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LONDON MARKET EARLY CALL: Stocks seen flat ahead of US jobs report

Fri, 03rd Sep 2021 06:59

(Alliance News) - Stock prices in London are seen opening marginally higher on Friday as investors look cautiously ahead to US nonfarm payrolls data, which could have a bearing on the Federal Reserve's plans for tapering its monetary policy.

IG futures indicate the FTSE 100 index is to open 5.50 points higher at 7,169.40. The blue chip index closed up 14.06 points, or 0.2%, at 7,163.90 Thursday.

AvaTrade analyst Naeem Aslam said: "US and European stock futures are trading mildly higher as traders are going to take a very cautious approach ahead of this data. Generally speaking, there is a minimal volume in the markets ahead of this data as the action tends to happen only after the economic reading.

"Although it is generally expected that the upcoming US NFP number is likely to produce another set of strong readings. But at the same time, investors are also going to look closely at the impact of the Delta variant on the US economy."

In the US on Thursday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.4%, S&P 500 up 0.3% and Nasdaq Composite up 0.1%. Both the S&P 500 and Nasdaq finished at all-time high closing records.

The Japanese Nikkei 225 index was up 2.0%. In China, the Shanghai Composite was down 0.4%, while the Hang Seng index in Hong Kong was down 0.7%. The S&P/ASX 200 in Sydney was up 0.5%.

Japan's Prime Minister Yoshihide Suga said Friday he will not run for his ruling party's leadership, effectively ending his tenure and throwing wide open the race for the next premier.

The shock decision after just a year in office comes with Suga's approval ratings at an all-time low over his government's handling of the response to the pandemic.

Further, it suggests a possible return to political instability for Japan, which cycled through prime ministers regularly before the lengthy tenure of Suga's predecessor Shinzo Abe. Suga has been battered by his government's response to the pandemic, with Japan struggling through a record fifth wave of the virus after a slow start to its vaccine rollout.

On the economic front, the Japanese service sector witnessed a sharp contraction during August, figures from au Jibun Bank and IHS Markit showed.

The au Jibun Bank Japan composite purchasing managers' output index - which measures combined output in the manufacturing and service sectors - fell to 45.5 index points in August from 48.8 points in July. The continued contraction was led by the fastest fall in services output for 15 months, alongside a softer increase in manufacturing production.

Readings above 50.0 points signal an improvement in business activity on the previous month while readings below show deterioration.

Meanwhile, services companies in China signalled a renewed fall in business activity during August, as rising Covid-19 case numbers at home and abroad hurt operations and demand, Caixin and IHS Markit said.

The headline seasonally adjusted Business Activity Index fell to 46.7 points in August from 54.9 points in July.

The composite output index posted 47.2 points in August, down from 53.1 points in July, to signal a renewed fall in overall business activity across China. Though modest, it marked the first decline in output since April 2020.

The pound was quoted at USD1.3835 early Friday, flat from USD1.3836 at the London equities close Thursday.

The euro was priced at USD1.1880, up from USD1.1862. Against the yen, the dollar was trading at JPY110.02, firm from JPY109.98.

Brent oil was quoted at USD72.98 a barrel Friday morning, down from USD73.34 late Thursday. Gold was trading at USD1,811.15 an ounce, soft from USD1,812.03.

The latest US nonfarm payrolls report is due at 1330 BST on Friday. Ahead of the data, a host of services and composite purchasing managers' index readings are printed, including the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.

Friday's UK corporate calendar has annual results from emerging markets-focused asset manager Ashmore Group. PVC window, door, conservatory and roofline products manufacturer Eurocell posts interim results.

By Arvind Bhunjun;

Copyright 2021 Alliance News Limited. All Rights Reserved.

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