Afternoon update

The weak dollar fuelled buying in commodities and natural resource stocks. 

London city skyline
Source: Bloomberg

The comeback in commodity stocks helped the FTSE finish on a positive note for once. Mining companies were in major demand in the UK, and across the pond the US markets are also being led higher by natural resources stocks. Wall Street shied and didn’t have the legs to reach 16,500 and the US 500 couldn’t crack 1930. Both markets have been broadly trading higher since the end of last month, but while the markets are below the high of February, negative moves can’t be ruled out.

Gold is still in its upward trend that has been in place since mid-January. The soft dollar is assisting the bulls, and the volatile swings in the equity and energy markets is making the safe haven even more attractive. Buying on the dip has been a popular strategy lately but traders are mindful of the US jobs report tomorrow. Gold has had a good run recently, but profit taking ahead of the NFP report is a possibility.

Oil surged after lunch as the weak dollar boosted the energy market. Brent didn’t quite make it to $36, and US light spent a brief amount of time north of $34, and now both markets are in retreat. The spike higher in oil this afternoon gives hope that the 2016 high will be retested, but the rapid decline that followed will keep traders cautious. 

FTSE 100 risers and fallers

Company % change Index points
Anglo American +19.95 +2.71
Glencore +15.97 +6.20
Antofagasta +14.56 +0.75
BHP Billiton +10.79 +5.68
Rio Tinto +10.27 +8.24

 

Company % change Index points
AstraZeneca -6.10 -13.15
Coca-Cola HBC AG -5.57 -0.59
Imperial Tobacco Group -3.49 -4.85
Johnson Matthey -2.66 -0.48
Diageo -2.22 -4.05

Key events tonight

Corporate reporting

US: LinkedIn

The day ahead

Economic data

12.30pm – Reserve Bank of Australia statement: the statement will follow on from the interest rate decision on Tuesday. The relative strength of the Australian economy given the slowdown in China is likely to be mentioned. Market to watch: AUD crosses

1.30pm – US non-farm payrolls, unemployment rate, hourly earnings and trade balance (January): the consensus is for 190,000, compared with 292,000 in December. The unemployment rate is expected to hold steady at 5%. Average hourly earnings are expected to increase by 0.3% from 0.0% on a MoM basis but fall to 2.2% from 2.5% on a YoY basis. The trade balance deficit is tipped to widen to $43.2 billion from $42.37 billion.

Corporate reporting

UK: BG Group, Shaftesbury

US: Moody's Corp

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