US stocks are looking to open higher on Friday, getting some positive read-through from the rapid jump in UK markets after a Conservative Party election victory that eased uncertainty at the prospect of a hung parliament or a business-hostile Labour government.
Trade data from China overnight was pretty horrible with exports and imports plunging again over the year, Asian equities responded well on the prospect for further government stimulus but the data doesn’t bode well for world growth.
The April US unemployment report will be front and centre of the agenda for Friday’s trading session.
US stocks peaked not long before the employment report in March which showed 295K jobs created in February and have remained range-bound since the disappointment in April of just 126K jobs created in March.
One data point doesn’t make a trend. Markets have been waiting for the April unemployment report to get a sense of whether March was an anomaly or a sign of things to come.
The Federal Reserve has forecasted that the weakness in Q1 was transitory and expects a pickup in the second quarter, its latest statement suggests it is willing to tighten policy once that recovery is born out in the data. The caveat is that should the US labour market remain weak, the Fed is data-dependant and will remain on hold.
The recent rally in the bond market
suggests a rise in inflation expectations; the Fed has long been forecasting a shift towards its 2% target. Depending on how closely the headline jobs number comes to consensus, average earnings growth could be the driver of market action as a key indication of inflation pressures and the timing of the next move by the Fed.
After a strong showing by Chinese ecommerce group Alibaba on Thursday, investor attention is switching to one its main competitors, JD.com which releases earnings before the bell on Friday. The Chinese online retailer beat both and top and bottom line earnings in the fourth quarter despite a deceleration in the Chinese economy. The shares
have had a strong 2015 so far but have corrected around 10% leading into the earnings report.
Futures suggest the:
will open 3 points higher at 2,091 with the
expected to open 41 points higher at 17,965 and the
16 points higher at 4,417.
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