In contrast to the tedious, indecisive mood of European markets, the FTSE 100 has actually managed to make further gains this morning, although they are of small magnitude. The quarter has hardly got off to a fantastic start for stock markets in Europe and the UK however, with the shortened week and the presence of US job numbers tomorrow.
Yesterday’s private payrolls and ISM data painted a much less optimistic picture on the US job situation, hitherto one of the few really strong parts of the American economy. Further bad news should push the timing of a Federal Reserve rate hike back, and this will be good for stocks, but for the moment investors are fretting about the news and not thinking about the potentially beneficial implications.
Shares in M&S rallied hard this morning, racing to the top of the FTSE 100 after it managed to post some actual growth in clothing sales after fourteen quarters of decline. ‘One swallow does not a summer make’, as the old adage has it, but investors have been keen to buy the shares in recent months and today’s news gives them a new reason. At just 18 times earnings, M&S continues to look attractive, especially since food sales remain robust.
Today’s US unemployment claims are the unsatisfying filling between the two meaty employment data points of ADP payrolls yesterday and non-farms tomorrow, so we could well see a further struggle for direction going on in the US. Having failed to hold overnight highs, US futures are lower, and ahead of the open we expect to see the Dow Jones open 37 points lower at 17,661.