Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)

UK 100 called to open -10pts at 6525, back down around the lows of yesterday, but having recovered from a near test of 6500. The index remains in a sideways 6500-6580 shift into the end of the week that could yet prove the platform for another bullish push towards 7100. Bears point to falling highs since yesterday afternoon and potential for a breakdown inspired by risk-off sentiment into the weekend. The Bulls highlight 6500-6520 support and prospect of a bounce back towards Wednesday’s highs. Watch levels: Bullish 6545, Bearish 6495.

A negative opening call comes as Asian bourses post losses into the weekend as traditional monthly caution creeps in ahead of the US jobs report and investors gear up for the start of a US earnings season next week that looks likely to disappoint, again. A US inventory-inspired plunge in oil is also serving to hamper sentiment while global growth fears simmer post-Brexit and the UK tries to get its A in G on the political front.

Japan’s Nikkei is underperforming on the back of uninspiring macro data including labour cash earnings contraction (first time in a year) and sharp drops in the Eco Watchers Survey outlook while renewed strengthening in the Yen (unwelcome safe haven seeking) is also making things difficult for exporters. Australia’s ASX is just above holding its head above water, with the stronger US dollar impeding the commodity space and energy names taking a knock from oil price declines.

US equity markets closed on the negative side of mixed on Thursday (DOW -0.1%, S&P -0.1%, NASDAQ +0.4%). Light volumes ahead of today’s stupid Jobs Report and a tanking oil price are dampening bullishness. Amazing really, US Crude stockpiles deliver a smaller than expected drawdown versus API yet another drawdown nonetheless. The 7th week in a row, the longest run in a year, and look how markets react - there’s no pleasing some commodities.

We heard from Cleveland Fed Governor Mester late in the US session, who said the FOMC has time to weigh up its options concerning the next rate move. Well yeah, you’ve got all the time in the world Loretta... On the US economy, she said the fundamentals are solid while risks to the outlook are balanced. Yadda yadda, cup of tea.

Crude price weakness has seen Brent Crude break down out of its falling channel, intensifying the downtrend from 9 June highs while WTI managed to hold above the floor of its own descending trading range. A strong USD and global growth jitters are also likely to weigh on prices, which have hitherto been held up by simple supply/demand dynamics alone.

Solid resistance on Gold since 6 July sees the yellow metal near the apex of a narrowing pattern, with a break below $1353 potentially signalling a bearish head & shoulders top pattern that could see further declines towards $1325.

In focus today: the monthly US Non-Farm Payrolls is sure to take centre stage as it does each month. However, given the likelihood of a rebound from June’s plunge, the rest of the jobs report will surely be looked to more closely with Revisions, Unemployment rate, Wages growth and of course Participation Rate being more important in terms of the underlying trend for the US economy.  

The NFP number itself is unlikely to fuel Fed plans for a rate hike given the Brexit headwind, even if it does rebound very strongly (from 38K to its usual 150-200K averge), although another very weak figure would vindicate Fed Minutes that suggested fears about the US labour market, pushing out market rate hike expectations even further.

The UK Trade Balance is seen unchanged in May, again not really important given it was before the Brexit vote, although a UK Credit Rating change by DBRS might spice things up following the ratings downgrade by S&P and Fitch and the outlook cut by Moody’s.

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UK Company Headlines: (Source: Reuters/DJ Newswires)

• Hammerson Buys Dundrum with JV Partner Allianz Real Estate
• Petra Diamonds Limited Kimberley Ekapa Mining Joint Venture
• Unite Group Property Portfolio Valued at GBP2.15B
• IG Appoints Financial Chief