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Stocks steady ahead of US jobs data

The FTSE 100 is still strong today after the rally yesterday, but we have seen a slight pullback from the bullish start to the session.

The rest of Europe is relatively quiet and is likely to stay that way until the US reports the non-farm payrolls report.

The Chinese services sector continued to grow according to the Caixin survey – the reading was 51.2, up from 50.6 in the previous announcement.

Shares in Lonmin plunged after the company stated it will delay publishing its full-year results until it completes its operational review.  The miner wants to get its house in order before it opens its books to the public. The company is undergoing restructuring, and doesn’t want to reveal its net asset position for fear it could breach one if its covenants. The market took this as a serious sign of weakness, and the share price is down 17.7%.

Carillion announced the hiring of Alan Lovell as a non-executive director. Mr Lovell has experience in helping companies turn themselves around – which is exactly what Carillion needs. The share price is up 1.6% today.

At 12.30pm, the US will release the non-farm payrolls report. The consensus is for a reading of 310,000 for the October report, and that compares with a drop a 33,000 in September. Unemployment is expected to hold steady at 4.2%. When it comes to the US jobs report, the devil is in the detail and the average earnings numbers will be closely watched. On a month-on-month basis, average earnings are expected to drop 0.2% from 0.5%, and on a year-on-year basis they are tipped to decline to 2.7% from 2.9%. Keep an eye out for revision to previous reports, as traders often get initially swayed by the headline figure.

EUR/USD is fractionally in the red this morning as the US dollar is a touch on the strong side ahead of the US jobs report. There are no major economic announcements from the eurozone today, so volatility is likely to be low until the US data is released.

GBP/USD is still suffering slightly from the dovish hike from the Bank of England (BoE) yesterday. The perception that UK interest rates won’t hike rates until well into 2018 is could keep the pound under pressure. UK services PMI in October was 55.6 vs 53.3 expected, which helped the pound edge higher.  

We are expecting the Dow Jones to open 30 points higher at 23,546, and we are calling the S&P 500 up 2 points at 2581.


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