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European equity markets are largely higher this morning as traders await the US non-farm payrolls report at lunchtime. 

Equity markets in Europe have been pushing higher in recent weeks, and that trend is largely being resumed today. Momentum one way or another is likely to be subdued on the run up to the jobs report from the US.

International Consolidated Airlines Group announced a 75% rise in first-quarter operating profit, and revenue jumped by 2.1%. Passenger numbers rose by 3.4%. It was a solid set of figures from the owner of British Airways, and the group is still ‘considering its options’ regarding the potential takeover of Norwegian Airline. The share price is extremely close to its all-time high, so sentiment is clearly bullish, and should the positive run continue it could target 700p.

HSBC shares are in the red after the bank posted a drop in first-quarter profit that also came in below estimates. Profit dipped by 4% to $4.76 billion, which was below the $5.76 billion that analysts were expecting. The fall in profit was largely down to rising costs as the bank boosted its investment in retail banking in the UK and China. HSBC are still keen to ‘pivot’ to Asia, as China has the potential to overtake the US as the largest economy in the world.

The bank continued its capital returns to shareholders as it announced a share buyback scheme of up to $2 billion. The balance sheet remains strong despite the impressive capital returns, which will also be welcomed by shareholders. The stock has rallied over 12% in the past month in the run up to the figures, so expectations were high. The numbers were still broadly positive however, so the dip might attract fresh buyers.

EUR/USD dipped after many eurozone countries announced softer-than-expected services data. Germany, Italy and Spain posted services figures which missed expectations, and showed slowing growth. Today’s numbers highlight the soft patch the eurozone is going through, and could keep pressure on the single currency.  

At 1.30pm (UK time) the US non-farm payrolls will be announced, and the consensus is for 192,000 jobs to have been added in April. The unemployment rate is tipped to fall to 4% from 4.1%. Average earnings on a monthly and yearly basis are expected to rise by 0.2% and 2.7% respectively.

We are expecting the Dow Jones to open down 5 points at 23,925 and we are calling the S&P 500 flat at 2629.

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