(Alliance News) - Stocks in London are set for a cautious start to Friday's session with focus on the latest US monthly jobs report.
"Today's key release will be the US labour market report, which will be important with respect to whether the Fed starts tapering in November as planned...In our view, new jobs around 300k or above will be enough for Fed to go ahead with tapering," said Danske Bank.
Analysts have pencilled in 488,000 new jobs in September, according to FXStreet, up from 235,000 in August. A better-than-expected result could bolster expectations of the Fed tapering its monetary stimulus, while a weaker one could heighten stagflation fears for the US economy.
IG says futures indicate the FTSE 100 index of large-caps to open 2.86 points higher at 7,080.90 on Friday. The FTSE 100 closed up 82.17 points, or 1.2%, at 7,078.04 on Thursday.
The US dollar was on the front foot ahead of the eagerly awaited labour market update.
Sterling was quoted at USD1.3604 early Friday, soft against USD1.3625 at the London equities close on Thursday.
The euro traded at USD1.1550 early Friday, easing from USD1.1566 late Thursday. Against the yen, the dollar rose to JPY111.91 versus JPY111.45.
Stocks in New York rallied on Thursday after the US Senate voted to stave off a credit default that would have sparked a recession and roiled world markets as Democrats and Republicans agreed to a stop-gap fix to raise the nation's debt limit.
The breakthrough – which temporarily defers the crisis by adding another USD480 billion to the allowable debt total – came with an estimated 11 days to go until the US would no longer have been able to borrow money or pay off loans for the first time in its history.
Rather than solving the crisis, the new arrangement kicks the can down the road to coincide with another major funding deadline – a shutdown that would kick in from December 3 when the government's coffers theoretically run out, closing federal services and properties.
In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average adding 1.0%, the S&P 500 0.8%, and the Nasdaq Composite 1.1%.
In Asia on Friday, the Shanghai Composite index was up 0.5%, after the market reopened from a week-long holiday in China, while the Hang Seng index in Hong Kong was flat.
Coinciding with mainland China's return from holiday, data on Friday showed the country's services sector showed renewed and strong increases in both new work and output in September, as a recent fall in domestic Covid-19 cases boosted market conditions.
The composite output index rose to 51.4 points in September from 47.2 points in August, to signal a renewed expansion of total Chinese business activity. The 50 point threshold is what separates growth from decline. Data indicated that the upturn was driven by a renewed increase in services activity, as manufacturing output struggled somewhat.
The Nikkei 225 index in Tokyo was up 1.6% and the S&P/ASX 200 in Sydney was up 0.9%.
Brent oil resumed its rally, trading at USD82.98 a barrel early Friday, jumping from USD81.76 late Thursday. Gold was quoted at USD1,758.42 an ounce, soft on USD1,759.45 on Thursday.
The economic events calendar on Friday has German trade data at 0700 BST and the US jobs report at 1330 BST.
The UK corporate calendar on Friday has interim results from online retailer N Brown and trading statements from electrical parts maker Electrocomponents and from tenpin bowling operator Hollywood Bowl Group.
By Lucy Heming; lucyheming@alliancenews.com
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