strength of the dollar.

EUR/USD has climbed on the back of the soft dollar but the downward trend is still in place. While it remains sub $1.10, the outlook will be bearish and $1.0894 and $1.0853 will be the levels of support to watch.

GBP/USD has had a good start to the put with disappointing purchasing manager’s index reports from the UK this week; it is clear the fear of a Brexit is starting to creep into the UK economy.

If the currency pair remains under $1.4235, a move south again can’t be ruled out and sellers will be looking towards $1.40.

Gold has continued to power ahead and it created a new one-year high this morning. Buying the dip continues to be a popular tactic for traders as the metal continues to push higher.

Gold’s strength which is running concurrently with a strong equity market is impressive, and while it holds above $1263 its outlook will be positive. The next big resistance levels in sight are $1274 and $1286.

The energy market continues to edge higher after US production dipped for the sixth week in a row, and it is now at its lowest level since November 2014.

Both WTI and Brent recently traded at prices not seen since early 2016. WTI bulls will be keeping an eye on $37 and buyers of Brent will be looking towards $38.

FTSE 100 risers and fallers (as of 09:30am) 

Company % change Index points
Glencore +5 +3.25
British American Tobacco +1.05 +3.01
BHP Billiton +4.26 +2.79
Rio Tinto +2.61 +2.51
Unilever +1.37 +1.97

 

Company % change Index points
Prudential -0.97 -1.29
Whitbread -2.66 -0.71
ITV -1.72 -0.58
Schroders -4.09 -0.49
Royal Dutch Shell

-0.18

-0.49


The day ahead

Economic data:

1.30pm – Canada trade balance (January): the deficit is expected to widen to C$ 0.9 billion from C$ 0.59 billion

1.30pm – US non-farm payrolls (February), average hourly earnings (February) and unemployment rate (February): non-farm payrolls: expected 195,000, prior 151,000. Average hourly earnings: MoM expected 0.2%, prior 0.5%. YoY expected 2.5%, pervious 2.5%. Unemployment is expected to remain at 4.9%.

Corporate reporting:

No major companies are expected to release their figures

Sign up for our non-farm payrolls webinar which starts at 1pm.

 

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