Markets await ECB and NFP releases

The FTSE 100 has risen 20 points this morning, displaying a remarkable calmness in the face of non-farm payrolls this afternoon.

Mario Draghi
Source: Bloomberg

The big question today is whether a strong NFP reading is going to be treated as good news, signalling fresh gains for markets, or as bad news, with equity indices dropping back from their recent highs.

In all the non-farm excitement the European Central Bank has been somewhat overlooked, but this month’s meeting is not expected to match the excitement of June. Mario Draghi may well repeat his comment that the ECB ‘will do more’, but like the boy who cried wolf, he runs the risk of being ignored if he tries this tactic too often.

Sports Direct has risen to the top of the leaderboard this morning, in the wake of the successful conclusion to the Mike Ashley bonus saga. With this out the way, investors will be hoping he will focus his formidable skills back on the company’s sales performance.

Bargain hunters are back in the frame in the supermarket sector, looking to pick up shares in these embattled companies on the cheap. 

Traders are gearing up for an exciting afternoon, but for a really positive end to the day they will need to see not just an encouraging NFP number, but also an ECB that is still committed to fighting the dragon of deflation and is edging ever closer to embarking on quantitative easing.

Indices have marked time over the past 24 hours, as is normal before NFPs, so there needs to be lots of good news if we are not going to see another light-volume slump towards the end of the week.

Ahead of the open, we expect the Dow Jones to start ten points higher at 16,986.

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