FTSE LIVE: Market starts on the front foot with US jobs data to come later

| October 5, 2012 | 0 Comments

By
This Is Money Reporters

02:31 EST, 5 October 2012


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10:33 EST, 5 October 2012

16.00: A surprise drop in U.S. unemployment gave world markets a shot in the arm as hopes also mounted over the eurozone crisis.

In Septembers jobs data, non-farm payrolls added 114,000 jobs, in line with forecasts and private payrolls added 104,000, short of the 130,000 consensus.

The Footsie rose 0.8 per cent or 43.4 points to 5,871.2 after data showed the U.S. unemployment rate fell to 7.8 per cent in September – its lowest level since President Barack Obama took office and a key result ahead of the U.S. presidential elections.

The Dow Jones on Wall Street is up 60 points at 13,637, while indices across Europe also rose.       

Trading: Focus will be on monthly U.S. payrolls data, due at 1230 GMT today

Trading: Focus will be on monthly U.S. payrolls data, due at 1230 GMT today

The Cac 40 in France lifted 1.6 per
cent and Germany’s Dax was 1.3 per cent higher, also boosted after the
head of the European Central Bank reassured ailing countries that
emergency support was on standby.

Marcus Bullus, trading director at MB Capital, commented: ‘For the first time in 44 months, the unemployment rate has dropped below 8 per cent, a symbolic threshold over which the Republicans have repeatedly baited the President.

‘Job creation is powering ahead and unemployment is falling, even if there is continued weakness in America’s manufacturing sector. House prices are rising and consumer confidence has finally picked itself off the floor. The economy could be coming good just at the right time for the President; 0.2 per cent could be the fraction that gives him another four years in office.’

Joshua Raymond, chief market
strategist at City Index commented: ‘A dramatic set of jobs data out of
the U.S. gave both stocks and the dollar a knee jerk lift in trading
this afternoon with a surprising fall in the unemployment rate to 7.8
per cent.

‘The FTSE 100 pushed higher by 20 points in the immediate aftermath of the data release.

‘The improvement of the unemployment
rate does however pose a threat to the longevity of the Federal
Reserve’s recent $40billion monthly increase in asset purchases, which
Bernanke claimed would be open-ended until the unemployment rate comes
down.

‘But the big news is actually not
what happened in September, but indeed of the hugely positive revisions
made to jobs data for both August and July and the drop in the
unemployment rate. A whopping 86,000 jobs have been added to July and
August payrolls in a perplexing set of revisions. U.S. unemployment is
now at its lowest level since January 2009, which is a real surprise and
will undoubtedly give President Obama a lift.’

12.45:

The
tentative gains continued after the head of the European Central Bank
reassured ailing countries that emergency support was on standby.

The FTSE 100 index was 28.5 points
higher at 5,856 by mid-day as traders took heart in Mario Draghi’s
comments yesterday, in which the ECB boss said the euro was irreversible
but its recently unveiled plan to buy up government bonds was available
on request.

But
investors are still looking ahead to a key jobs report in the U.S. to be
released this afternoon, in which some analysts have forecast a slight
improvement in the figures. 

Barclays was the best performing
banking stock, rising 3.5p to 226p, but fellow bankers Royal Bank of
Scotland and Lloyds Banking Group were in the red with falls of 0.2p to
259.6p and 0.1p to 37.9p respectively.

Supermarket giant Tesco continued its
depressed run, sliding another 3 per cent, after revealing its first
fall in profits since 1994 – a 12 per cent drop to £1.7billion. Shares
fell a further 8.2p to 309.9p to the lowest level in more than three
months, despite the grocer’s attempts to reassure the market that its
turnaround plans were on track.

Meanwhile, FirstGroup continued to
suffer after having the carpet pulled from under its feet when the
Department of Transport scrapped its award of the West Coast main line
franchise to the transport group. Shares were down 3.2p at 197.4p.

10.20:

With
the Footsie hovering 12 points up on the morning so far, market analyst
at IG, Chris Beauchamp, commented: ‘The market has entered its usual
lockdown mode ahead of non-farm payrolls this afternoon. As we await the
key moment, it is worth reflecting on the situation in Europe.

‘After weeks of speculation we are
still no closer to knowing when Spain will finally take the poisoned
chalice and accept a bailout. Financial markets remain stuck in the
middle of a standoff between Madrid and the ECB; the bank will happily
lend assistance, but Mr Rajoy needs to ask for it, and he still seems
unwilling.

‘Perhaps only real pressure in the
bond markets will force his hand, and if he continues to delay then this
may become the only means of securing real action.’

09.45:

The FTSE 100 has made modest gains as traders await the publication of key figures from the world’s biggest economy.

The US non-farm payroll report is
expected to show little change from previous months, with the country
still unable to generate the level of new jobs needed to bring the
unemployment rate down. As the U.S. presidential elections loom into
view, the figures will be closely by the American public as well as
analysts.

The FTSE 100
was 17 points higher at 5884.8. but ETX Capital trader Markus Huber said
Europe remained the main sticking point for progress.

He added: ‘Even if the payroll
figures give markets a lift, some traders might still hesitate to fully
commit as long as uncertainty concerning aid for Spain is hanging over
the markets.’

In a session devoid of major
corporate news, miners made headway as Vedanta Resources lifted 32p to
1097p and Eurasian Natural Resources added 7.6p to 322.3p, a rise of 2
per cent.

Outside the top flight, shares in
business communications firm KCOM slid 7 per cent as it warned economic
uncertainty was continuing to result in delays in new business
investment decisions by customers. The stock fell 6.2p to 78.15p,
although the company has continued to perform in line with expectations.

08.30:

As expected the Footsie has started the day on the front foot, springing 19 points (0.3 per cent) up to 5,846.

08.00:

The
FTSE 100 index is seen opening 17 to 29 points or as much as 0.3 per
cent higher this morning according to financial bookmakers.

The
UK blue chip index closed flat at 5,827.8 points yesterday, shrugging
off an expected decision by the Bank of England to leave monetary policy
unchanged, but failing back slightly from the day’s high of 5,854
points.

Focus will be on monthly U.S. payrolls
data, due at 1230 GMT today, after recent indicators suggested the
American economy was picking up traction again, although it appears
still stuck in a slow recovery.

Jobs likely increased by 113,000 last month but the jobless rate likely ticked up to 8.2 per cent from 8.1 per cent in August.

Stocks to watch

RENTOKIL – The cleaning-to-pest
control firm rose on Thursday on various rumours ranging from a
£2.63billion, or 145p-per-share, private equity bid and that the company
might sell Citilink, its private postal business, according to various
newspaper market reports.

BAE SYSTEMS – EADS and BAE Systems
have edged closer towards winning political backing for a $45billion
merger amid positive signals from Britain and France, but German
misgivings over control remain a major hurdle, sources close to the
talks said.

Brent futures slipped below $112 per
barrel, but were on course to end a choppy week nearly flat as rising
tensions in the Middle East battle with perennial worries about the
global economy and oil demand.

UK CORPORATE DIARY:

JOHN WOOD GROUP issues a trading update.

KCOM GROUP issues a trading update.

ST IVES issues a trading update.

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