Traders consider signficance of unemployment drop

In mid-morning trading the FTSE 100 is down 60 points, as markets digest the latest UK unemployment figures.

All eyes will be focused on the Bank of England this morning, with Mark Carney delivering his speech on the state of the economy after this morning’s latest unemployment figures. The number has dropped again to 7.6%, continuing to creep towards that 7% target. Following the fall in inflation earlier in the week, today's unemployment drop takes on even more significance as the BoE barometers for interest rate change keep moving.

There has probably been a fair amount of congratulatory back-slapping going on at Sainsbury's HQ this morning, following the company’s announcement that first-half profits were up 7%, at the top end of expectations. The 35th consecutive quarter of growth for Sainsbury's means the tussle with ASDA over the number two slot is really heating up. Ahead of the important Christmas season, it is worth noting that online sales grew by another 15%. With this rate of growth, how long will it be before shopping at a supermarket becomes a very lonely experience?

With bigger IPOs such as the Royal Mail's earlier this year becoming more frequent, the London Stock Exchange has seen profits in the first half of the year jump by 6%. Energy supplier Scottish & Southern Energy has suffered a 12% drop in first-half profits, but considering that it has already increased average household bills by 8.2% it is likely to find sympathy in short supply.

This week’s jittery behaviour among European traders looks to have rubbed off on the US markets, as today could be the calm before the storm. Tomorrow sees US trade balance, unemployment claims and a speech from Janet Yellen. All these are capable of moving the markets, and in combination they are almost guaranteed to. Certainly those with a dovish mind-set have been cooing their approval, as the Fed’s chairwoman-in-waiting prepares to replace Ben Bernanke in early 2014.

In contrast to the spot market, demand for American physical silver has hit record levels. The US Mint has confirmed sales of US American Eagle silver coins of 40.2 million ounces - a new annual record.

Ahead of the open, we expect the Dow to start 15 points lower at 15,735.

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa 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. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.

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