News Column

MARKET COMMENT: Wall Street Set For Muted Open Ahead Of Jobs Report

May 2, 2014

Jon Darby

LONDON (Alliance News) - US stocks are set to follow UK indices marginally higher Friday, with investors treading carefully ahead of the monthly US non-farm payroll report, due at 1230 GMT.

Futures trading suggests that the DJIA, the S&P 500, and the Nasdaq Composite all will open between flat to 0.1% higher.

The overriding story from the US over the first quarter has been the unusually harsh winter weather, which has led to a string of disappointing macroeconomic data and heavily downgraded earnings expectations for corporate earnings over the period. Most recently, the first reading of US GDP released on Wednesday indicated that the bitter weather almost stopped the economy dead in its tracks, with a print of just 0.1%.

The market is looking for activity to pick up now that the first quarter has finished, with the April US jobs report next up. The consensus expectation for 210,000 jobs to be added over the month, up from 192,000 in March. The headline unemployment rate is expected to tick down to 6.6% in April, from 6.7% in March.

First quarter US earnings continue to be in focus, with Chevron amongst the big names reporting Friday. The oil major is expected to announce earnings per share of USD2.51 on revenue of USD54.47 billion.

The results will follow Exxon, which reported better-than-expected earnings per share on Thursday on lower-than-expected revenue. Both companies raised their dividends on Wednesday before reporting any numbers, raising market expectations.

"The energy sector has been one of the best performing this year as investors have moved away from technology and other growth sectors," said CMC Markets market analyst Jasper Lawler. "Earnings growth from the majors will be needed for this trend to continue," Lawler says.

Pfizer may be back in focus following the news that it has had its increased bid for AstraZeneca rejected by the UK drug maker's board. Pfizer increased its offer to GBP50 per share from the original offer of GBP46.61 per share, but AstraZeneca said it still "significantly undervalues" the company and its pipeline revenue.

Pfizer will now have to either increase its offer further, walk away, or proceed with a hostile takeover attempt by approaching the AstraZeneca shareholders directly.

Pfizer shares are little moved in US pre-market trading, while AstraZeneca has returned to almost flat on the day after having lost almost 1.0% in early trade.

The UK indices as a whole are stable ahead of the US jobs report, holding on to small early gains. The FTSE 100 is up 0.2 at 6,824.22, the FTSE 250 is up 0.5% at 15,925.42, and the AIM All-share is up 0.2% at 825.82.

In the forex market, the dollar is a little firmer heading into the jobs number, although major pairs remain in a tight range. The pound is off the multi year high made on Thursday, currently trading at USD1.6870, while the euro trades at USD1.3860.

US factory orders data is also still to come Friday at 1400 GMT. Economists expect order to have risen by 1.5% in the month of March, slowing slightly from the 1.6% growth in February.

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Source: Alliance News

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