Financials drive FTSE higher before payrolls release

Financial stocks drove the FTSE 100 higher and countered profit taking in the mining sector but most traders were waiting for the 1.30pm release of January US jobs data, which is likely to strongly influence how the FTSE closes out the trading week.

The FTSE 350 banking sector rose over 1% in early trading and this is where much of the FTSE’s early energy is being dictated from. By 11am, the FTSE 100 had rallied 0.5% to trade above key resistance levels to reach 5820.

We have seen general profit taking in mining stocks, with investors happy to take some gains off the table after a strong 48 hours trading that has seen the FTSE 350 mining sector rally over 7%. Rio Tinto, BHP Billiton and Fresnillo were three of a cluster of miners that fell as a result, whilst Xstrata and Glencore, who announced merger talks yesterday sending their respective shares higher by 7%-10%, have seen share prices settle down somewhat today.

All eyes now switch to the lunchtime reading of US jobs with payrolls growth expected to slow somewhat from December’s forecast beating numbers. After the Fed’s dovish pledge in their latest FOMC meeting, this may well have dampened expectations somewhat for a continuation of December’s bullish jobs growth numbers. As this jobs reading could well be aligned strongly with prospects for further quantitative easing, a weaker than expected reading could see any bearish stock market reaction limited in the medium term, whilst also potentially posing a double negative for the US dollar as a weak economic signal whilst also raising the potential for more QE.

BT Group’s shares saw support after the telecom firm reported third quarter results that broadly met market forecasts. Third quarter revenues fell 5% to £4.8bn whilst adjusted EBITDA rose 3% to £1.5bn and net debt fell by £1bn.

The firm continues to rely on cost cutting measures and efficiencies to help stretch profit margins at a time when sales are pressurised. One of the positives to take from today’s results is the fact that its broadband services continues to maintain a strong footing in the UK market, with 146,000 new retail customers added whilst 95,000 customers took up its faster BT Infinity broadband services.

The results sent BT shares higher by 3%, with prices hitting a new three-and-a-half-year high as a result.

Admiral Group shares topped the FTSE 100 however, with prices rising 7%, after the firm said it had extended its reinsurance arrangements with its UK car insurance until 2014. The share prices have charged higher due to the removal of uncertainty towards the renewal, whilst the fact that the costs of the extension is unchanged has also been received well by shareholders.