News Column

MARKET COMMENT: FTSE To Open Flat After Post-Payroll Global Rally

July 3, 2014

Jon Darby



LONDON (Alliance News) - UK stocks are set to open broadly flat Friday, ahead of a session that promises to be relatively quiet compared to the excitement of Thursday, when a strong US jobs report sent equity markets around the world surging higher.


Thursday's data showed that US non-farm payroll employment rose by 288,000 in June, exceeding the consensus expectation for 212,000 jobs to be added. That means that over the past 3 months, job growth has averaged 272,000 per month, giving investors confidence that the US economy may well be experiencing the rebound that analysts have been expecting following the particularly harsh US winter. The strong report came hot on the heels of a strong ADP jobs number from the US on Wednesday.


"All the early optimism surrounding this week's US jobs reports turned out to be well founded with both jobs report posting strong numbers in June," said CMC Markets market analyst Michael Hewson.


The FTSE 100 reached a three-week high Thursday, closing up 0.7% at 6,865.21. Meanwhile the German DAX rallied back above the 10,000 level, and in the US, the DJIA rose through 17,000 for the first time ever.


US markets held on to their post-payroll gains, and both the DJIA and the S&P 500 closed more that 0.5% higher on Thursday at 17,068.26 and 1,985.44 points, respectively.


It also has been a broadly positive session in Asia overnight, with the Nikkei closing up 0.6%, the Hang Seng continuing up 0.2% and the Shanghai Composite fractionally lower.


The post-US payroll surge seems to have lost momentum, however, with US markets closed for the Independence Day holiday, and very little scheduled in the data calendar Friday. Futures markets indicate that the FTSE 100 will open almost flat.


European Central Bank President Mario Draghi managed to talk the euro down to about USD1.36 on Thursday when he reiterated a dovish message and kept interest rates on hold at their historic lows.


The euro remains under pressure early Friday, having just dipped below USD1.36 ahead of the equity market open in response to some disappointing economic data from the single currency region.


German factory orders fell by 1.7% month-on-month in May, reversing some of the 3.4% gain recorded in April. On an annual basis, factory orders grew at 5.5%, slowing from 6.3% in the previous month.


As well as the US remaining closed, and a very quiet economic calendar, there's also the matter of a quarter-final World Cup clash between France and German later this afternoon, for which half of Europe will likely be in front of a TV screen not long after the market close.


Easyjet flew 10% more passengers in June, compared a year before, according to its passenger statistics released prior to the open Friday, amid a relatively empty UK corporate calendar.







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Source: Alliance News


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