London pre-open: October US jobs report may hold key to December FOMC

In Friday´s session all eyes will be trained on the latest US jobs report for October, which may hold the key to an interest rate hike - or not - at the 15-16 December meeting of the US Federal Open Market Committee.

Is the outlook for the American economy so strong that beginning to tighten monetary policy ever so slightly now is the best option, even in the face of loosening by its peers across the globe? That is the question.

Ahead of those numbers the Footsie was being called to start the day up to 12 points higher from Thursday´s closing value of 6,364.90.

Societe Generale said the US employment report this week will be critical in shaping market expectations for the December FOMC meeting.

“The average non-farm payroll gain in the previous six reports was 199,000, and in the past twelve reports was 229,000. The current consensus expectation for the October non-farm payrolls is 180,000 with the unemployment rate at 5.1%.

"A report with a headline number around 200K is likely to raise market pricing of a December rate hike, and pave the way to a further dollar advance," the French broker said.

Ironically, the October US jobs report will arrive one day after a dovish MPC meeting and minutes dashed many a trader´s hopes that Carney&Co. might be looking to prod markets into pricing in an earlier start to policy tightening.

The reason? Weakness overseas, centred on emerging markets. Yet at their 27-28 October FOMC it was precisely the reference to those risks that US rate-setters eliminated from their policy statement in a bid to keep all options on the table, amid heavy criticism of Janet Yellen.

“The average non-farm payroll gain in the previous six reports was 199,000, and in the past twelve reports was 229,000. The current consensus expectation for the October non-farm payrolls is 180,000 with the unemployment rate at 5.1%.

"Probably one between 150-180k might be the immediate sweet spot. We haven't eradicated slow down fears enough to revel in another weak number but with this week's strength in the dollar and renewed weakness in Oil and EM post-Yellen's hawkishness, a strong number would risk reinforcing these themes," pitched in Deutsche Bank´s Jim Reid.

Acting as a backdrop, first thing on Friday morning investors learned that German industrial production declined by an "alarmingly poor" 1.1% month-on-month in September, although upwards revisions to prior months´ data took some of the sting out of the numbers, Pantheon Macroeconomics said in a research note sent to clients.

Data on UK industrial production and visible trade in September were set to be released in September, courtesy of ONS, at 09:30GMT.

Pharmaceuticals still on shopping binge

Pharmaceuticals giant AstraZeneca has agreed to buy California-based ZS Pharma for $2.7bn (£1.8bn) in cash. The Anglo-Swedish drug giant has agreed to pay $90 a share for ZS, which develops treatments for hyperkalaemia, a serious condition typically associated with chronic kidney diseases and chronic heart failure, as Astra said ZS represented a strong fit with its pipeline and portfolio in cardiovascular and metabolic disease.

Inmarsat’s third quarter revenues have been given a large boost thanks to its new aviation division. The FTSE 100 satellite communications service provider posted its results for the three months to 30 September on Friday where total revenue for the quarter climbed 7.5% on 2014, driven by an $11.9m (£7.8m) increase in aviation revenues.

The bursting of a tailings dam at a mine part-owned by BHP Billiton in Brazil's Minais Gerais region is thought to have left at least 15 people dead and almost 50 missing in the resulting mudslides. The Germano iron ore mine is operated by Samarco Mineração, a joint venture of which BHP Billiton and Vale both own 50%.