Caution prevails before non-farm payrolls

In mid-morning trade, the FTSE 100 is edging lower – down five points – as traders await non-farm payrolls this afternoon.

It’s been a busy week really; economic news, geopolitical concerns and tapering worries have all have been thrown at investors in one form or another, and although the FTSE 100 and S&P 500 have made some headway, the overall impression is one of extreme caution. With non-farm payrolls out today, this caution has only been heightened.

With little corporate news this morning traders have been left bereft, falling back on the current narrative that the British economy is showing some remarkable resilience at long last. Although off the highs seen yesterday, the pound continues its steady ascent against the US dollar, a trend that has persisted since mid-July. For the FTSE 100, it looks as if the recovery above 6500 has provided a floor upon which further gains can be built. Of course, a strong NFP reading this afternoon could reignite fears of tapering and undo all the good work of the past five days.

ADP numbers were a shade weaker yesterday, but we are still expecting a gain of around 180,000 for the month of August in non-farm payrolls. It would take a fairly poor reading to even hint that tapering might be delayed, but of course not so weak as to suggest that the US economy is not as strong as previously thought. Such are the delicate margins within which the US Federal Reserve has to work. Ahead of the open, we expect the Dow to start 15 points lower at 14,920.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.