London open: Stocks start higher ahead of February US jobs data

By Alexander Bueso

Date: Friday 10 Mar 2017

London open: Stocks start higher ahead of February US jobs data

(ShareCast News) - Stocks began the morning with a small upwards push, tracking similar sized gains overnight on Wall Street, with traders looking towards official US non-farm payrolls data later on Friday.

At 0802 GMT the FTSE 100 was up 0.24% or 30.81 points at 7,345.77 and the FTSE 250 was 0.13% or 24.37 points higher to 18,195.91. The pound was near its recent lows, trading down by 0.12% to $1.2154.

Just as important for traders would be the reaction in US Treasury markets. Overnight, the yield on the benchmark 10-year US Treasury note had moved towards just under 2.61%. If that level were breached then this key interest rate for equity markets might be set to run higher, towards 2.80% or perhaps even 3.0% - a potential headwind for stocks and commodities.

"Calls for a positive open come courtesy of a flat finish on Wall Street that snapped a 3-day run of losses onto which Asian investors have latched for a positive end to their trading week ahead of a key US jobs report that could seal the deal on a Fed rate hike next week," said Mike van Dulken, Head of Research at Accendo Markets.

The US jobs report was set to be published at 1330 GMT.

Market consensus was for the US to have added 190,000 jobs in February after a gain of 227,000 in January and for a dip in the unemployment rate from 4.8% in January to 4.7%, alongside gains of 0.3% month-on-month and 2.8% year-on-year in average hourly earnings.

Fed hike already priced-in, but the US jobs data?

Analysts at UBS commented on how the recent rapid shift in near-term rate hike expectations Stateside had seen only relatively small moves in FX markets, while bonds had continued to trade within their recent trading ranges.

Indeed, Fed funds futures were already almost fully pricing in a 25 basis point rate hike in the US overnight rate on 15 March.

However, the risks that might be about to change were rising, UBS said.

For his part, SocGen's 'perma-bear' Albert Edwards weighed in a with a word of caution, saying: "Accelerated Fed rate hikes will cause tremors in the Treasury bond markets, forcing rates up, most especially in the two year - just like 1994."

Also on the economic calendar for Friday´s session were UK industrial production and foreign trade for January, with ONS scheduled to release both sets of data at 0930 GMT.

Friday evening would also bring with it Baker Hughes's latest weekly tally of US oil rigs, which might impact on already tense oil market trading.

Analysts positive on Aerospace&Defence

In terms of early broker recommendations, Berenberg sounded a positive note on the aerospace and defence sector.

Within civil aerospace, GKN and Senior remained "attractive value plays", the German broker said, adding that it remained 'Neutral' on Meggitt and Rolls Royce.

In defence it favoured BAE Systems, but it downgraded Ultra Electronics to a 'Hold' after a strong rally and despite the improved outlook. As for Cobham, it was too early to be overly bullish on the pace of recovery.

For their part, analysts at N+1 Singer weighed in with a 'Hold' on Spirent.

In UK corporate news, BT Group agreed to legally separate its Openreach infrastructure arm, under pressure from the regulator. The new Openreach will have roughly 32,000 staff transferred from BT, plus its own management, independent board and own logo, but still be within the BT group.

Amec Foster Wheeler on Friday said it it had won separate contracts in Brunei and Kuwait for undisclosed values.

Bookmaker and gambling operator William Hill announced the appointment of Philip Bowcock as chief executive officer on Friday, with immediate effect.The FTSE 250 company had appointed Bowcock as its interim CEO in July 2016, having previously been chief financial officer of the company.

Property developer Segro has bought the remaining 50% stake in the Airport Property Partnership joint venture it does not already own from Aviva Group Entities for £365m. The acquisition is to take advantage of the government's recent decision to build a third runway at Heathrow Airport as the company expects expansion in the medium to long-term for space around the airport.

Market Movers

FTSE 100 (UKX) 7,337.79 0.31%
FTSE 250 (MCX) 18,917.31 0.14%
techMARK (TASX) 3,459.59 0.30%

FTSE 100 - Risers

BT Group (BT.A) 339.95p 2.95%
Glencore (GLEN) 312.05p 1.64%
Hikma Pharmaceuticals (HIK) 2,143.00p 1.32%
BHP Billiton (BLT) 1,264.00p 1.16%
Royal Dutch Shell 'B' (RDSB) 2,204.00p 1.10%
Capita (CPI) 554.00p 0.91%
BP (BP.) 457.85p 0.85%
Wolseley (WOS) 5,005.00p 0.85%
Royal Dutch Shell 'A' (RDSA) 2,107.00p 0.84%
easyJet (EZJ) 982.50p 0.82%

FTSE 100 - Fallers

Fresnillo (FRES) 1,315.00p -2.95%
Randgold Resources Ltd. (RRS) 6,810.00p -1.80%
Coca-Cola HBC AG (CDI) (CCH) 1,918.00p -1.39%
Relx plc (REL) 1,537.00p -0.65%
Admiral Group (ADM) 1,898.00p -0.63%
Antofagasta (ANTO) 751.50p -0.40%
Worldpay Group (WPG) 286.40p -0.31%
Merlin Entertainments (MERL) 492.50p -0.26%
Unilever (ULVR) 3,992.00p -0.26%
Intu Properties (INTU) 281.50p -0.25%

FTSE 250 - Risers

JRP Group (JRP) 156.60p 4.33%
G4S (GFS) 295.10p 2.71%
Allied Minds (ALM) 408.80p 2.71%
Amec Foster Wheeler (AMFW) 480.90p 2.30%
Fidessa Group (FDSA) 2,567.00p 1.78%
Kaz Minerals (KAZ) 456.50p 1.78%
CYBG (CYBG) 271.10p 1.50%
Grafton Group Units (GFTU) 664.50p 1.37%
Tullow Oil (TLW) 246.50p 1.36%
Assura (AGR) 58.70p 1.29%

FTSE 250 - Fallers

Ibstock (IBST) 202.00p -4.67%
SEGRO (SGRO) 475.00p -4.35%
Domino's Pizza Group (DOM) 327.50p -4.24%
Halfords Group (HFD) 337.30p -2.43%
AO World (AO.) 146.20p -2.27%
Auto Trader Group (AUTO) 391.60p -2.27%
Euromoney Institutional Investor (ERM) 1,074.00p -2.10%
Metro Bank (MTRO) 3,350.00p -2.05%
Brewin Dolphin Holdings (BRW) 300.70p -1.67%
Polymetal International (POLY) 901.00p -1.37%


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