London open: US data, more Fedspeak ahead

Investors are trying to sort the wheat from the chaff on Friday morning after a barrage of somewhat hawkish Fedspeak on the previous day weighed on markets.

That came as the S&P 500 was down by 2.7% from the intra-day high hit right after the release of the October US jobs report on 6 November. However, that move lower had come after a very sharp bounce back in stocks in October. Hence, the question on everyone's mind was whether weakness in stocks was reflecting economic weakness or not.

“Even the usually dovish Dudley suggested the conditions for a monetary policy normalization could soon be satisfied and the risks of acting too soon and waiting too long as nearly balanced. [That] clearly did little to ease the anxiety ahead of the December Fed meeting,” Jim Reid at Deutsche Bank pointed out in a research note sent to clients.

In parallel, oil futures had retreated by close to 14% from their early month highs. "Commodity weakness was perhaps also an ongoing reflection of the perceived sluggishness in China’s underlying economy," Reid added.

As of 08:47 the Footsie was fractionally lower, slipping 13.3 points to 6,165.38. Overnight, the Shanghai Stock Exchange’s Composite Index slipped 1.43% to hit 3,580.84 while Sydney’s ASX tumbled 1.45% to 5,051.25 on the back of falling commodity prices.

To take note of, according to the International Energy Agency global oil stocks hit a record near-3bn barrel by end-September. The developed world’s oil-watch dog also projected a slowdown in global oil demand in 2016 to a 1.2m barrel per day pace after an increase of 1.8m p/d in 2015.

Global oil supplies breached 97m b/d in October – levels which were deemed impossible to reach just a few year ago - as non-OPEC output recovered from lower levels the previous month, the IEA said. However, supplies from outside the cartel of producer countries will fall by more than 600,000 barrels per day next year.

Friday would bring with it a small barrage of US economic data on retail sales and consumer confidence, alongside two more Fed speakers, Loreta Mester and Richard Fischer.

“With the jobs hurdle now cleared, the next big test for the Fed will be the October retail sales report. The consumer is extremely important for the US economy and so far this year, it has been quite reserved, despite the boost to disposable income from lower oil prices. As wages pick up, we should expect to see spending pick up as well, the problem being that wage growth has been quite subdued so far,” commented Craig Erlam, senior market analyst at Oanda.

As of Thursday afternoon, Fed funds futures were pricing in a 66% probability of a Fed hike come the 15-16 December FOMC meeting, down a tad from the 70% seen last week.

FTSE 100: Brasilia slaps suspension on Anglo-Australian miner’s JV

BHP Billiton confirmed on Friday that there were nine fatalities at the incident at its Samarco Mineração SA joint venture with Brazilian miner Vale SA and said the operating licence for the mine has been suspended. In addition, four people previously unaccounted for have been found, while 19 people remain unaccounted for.

FTSE 250: Auto Trader races to the top

Second half earnings have been motoring at Auto Trader Group, seven months after the classifieds publisher listed. The company - which listed in March in a £2bn IPO - announced on Friday that revenue was up 8% on the previous period to £138.2m, with reported operating profit growing by 23% to £82.9m in the six months to 27 September. The firm’s basic earnings per share from continuing operations increased more than sixfold – from 0.95p in the first half, to 5.98p.

Industrial valve maker Rotork said orders were down 17% in the third quarter due to the slowdown in the oil sector, but was maintaining its full year guidance with revenue in the range of £530m-£555m and adjusted operating profit of £120m-£130m at current exchange rates. Revenue for the third quarter was 18.1% lower.

Housebuilding and construction group Galliford Try said it continues to see good market conditions in all of its businesses and remains confident of achieving its expectations for the current financial year. The company said its housing business, Linden Homes, has enjoyed improved rates of sale of 0.60 units per outlet per week since the start of the financial year, compared with 0.48 for the equivalent period last year, from an average of 75 outlets.

Russian gold and silver producer Polymetal said it was taking 100% control of the Lichkvaz property in Armenia. Polymetal said it had bought the remaining 75% of the property's holding company for 1.08m Polymetal shares equal to $9.7m or 0.26% of increased share capital.

Luxury shoe-maker Jimmy Choo announced the appointment of Elisabeth Murdoch - daughter of media mogul Rupert Murdoch - as an independent non-executive director. Murdoch is an executive and entrepreneur in the media and technology sectors.

Market Movers

FTSE 100 (UKX) 6,165.38 -0.22%
FTSE 250 (MCX) 16,847.27 -0.13%
techMARK (TASX) 3,058.24 -0.51%

FTSE 100 - Risers

Anglo American (AAL) 460.80p 2.42%
BHP Billiton (BLT) 897.90p 2.35%
Glencore (GLEN) 98.17p 2.35%
Rio Tinto (RIO) 2,274.00p 1.61%
Standard Chartered (STAN) 590.10p 1.37%
GKN (GKN) 283.20p 1.18%
Royal Dutch Shell 'A' (RDSA) 1,601.00p 1.04%
Royal Mail (RMG) 445.40p 1.00%
Royal Dutch Shell 'B' (RDSB) 1,610.50p 0.88%
Royal Bank of Scotland Group (RBS) 312.60p 0.84%

FTSE 100 - Fallers

G4S (GFS) 223.20p -5.50%
Rolls-Royce Holdings (RR.) 520.00p -3.08%
Hikma Pharmaceuticals (HIK) 1,902.00p -1.76%
Burberry Group (BRBY) 1,292.00p -1.60%
Shire Plc (SHP) 4,496.00p -1.55%
AstraZeneca (AZN) 4,017.00p -1.42%
GlaxoSmithKline (GSK) 1,316.00p -1.16%
Johnson Matthey (JMAT) 2,424.00p -1.06%
Intu Properties (INTU) 315.00p -1.04%
Reckitt Benckiser Group (RB.) 6,201.00p -1.02%

FTSE 250 - Risers

Just Retirement Group (JRG) 165.40p 4.03%
Auto Trader Group (AUTO) 380.30p 3.62%
Tullow Oil (TLW) 196.80p 3.52%
Premier Oil (PMO) 71.55p 3.02%
Northgate (NTG) 410.00p 2.37%
Weir Group (WEIR) 1,112.00p 2.30%
FirstGroup (FGP) 101.60p 2.01%
PZ Cussons (PZC) 308.10p 1.95%
CLS Holdings (CLI) 1,794.00p 1.93%
AO World (AO.) 159.00p 1.73%

FTSE 250 - Fallers

IMI (IMI) 871.50p -3.06%
Wizz Air Holdings (WIZZ) 1,808.00p -2.59%
DCC (DCC) 5,660.00p -2.08%
Just Eat (JE.) 425.00p -1.92%
Dunelm Group (DNLM) 923.00p -1.81%
B&M European Value Retail S.A. (DI) (BME) 328.60p -1.50%
Ultra Electronics Holdings (ULE) 1,832.00p -1.45%
Brewin Dolphin Holdings (BRW) 259.00p -1.45%
Thomas Cook Group (TCG) 109.70p -1.35%
Renishaw (RSW) 1,850.00p -1.33%