LONDON (Alliance News) - UK stocks are expected to open higher Monday, following a higher close on Wall Street on Friday and strong trading in Asia overnight.
US equities closed firmly higher on Friday after the highly anticipated US non-farm payroll report for May came in broadly as expected, and the US unemployment rate remained unchanged.
The non-farm payrolls report showed that the US economy added 217,000 jobs in May, just 1,000 fewer than the consensus expectation, while the April number was revised down slightly to 282,000, from its the very strong original print of 288,000. At the same time, the US Labor Department revealed that the headline rate of US unemployment remained stable at 6.3% over the month, beating economist expectations for it to tick up to 6.4%.
On Wall Street, the NASDAQ Composite closed up 0.6% Friday, while the S&P 500 and DJIA closed up 0.5%, ensuring that they both ended the day at record highs once again.
The US jobs data and subsequent strong performance by US stocks, combined with some upbeat data from China and Japan, has seen major Asian stock markets move higher Monday.
"China has started the week in promising fashion with an improved trade balance that saw exports improve and imports drop and has helped European markets look set for a higher open this morning," says Jasper Lawler, a market analyst at CMC Markets.
Data released over the weekend revealed that China's trade surplus increased to USD35.92 billion in May from USD18.45 billion in April. Economists had been expecting a surplus of USD22.60 billion. China's imports fell 1.6% year-on-year in May, down from the 0.8% rise posted in April, and below economists' expectations for a 6.1% increase. Exports rose 7.0% year-on-year, up from the 0.9% seen in April, and exceeding the 6.6% rise economists had been expecting.
Meanwhile, "the release of this morning?s Japanese GDP revision has only given investors more reason to be positive this morning," says Craig Erlam, a market analyst at Alpari.
Second estimates released by Japan's Cabinet Office Monday showed that the nation's gross domestic product rose at a faster-than-initially-estimated pace in the first quarter. GDP rose 1.6% quarter-over-quarter, bigger than the 1.5% growth estimated initially and the consensus estimate of 1.4% growth. The annualized growth of GDP was also upwardly revised to 6.7% quarter-over-quarter from 5.9%.
"What made this sweeter was that it was driven by capital investment, a sign that the message of Abenomics is getting through to the right people," says Erlam.
Ahead of the UK equity market open, the Nikkei in Tokyo has closed up 0.3%, while the Shanghai Composite index trades up 0.5%, and the Hang Seng is up 0.7%.
London's FTSE 100 is called to open modestly higher Monday, having closed at 6,858.21 on Friday. CMC Markets and IG indicate the blue-chip index to open up at around 6,872, while Alpari expects it to open even higher at approximately 6,879.
However, "the European session is shaping up to be a rather quiet one today," says Erlam. "A combination of bank holidays in France and Germany, and a lack of economic data providing any kind of catalyst, may result in yet another low volume day," he says.
Still to come in a quiet data calendar Monday, Sentix investor confidence data for the eurozone is released at 0930 BST.
In corporate news, ahead of the UK equity market open, AIM All-Share-listed Falkland Island Holdings has released full-year results.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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