FTSE treads water ahead of US Non Farm Payrolls

<p>The FTSE 100 largely treaded water in trading on Friday as investors awaited the latest release of US Jobs data in the shape of non […]</p>

The FTSE 100 largely treaded water in trading on Friday as investors awaited the latest release of US Jobs data in the shape of non farm payrolls at 1.30pm.

The FTSE 100 was trading flat by 11.40am within a tight trading range of just 19 points, which emphasises that investors are happy to sit on the sidelines this morning and wait to see which way the US jobs wind blows first, before assessing which positions to take ahead of the weekend break. 

Current expectations are for an increase in US non farm payrolls to 90,000 last month, after a very disappointing growth of just 69,000 jobs in May. Private jobs are expected to grow to 102,000 from 82,000 whilst the US unemployment rate is expected to remain flat at 8.2%.

If we get a strong jobs report, certainly above 100,000, we could see the UK Index bounce back above the 5700 resistance level, which could be important for the FTSE 100 in maintaining its upward trajectory. A weak report however could see investors in risk off mode, though as with previous weak jobs reports, sell off’s have recently been short lived as weak jobs could convince the Federal Reserve to act with more stimulus. That said, with the Fed recently extending Operation Twist until the end of the year, this may be a somewhat different reaction as the Fed have hinted that whilst there are more armoury in their bags to stimulate the US economy, Operation Twist remains the favoured method of choice for now. A weak jobs report may do little this time around to change that perspective.

The mining sector is the key drag on the FTSE so far in trading, with investors moving to lock in their gains after five days of consecutive gains for the FTSE 350 mining sector. The news yesterday that China has cut interest rates for a second month in a row helped to spark some increased demand for mining stocks but having seen the sector hit some near term resistance, investors have been happy to scale back some positions today.


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