4th Apr 2014 06:42
LONDON (Alliance News) - UK stocks are set to open slightly higher Friday as investors take their positions ahead of the latest print of the highly anticipated US non-farm payrolls.
Both CMC Markets and IG indicate the FTSE 100 to open higher at approximately 6,662 points, having closed at 6,649.14 on Thursday.
However, with little to go by in the corporate calendar, and ahead of the keenly awaited US jobs data, early trading may remain in tight ranges.
The small gains are expected despite major US stock indices closing in the red on Thursday. The S&P 500 closed down 0.1%, having hit yet another intra day high in early trading, while the NASDAQ Composite closed down 0.9% and the DJIA closed fractionally lower.
Nevertheless, although Wall Street closed in negative territory, stocks pulled back from their lowest levels late in the session. "This is likely to see a slightly stronger European open Friday," says Michael Hewson, chief market analyst at CMC Markets
In Asia, ahead of the UK equity market open, the Shanghai composite index is up 0.6%, while the Hang Seng is down 0.2%, and the Nikkei in Tokyo has closed down 0.1%.
"Today will be dominated by the US labour market report as markets look for signs of a post-winter rebound," says Rhys Herbert, senior international economist at Lloyds bank.
On Wednesday, the US ADP employment report revealed that a total of 191,000 jobs were added to the US economy in March, while the February number was revised up to 178,000 from 139,000. Although economists had expected slightly more jobs to be added in March, with the consensus estimate of 195,000, analysts suggest the strong revision bodes well for the important US non-farm jobs report on Friday.
Alongside this, a strong employment component of the Institute for Supply Management's non-manufacturing purchasing managers' index on Thursday, despite a weaker-than-expected headline number, suggests improving US employment conditions.
"This has raised expectations of a much higher, above consensus, number," says Hewson, "with some estimates as high as 275,000."
Consensus expectations are for the print to reveal an addition of 200,000 jobs in all non-agricultural businesses in March, up from the 175,000 increase in February, according to FXStreet.com.
"This would be above last year?s monthly average of 194K, although after the sluggish growth seen in the last three months it would be surprising not to see some further ?catch-up? over the next few months as well," says Herbert.
The headline rate of US unemployment is released at the same time. Although the Federal Open Market Committee has recently altered its forward guidance on interest rates, dropping its 6.5% unemployment target in favour of a broader range of indicators, the forecast drop in the rate to 6.6% in March, down from the 6.7% posted in February, will still be of interest.
Average weekly hours and hourly earnings data are also released at 1230 GMT.
Already released Friday, the Deutsche Bundesbank has revealed that German factory orders rose in February. Germany's factory new order growth accelerated more-than-expected, advancing 0.6% from January. Economists had forecast orders to rise 0.1% in February, having climbing 0.1% in January.
Following the data, and ahead of the UK equity market open, the euro has moved a touch lower against its major rivals, trading at USD1.3696, CHF1.2229, and JPY142.266, while the pound trades at EUR1.2102.
In the corporate calendar, FTSE 100-listed easyJet has published its traffic statistics for March, while Flybe Group has released a trading statement.
By James Kemp; [email protected]; @jamespkemp
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