UK

FTSE 100 makes cautious start ahead of US jobs numbers and amid international trade war worries

The FTSE 100 made a slow start to proceedings with traders keeping their powder dry ahead of US job numbers.

The monthly non-farm payrolls have been on something of a roller coaster since February, making the July data hard to guess.

The consensus is for 1.5mln people to have been added to Americas workforce, though the number could be half that, economists said.

Closer to home, pressure is growing on chancellor Rishi Sunak to extend the furlough scheme in order to stave off mass unemployment this side of the Atlantic.

The Bank of England warned on Thursday that the jobless total is likely to rise significantly between now and the end of the year, with output falling sharply in that period.

Adding the uncertainty on the market was Donald Trumps move to prohibit US firms from doing business with TikTok and WeChat due to national security concerns.

“Trumps growing attack on Chinese tech sent Asian stock indices lower on Friday, as the escalating tensions between the US and China also threatens the trade agreement that the two countries spent two years getting signed,” said Ipek Ozkardeskaya, analyst at Swissquote Bank.

Turning to the Footsie, Hikmas (LON:HIK) stock opened 7.3% higher after it raised the dividend (unprecedented these days) after a strong commercial showing off the back of increased coronavirus demand for its injectable products.

Rightmove (LON:RMV) jumped 4% after reporting a rebound in demand for its online estate agency services after an earlier government-enforced hiatus. Clearly, the cut to stamp duty is having the required effect.

A tepid start to the second half saw shares in the inter-dealer broker TP ICAP (LON:TCAP) fell 7.9%.

Lockdown worries haunted Cineworld (LON:CINE), which fell 5%.

6.50am: Dull end to the week expected

The FTSE 100 index is expected to open cautiously lower on Friday ahead of the release of US jobs numbers for July due this afternoon.

Simmering tensions between the US and China are also undercutting sentiment. According to spread betting quotes, the UK blue-chip index is set to open around 14 points lower at 6,013.

Traders have some news from China to chew on, where exports grew more than economists had expected in July.

China's exports were up 7.2% year-on-year after rising just 0.5% in June. Economists had pencilled in a 0.6% decrease for July. Meanwhile, Imports were down 1.4% from a year earlier after rising 2.7% in June; economists had expected growth of 1.0%.

“Looking at the details of exports by item, we see that there is an overall improvement in exports in July from June, not just medical supplies which had previously been the main contributor to export growth. Back in June, we already saw some monthly improvement in demand for textiles and garments. This July data shows that there have also been improvements in electronic parts, handsets, computers, clothing, and automobiles,” said Iris Pang, the chief economist covering Greater China at ING.

“But the jump in external demand in July may not last long because some Covid-19 clusters have emerged since late July, as caution was relaxed too early in some places,” Pang added.

US indices had a decent day yesterday after an iffy start, with the Dow Jones Industrials Average advancing 185 points to close at 27,387 and the S&P 500 rising 21 points to 3,349.

The official July US non-farm payrolls will be on investors minds today following Wednesday's ADP numbers, which showed that private payrolls increased 167,000 in July, well short of predictions of 1mln, indicating that US economic growth is slowing amid the renewed surge in coronavirus (COVID-19) cases.

After losing 22mln jobs between February and April as lockdowns forced businesses to close and lay off workers, before reopening through May and June allowed nearly 8mln of those jobs to come back, the US economy is still an almighty jobs deficit, according to the economists at ING.

“We are more cautious than the market though and look for a figure closer to 750,000 versus the current consensus of 1.5mln,” they said.

Markets in China this morning have been soft with Tokyos Nikkei 225 down 130 points at 22,288 and Hong Kongs Hang Seng 468 points lower at 24,463.

On the corporate news front in London, the big hitters today are Standard Life Aberdeen PLC (LON:SLA) and house listing site Rightmove PLC (LON:RMV) as well as final results from Hargreaves Lansdown PLC (LON:HL.).

Around the markets:

  • Sterling: US$1.3114, down 0.29 cents
  • 10-year gilt: yielding 0.109%, down 2.29 basis points
  • Gold: US$2,065.70 an ounce, down US$3.70
  • Brent crude: US$44.94 a barrel, down 15 cents
  • Bitcoin: US$11,775, down US$78

6.45am: Early Markets – Asia/Australia

Stocks in the Asia Pacific region were mostly lower on Friday as investors await several economic data releases for July.

In China, the Shanghai Composite was down 0.56% while Hong Kongs Hang Seng index dipped 0.55%. Japan's Nikkei 225 slipped 0.19% but South Koreas Kospi advanced 0.3%.

Shares in Australia dipped, with the S&P/ASX 200 shedding 0.34% after the nations central bank revised up the unemployment rate to a peak of 10% in December 2020.

READ OUR ASX REPORT FOR MORE INFORMATION

Proactive Australia news:

Pantoro Ltd (ASX:PNR) is raising $55 million in capital which will place the company in a strong financial position as it accelerates activities at its 50%-owned Norseman Gold Project in Western Australia.

MGC Pharmaceuticals Ltd (ASX:MXC) (OTCMKTS:MGCLF) hasRead More – Source