Markets quiet as NFP looms

Heading into the close the FTSE 100 is up 15 points, but 17,000 on the Dow Jones is still an unfulfilled ambition.

US flag
Source: Bloomberg

FTSE above 6800

The FTSE has remained comfortably above 6800 for most of the day, and investors can be pleased with their work so far. Any bigger gain might have been viewed as irrational exuberance ahead of non-farm payrolls that would leave the index open to a nasty drop on Friday when US markets are out of the picture. Instead, quiet trading will now predominate with a little bit of deflation entering traders’ minds after the latest blow to British sporting hopes with the departure of Murray from Wimbledon.

Mike Ashley can rest a little easier tonight after he finally won his battle with Sports Direct shareholders – the combative retail expert has got his bonus at last. The Institute of Directors might warn about his unfettered powers but the success of his operation speaks for itself. Investors might complain, but so long as profits keep rolling in they are unlikely to decamp from the company.

US markets await NFPs

US indices are fractionally higher, and are stubbornly refusing to move into the red. But after a strong day yesterday, most are content to rest on their laurels and wait for non-farms tomorrow. ADP numbers were good, but this served more to reassure people than as a rationale for increased long positions.

17,000 is probably a bridge too far for now, but the pleasing round number is, given the recent performance of US indices, just a few days away. A speech from Janet Yellen provides an extra excuse to hold fire, although Ms Yellen can hardly be blamed if she chooses to stay tight-lipped on monetary policy. 

Gold meets heavy resistance

Gold’s latest attempt to hit $1330 is meeting heavy resistance, although it is undeniably positive that gold was able to hold on to its gains in the wake of a buoyant ADP report. Nonetheless, the major risk remains that gold will become vulnerable to short-sellers if tomorrow's non-farms are just as solid as their private-sector cousins.

Elsewhere NYMEX is fighting hard for $105, but found support after inventory data fell, indicating greater US consumption. Dip buyers have yet to materialise in NYMEX, but given previous patterns they should appear in due course.

Sterling moves higher 

A decisive rejection of the attempt to break through the 200-day moving average has seen EUR/USD fall today. However, this modest bout of dollar strength is taking place ahead of a speech by Janet Yellen that will likely provide little colour on interest rates. Once Ms Yellen sits down, the dollar will find itself friendless once again, while most traders wait for the non-farm payrolls tomorrow.

Sterling remains in fine form, leaping further today following the construction PMI from the UK. Service sector figures tomorrow are actually expected to be slightly weaker, so another good number could prompt some hurried buying of the pound in the morning.


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