7th Apr 2015 06:30
LONDON (Alliance News) - UK stock prices are set to open higher Tuesday as Europe returns from the long Easter break and gets the first chance to react to Friday's lower-than-expected US nonfarm payrolls number.
Employment in the US rose by much less than expected in March, according to a report released by the Labor Department on Friday. The report said non-farm payroll employment rose by 126,000 jobs in March following a downwardly revised increase of 264,000 jobs in February. Economists had expected employment to increase by about 245,000 jobs compared to the addition of 295,000 jobs originally reported for the previous month.
Meanwhile, the Labor Department said the US unemployment rate held at a six-year low of 5.5% in March, unchanged from February and in line with economist estimates. In addition, average hourly earnings rose 0.3% month-on-month in March, slightly higher than the 0.2% consensus and February's growth of 0.1%.
The low number of jobs created in the US added further support to the view that a summer rate hike from the US Federal Reserve is unlikely, which gave US stock indices a boost on Monday but saw the dollar slip a little against its major currency partners. The pound is quoted at USD1.4915 and the euro at USD1.0935 early Tuesday.
However, Craig Erlam, senior market analyst at Oanda, says this job report was much better than markets are making out.
"It's been made clear for months now that job creation is not the issue and is not what is holding the Fed back. The US is at full employment. Wage growth and inflation are the bigger concerns and this report was positive on both of those points," Erlam says. "Higher wage growth increases inflation pressures and a higher than expected hourly earnings figure of 0.3% suggests we'll get just that."
IG indicates the FTSE 100 to open 36.3 points higher at 6,869.8. The index closed up 0.4% at 6,833.46 on Thursday before the long weekend.
On Monday, the DJIA and the S&P 500 both ended up 0.7% and the Nasdaq Composite closed up 0.6%.
In Asia Tuesday, the Japanese Nikkei closed up 1.3%, the Hang Seng is up 0.8% and the Shanghai Composite is up 1.6%.
Rio Tinto said it has completed the off-market buy-back tender of Rio Tinto Ltd shares, increasing the total buyback to AUD560 million due to strong demand. The FTSE 100-listed Anglo-Australian miner said the buyback, which was increased to AUD560 million from AUD500 million, was made at AUD48.44 per share, a 14% discount to the market price for Rio Tinto Ltd shares based on the volume-weighted average price in the five days of trading up to and including last Thursday
Flybe Group said it expects to report full-year results in line with market expectations following a return to growth in the final quarter of its financial year to the end of March.
The European regional carrier said it expects to be around breakeven on its adjusted pretax profit, excluding the GBP26 million cost of its Embraer E195 jets and any impact from US dollar loan revaluation. But the adjusted pretax profit would include the GBP10 million writedown on its Finland joint venture and the GBP6 million provision made on flight delays.
In the economic calendar, there are Markit Services and Composite Purchasing Managers' Index readings from Germany at 0830 BST, France at 0850 BST, and the eurozone at 0900 BST. UK Markit services PMI is at 0930 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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