After a week of massive interest rate volatility, jobs data will put monetary policy in the spotlight today.
The US Federal Reserve rose 0.75% on Wednesday, pushing Wall Street’s expectations to a final peak. Today’s non-farm payrolls report is due to add 200,000 jobs in October, down from 263,000 last month.
The Bank of England rose 0.75% to 3% yesterday, but the pound weakened as policymakers outlook for softer rates than expected and warned of a two-year recession.
Covid speculation fuels Hang Seng, Pru 3% higher
Hong Kong’s Hang Seng index rose 5%, reflecting renewed speculation that China is taking steps to relax its tough COVID policies.
This led to gains of more than 3% for London-listed mining stocks and shares in Asia-focused insurer Prudential.
Hargreaves Lansdowne analyst Sophie Lund-Yates said: “China’s impregnable policies have caused a great deal of economic pain both inside and outside the country.
“Supply chain, manufacturing and demand have all come under very severe pressure. Any indication that some rules may be eased will be an immediate dose of oil to dent China’s economy. ,
“Outperforming” FTSE 100 Opens Higher
The FTSE 100 index has added another 0.7%, or 46 points, to build at 7234 in yesterday’s strong session, while the FTSE 250 index is up 0.4% more modestly at 18,187.
Richard Hunter, Head of Markets, Interactive Investor, said the UK stock market is a tale of two indices as the domestically focused FTSE 250 continues to bear the burden of a sluggish economy.
Hunter points out that the second-tier benchmark is down 23% so far this year, while the globally-focused FTSE 100 is showing relative resilience after falling just 2% so far this year.
He said the outperformance of the FTSE 100 was “driven by a mix of defensive and cyclical plays, with a particular weighting to the likes of oil majors, and where the average dividend yield of 4% remains an added attraction”.
DFS defies market gloom and appreciates ‘positive trend’ in consumer demand
Furniture business DFS today defined the industry’s dismay, saying that consumer demand had seen a “more positive trend” in recent weeks, although there was a significant softening earlier in the year.
The firm said it has increased its market share and expects earnings to be in the mid-range of analysts’ expectations.
Chief Executive Officer Tim Stacy said: “We are pleased to report that we have seen positive year-over-year growth since mid-September.
“While we continue to remain vigilant of the macroeconomic environment, we continue to take market share and our market-leading position, underlying scale and proven strategy give us confidence in future prospects.”
Average used car cost close to £18,000, almost 50% above pre-pandemic levels
The average price of a used car rose from around £180 to £17,587 in October, according to a market tracker run by AutoTrader.
From August onwards it rose to around £550 and ran for 31 months without a drop in prices. The growth comes as the secondhand car market benefits from increased demand from the pandemic and longer delivery times for new vehicles. Where there is a problem in the supply chain.
This left the average price up 47% from pre-pandemic levels.
Richard Walker, AutoTrader’s director of data and insights, said: “The market will not be immune to the current financial uncertainties, but there are a range of factors unique to the automotive sector that should set it apart from some of the macroeconomic disruption that we are tracking. There is no sign of a fall in average used car prices from that.”
Cars were also speeding out of the forecourt. It took an average of 25 days to sell old vehicles in October, which is one day faster than in September. Nonetheless, the number of ad views on Auto Trader’s Marketplace declined 4% year-over-year, but were up 14% from 2019, which was a more typical trading year.
Pound steady, focus on US payroll report
The pound has held steady above $1.12, falling 2% yesterday as the worst performer of the world’s major currencies.
The sharp fall comes after the Bank of England estimates that interest rates may not be in line with City’s expectations, unlike in the US, where the Federal Reserve raised Wall Street guidance.
A weaker pound boosted foreign earners on the FTSE 100, which closed 0.6% higher in a session when other global markets traded lower. In the US, the S&P 500 dropped 1% and the Nasdaq Composite 1.7%.
CMC Markets expects the FTSE 100 to open 40 points higher at 7228, but traders will focus on this afternoon’s monthly jobs report in the US.
September’s payroll numbers showed an additional 263,000 jobs and an unemployment rate of 3.5%. Hiring for temporary roles ahead of Black Friday means the labor market is likely to remain tight for the rest of the year, with the market expected to close October’s figures of 200,000 and a rate of 3.6%.
Credit: www.standard.co.uk /