Europe open: Stocks little changed as investors eye Yellen

European stocks were little changed in early trade as investors awaited a speech by Federal Reserve chair Janet Yellen as they look for further clues on US monetary policy after Friday’s dire payrolls report.

At 0845 BST, the benchmark Stoxx Europe 600 index was flat, Germany’s DAX was up 0.2% and France’s CAC 40 was 0.1% higher.

At the same time, oil prices rose as the dollar weakened after Friday’s dismal non-farm payrolls report pushed back expectations of the next Federal Reserve rate hike. Prices were also supported by attacks on Nigerian oil infrastructure.

West Texas Intermediate was up 0.8% to $49.03 a barrel and Brent crude was up 0.7% at $50.00.

“Commodity prices continue to rise after the weakest payrolls number for over five years on Friday caused the chances of an imminent US interest rate rise to collapse,” said Rebecca O’Keeffe, head of investment at stockbroker Interactive Investor.

“Janet Yellen's speech in Philadelphia this afternoon will yet again be a key focus for investors, but with the risk of a rate rise in June falling from 22% to 4% after Friday's employment figure, the major question is how the Federal Reserve positions the headline jobs number. With the US unemployment rate just 4.7%, one could argue that the US is close to full employment, but whether this is enough to allow the Fed to continue to maintain its more hawkish stance remains to be seen.”

Yellen is due to give a speech on the economic outlook and monetary policy at the World Affairs Council of Philadelphia’s luncheon at 1730 BST.

Societe Generale said: “Coming off last Friday’s employment report, Chair Yellen probably had some tweaking to do to Monday’s speech. The positive momentum seemed to quickly evaporate after a lowly 38K nonfarm payrolls print and a slowdown to the 3-mo average of payrolls to 116K from the 212K pace seen as recently as February.

“Given the Fed’s rhetoric about being data dependent, it seems that plans for a summer hike could be delayed. We will closely monitor Chair Yellen’s comments about the May employment report, as well as any comments regarding how she views global and financial risks now as compared to her dovish speech in late March.”

Other than that, there are no major events of note to look to on Monday.

In terms of sectors, basic resources racked up healthy gains thanks to a weaker greenback, with the Stoxx 600 sub-index for the sector up 1.8%.

Among individual stocks, Vodafone edged up after announcing the formation of a non-equity partnership in Zambia with Afrimax Group.

Low-cost airline EasyJet was a little weaker, however, after reporting a 5.7% jump in passenger numbers in May despite 173 cancellations due to French air traffic control strikes and weather conditions.

Earlier, data released by Destatis showed manufacturing orders in Germany fell much more than expected in April.

Factory orders slumped 2% in April from the previous month, which was a much steeper drop than the 0.6% economists had been expecting

However, the figures for March were revised to show a 2.6% increase, up from the 1.9% initial reported.

On the year, manufacturing orders were down 0.5%.