London pre-open: Stocks to start lower ahead of busy data schedule

Stocks were being called to start lower as selling on Wall Street on the previous night night carried over into Friday’s session and ahead of a busy schedule on the macroeconomic front, both in the Eurozone and in the US.

Stateside, the latest readings on retail sales and consumer confidence would be in focus, while over on the Continent all eyes would be trained on the latest figures for Eurozone gross domestic product and international trade, alongside readings on consumer price inflation in Italy and Spain.

“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.

The above followed heavy selling over the previous sessions, albeit after October’s sharp bounce in stocks.

“There was a risk that last week’s US jobs report could have created more instability in emerging markets, given what we saw back in August. The jobs report not only dramatically increased the odds of a December rate hike, based on market pricing, but also of a second in relatively quick succession, possibly as early as August. So far, that doesn’t appear to have spooked investors which would be a big relief for the Fed,” Erlam said.

BHP Brazilian joint-venture’s mining licence suspended

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.

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.