LONDON (Alliance News) - UK equities are called to follow Asian and US stock indices lower Friday as investors await much-anticipated US jobs market data.
Stocks worldwide were dragged lower Thursday after a report from the US Commerce Department showed stronger-than-expected US third-quarter GDP growth. The report revealed that US gross domestic product rose by 2.8% in the third-quarter, from a 2.5% increase in the second-quarter, coming in ahead of economist estimates of an increase of 2.0%.
The strong figure, by dismissing signs that the US economy had slowed down through the end of the third-quarter, was seen by many as increasing the likelihood that the Federal Reserve may taper its USD85 billion-per-month asset buying programme in December.
Investor focus Friday shifts towards the health of the US jobs markets. A stronger-than-expected nonfarm payrolls report for October is likely to further increase the chance that the Fed will curb its asset-buying scheme. The data, scheduled at 1330 GMT, is expected to come in at 125,000, from 148,000 in September.
Separate US reports on personal income and spending and consumer spending, also are expected at 1330 GMT, will also provide a clearer picture on whether the US economy is resilient enough to withstand an early start to stimulus tapering.
Positive Chinese data released overnight has largely been dismissed.
China's trade surplus more than doubled in October, boosted by a stronger-than-expected rebound in exports, data from the General Administration of Customs showed Friday, suggesting that the economic recovery is gaining traction. The trade surplus jumped to USD31.1 billion in October from USD15.21 billion in September. Economists expected an increase to USD23.9 billion.
The country's exports grew 5.6% year-on-year in October compared with forecast for a 3.2% rise. For September, overseas shipments had fallen 0.3%. Imports grew 7.6% annually, faster than the 7.4% increase in the previous month, however slightly missing expectations of a rise to 8.5%.
The positive data will encourage Chinese leaders, gathering in Beijing this weekend for a key Communist Party meeting, to accelerate efforts to unlock another wave of economic reforms.
Ahead of the London open, the Nikkei trades down 1%, with the Hang Seng down 0.7%.
In the US, Wall Street closed lower Thursday. The DJIA closed down 1%, the S&P closed down 1.3%, and the Nasdaq Composite closed down 1.9%.
IG is calling the FTSE 100 to open lower at approximately 6666.0 points.
The euro is set for another volatile day Friday, having been hit Thursday on the back of the European Central Bank's rate cut and strong US third-quarter GDP growth.
Standard and Poor's has slashed France's sovereign credit ratings by one notch to 'AA', citing weak economic prospects and fiscal policy constraints.
In the wake of the decision, EURUSD and EURJPY were knocked, said CitiFX Wire's Nishtha Asthana. "The overall reaction however, is still muted," Asthana added.
However, the euro has been boosted in the aftermath of a strong German trade report. Germany's total trade surplus rose to EUR20.4 billion in September, compared to expectations for an increase of EUR15.5 billion.
Ahead of the UK equity market open, the euro trades at USD1.3410, GBP1.6101 and JPY131.632.
In Friday's data calendar, UK goods and total trade balance numbers are scheduled for 0930 GMT.
There has been a number of corporate releases ahead of the London open Friday. Blue-chip Rolls-Royce has been joined by FTSE 250-listed Hikma Pharmaceuticals, Bovis Homes and Tullett Prebon, amongst others, in releasing interim management statements. Rentokil initial has provided a trading statement. Merlin Entertainment has announced its IPO price.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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Hikma Pharmaceuticals (HIK)
Rentokil Initial (RTO)
Rolls-Royce (RR.)