FTSE 100 to open higher ahead of US jobs

(Alliance News) - Stocks in London are set to open higher on Friday, building on Thursday's gains, on the back of the Bank of England leaving interest rates unmoved, with eyes now turning to the latest US jobs report.

IG says futures indicate the FTSE 100 to open 37.7 points, 0.5%, at 7,484.23 on Friday. The index of London large-caps closed up 104.10 points, 1.4%, at 7,446.53.

"European markets saw their best one-day session in 3 weeks, with the DAX closing at a two-week high, helped by a combination of some solid earnings reports, and tumbling yields on growing optimism that central banks have hit peak rates, after the Bank of England followed the Fed in holding rates at current levels. US markets saw a similarly strong session, rising for the 4th day in a row, with the S&P 500 rising to a 2-week-high, while US 10- and 30-year yields falling more than 25bps in the last 2 days, reinforcing the idea that the rate hike narrative of the last 18 months is now in the rear-view mirror. Of course, this narrative will still need to be supported by the underlying economic data, and in the case of the US is likely to be subject to two-way risks given the continued resilience of the US labour market," CMC Markets analyst Michael Hewson commented.

According to FXStreet cited consensus, US nonfarm payroll growth is expected to have eased to 180,000 in October, from 336,000 in September.

In New York overnight, the Dow Jones Industrial Average surged 1.7%, the S&P 500 soared 1.9% and the Nasdaq Composite jumped 1.8%.

The pound was quoted at USD1.2207 early Friday, rising from USD1.2176 at the London equities close on Thursday. The euro stood at USD1.0633, up from USD1.0613. Against the yen, the dollar was trading at JPY150.27, down from JPY150.48.

Equities in Asia were on the up. The Shanghai Composite climbed 0.7% in afternoon trade, while the Hang Seng in Hong Kong jumped 2.8%. The S&P/ASX 200 in Sydney shot up 1.1%. Financial markets in Tokyo were closed Friday for Japan Culture Day.

China's services sector saw a marginal expansion in October, according to survey data on Friday, but overall business activity was stagnant.

The Caixin purchasing managers' index rose to 50.4 points from September's nine-month low of 50.2. Staying just above the 50-point no-change mark, it shows activity in the sector increased slightly.

"The muted increase in services activity was often attributed by panel members to relatively subdued demand conditions. Notably, overall new orders rose slightly and at the softest pace in ten months. However, there was a further improvement in foreign demand for Chinese services, with new export business rising at the fastest pace for four months amid reports of increased amounts of overseas visitors," said S&P Global.

The composite PMI, which measures manufacturing and services, fell to a neutral 50.0 reading from 50.9. On Wednesday, the manufacturing PMI had fallen to 49.5 from 50.6, indicating a renewed but mild contraction.

Brent oil was quoted at USD87.02 a barrel early Friday London time, up from USD86.38 at the European equities close on Thursday. Gold was quoted at USD1,986.76 an ounce, up from USD1,981.27.

"Oil prices slightly increased during early Friday trading, with West Texas Intermediate, the US benchmark, trading above USD82 after a 2.5% gain on Thursday. In addition to the risk-on bounce and declining Venezuela exports, we think some pre-weekend short covering drove the oil markets rally," SPI Asset Management analyst Stephen Innes commented.

Reuters reported that Venezuela's oil exports fell in October to fewer than 700,000 barrels per day, despite US sanctions being lifted. Venezuela holds the largest proven oil reserves in the world.

Friday's global economic calendar sees the US employment report at 1230 GMT and service sector PMI readings in the UK and the US at 0930 GMT and 1345 GMT.

By Eric Cunha, Alliance News news editor

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