The FTSE 100 is expected to open modestly lower on Friday following Thursday’s strong session, as investors turn their attention to the latest US employment figures and their implications for Federal Reserve interest rates.
IG’s out-of-hours market indicated the FTSE 100 around 10.5 points lower shortly before 7 am, following Thursday’s 0.7% advance to 10,831.52.
The cautious start comes despite a strong overnight backdrop from Wall Street and gains across most major Asian markets, supported by easing concerns over an imminent US interest-rate increase.
Wall Street rallied on Thursday, with the Dow Jones Industrial Average gaining 624 points, or 1.18%, to 53,686.11. The S&P 500 climbed 1.06% to 7,747.71, while the Nasdaq Composite advanced 1.4% to 26,584.06.
Sentiment improved after Federal Reserve Governor Chris Waller indicated his decision at this month’s policy meeting would depend heavily on upcoming inflation data.
Waller said he would be prepared not to support an increase if inflation continued moving towards the Fed’s 2% target, helping ease some of the rate concerns that had driven government bond yields sharply higher earlier in the week.
Attention now turns to the US nonfarm payrolls report at 1.30pm BST.
Consensus forecasts point to the US economy adding around 58,000 jobs in August, following a reported 23,000 decline in July.
The employment figures will provide another indication of the resilience of the US economy, although next Thursday’s August inflation report could prove even more important in determining whether the Federal Reserve raises rates at its September meeting.
US Treasury yields edged higher early Friday after Thursday’s retreat. The 10-year yield stood around 4.76%, while the 30-year yield was approximately 5.24%.
Asian equity markets were predominantly positive. Japan’s Nikkei 225 gained 1.4%, Hong Kong’s Hang Seng jumped 1.8% and China’s Shanghai Composite added 0.2%, while Australia’s S&P/ASX 200 was broadly unchanged.
Commodity markets provided some relief following the sharp energy-price increases earlier in the week. Brent crude eased to around $95.56 a barrel from $96.83, while gold slipped to approximately $4,472 an ounce from $4,507.
Sterling was little changed at around $1.3533, while trading at approximately €1.1634 against the euro.
Alongside the US jobs report, Friday’s economic calendar includes UK construction PMI data at 9.30am BST, eurozone retail sales and Canadian employment figures.
