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

UK 100 called to open +25pts at 6770 after bouncing off the floor of its 3-week falling channel at 6720. It’s becoming something of a range trader’s delight. Bulls are ever hopeful that this bounce will be the one that delivers a breakout beyond the channel’s ceiling at 6810. The Bears are, however, likely to merely pounce again, assuming yet another retrace is on the cards, this time to 6700. Updated watch levels: Bullish 6785, Bearish 6745.

A positive market open comes in spite of a mixed Asian session with investors failing to ride the coat-tails of muted stateside gains. Risk appetite is tempered as usual in the run-up to the latest US jobs report, but possibly even more so than usual given Fed clarity about data-dependency before the next US rate rise. The result of this afternoon’s US Non-Farm Payrolls could well dictate sentiment onto the weekend. This as markets continue to digest yesterday’s raft of mixed - in some cases surprising - manufacturing data that calls into question the quality of economic recovery around the world.

Japanese stocks are holding their heads above water thanks to a still weak Yen, even after yesterday’s surprise US manufacturing contraction sent the USD basket lower (normally a negative for the Japanese currency). Note Australia’s ASX underperforming, held back by telcos and financials. A depressed oil price remains a hindrance to the Energy sector but barrel prices are off their lows. Metals prices (Copper, Iron Ore, Zinc, Nickel) continue to recover thanks to the USD drop making them cheaper. Renewed confidence in China.

US stocks finished more or less flat, holding just above neutral following a rate hike negative ISM manufacturing data print with low volumes capping any upside ahead of this afternoon’s jobs report. Financials fell victim to yo-yoing rate hike expectations (could the data take September off the cards?), which shows just how little they have left to cling on to, while energy underperformed on tanking oil prices after yet more builds in US stockpiles - that compounded by the poor ISM print with its implications for near term demand.

Crude oil found some respite from recent price falls in Asia overnight as a slightly weaker USD helped commodity prices. However, note Russia playing down the need to limit output and a more hawkish US Fed keeping the door open to a September rate hike. Light volumes also not helping ahead of the Jobs Report.

The gold price has steadied after making a fresh 2-month low yesterday, with losses cushioned by a USD off its highs on the weak manufacturing data print. Note however that today’s US Jobs Report will move the yellow metal one way or the other...for about five minutes.

Last Word: The best way to win a stock picking competition is to pick the most volatile stock and hope for the best. In much the same vein, a ‘data dependent’ US Fed has picked Non-Farm Payrolls and is hoping… If we get a blowout number, it’s highly likely that we’ll get a rate hike before year end.

In focus today it’s thus all about US Non-Farm Payrolls and the state of the US Labour market given its potential to alter expectations for the timing of the next US rate rise, which has a significant knock-on for global risk appetite. However, it does depend on how markets read the data. Sometimes they like good data as a sign of US recovery, even if it does mean higher US rates. Sometimes they prefer to focus on it being a step away from the easy monetary policy they have become so dependent on. How fickle! Recent labour cost data suggested welcome inflation. Will average earnings show the same?

After yesterday’s surprise contraction in US manufacturing data, watch out for the potential for US ISM New York and US Durable Goods Orders to do the same.

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

• Mining project enquiries on the rise – Amec Foster Wheeler
• Ryanair says August load factor rises to 96 pct
• Gulf Keystone launches of scheme of arrangement for notes and bondholders
• SEGRO says Brexit has not yet had a material impact on operating business
• Segro to Raise £340m to Fund Development Program
• Asos says settles trade mark disputes
• BP's Dudley sees oil price at $50 per barrel for rest of 2016
• BP CEO says confident in continuous investments in Russia
• Oil heads for biggest weekly loss since mid – January
• London copper eyes steady week; lead, zinc extend gains
• Man Group reshuffles senior management
• Spectris Buys Millbrook Group For £122m
• McCarthy & Stone Enquiries, Reservations Since June 29 Fall; Cancellations Higher
• Go-Ahead FY Pretax Profit Rises