LONDON MARKET EARLY CALL: Stocks called lower ahead of US payrolls

(Alliance News) - Stocks in London are set to open lower on Friday, ahead of US non-farm payrolls later in the day, a key piece of data for understanding the nation's economic health, which may have an influence on the US Federal Reserve at its December meeting.

"This economic reading commands the most attention among investors and traders as the economic data set the trading tone for today and influences it for the rest of the month. As always, the Fed will watch this data very closely," said Naeem Aslam at AvaTrade.

IG says futures indicate the FTSE 100 index of large-caps to open down 12.69 points, or 0.2%, at 7,545.80 on Friday. The FTSE 100 index closed down 14.56 points, 0.2%, at 7,558.49 on Thursday.

The non-farm payrolls report comes a day after new data showed US manufacturing suffered a downturn in November.

The S&P Global US manufacturing purchasing managers' index fell to 47.7 points in November from 50.4 in October. Falling beneath the 50.0 no-change mark, it shows the sector is in contraction. The reading was largely in line with a flash estimate of 47.6, however.

"A combination of the rising cost of living, higher interest rates and growing recession fears have led to slumping demand for goods in both the home-market and abroad. Companies are consequently cutting production at a rate not seen since the global financial crisis, if the initial pandemic lockdowns are excluded," explained Chris Williamson, chief business economist at S&P Global Market Intelligence.

In the wake of the negative PMI reading, Wall Street ended lower on Thursday, with the Dow Jones Industrial Average down 0.6%, the S&P 500 down 0.1% and the Nasdaq Composite down 0.1%.

In early morning trade, the US dollar was mixed.

The euro traded at USD1.0529 early Friday, higher than USD1.0487 late Thursday. Against the yen, the dollar was quoted at JPY135.11, down versus JPY135.93.

Meanwhile, sterling was quoted at USD1.2236 early Friday, lower than USD1.2266 at the London equities close on Thursday.

UK retail footfall suffered a sharper decline in November, with rail strikes adding to a wall of worry for the sector, which will be hoping for a festive boost this month.

The latest British Retail Consortium-Sensormatic IQ monitor showed retail footfall slid 13% versus pre-virus levels last month, worse than the three-month average fall of just under 12%.

High street footfall alone fell 14% on three years ago, a worse outcome than the three-month average of just over 12%. In shopping centres, footfall was 23% lower, largely in line with the three-month average. In retail parks, the number of visitors fell 4.2%, compared to the three-month average of 2.7%.

"Footfall took another stumble as the cost of living crisis put off some consumers from visiting the shops in November. Others opted to stay home due to the scattering of rail strikes, or chose the World Cup over shopping visits. Many big cities were particularly hard hit, with Birmingham, Bristol and Manchester all seeing the biggest drops in footfall since January," BRC Chief Executive Helen Dickinson said.

In Asia on Friday, stocks were in the red. The Japanese Nikkei 225 index was down 1.6%. In China, the Shanghai Composite and the Hang Seng index in Hong Kong were both down 0.3%. The S&P/ASX 200 in Sydney was down 0.7%. 

IMF Chief Kristalina Georgieva warned that the chance of global growth dropping below two percent – last seen during the coronavirus outbreak and the global financial crisis of 2009 – is increasing as major economies slow.

Her comments come as the world's biggest economies grapple with fallout from Russia's invasion of Ukraine, which sent food and energy prices soaring, along with a surging inflation and a slowdown in China.

"The probability of growth slowing even further, falling below two percent was one-in-four," said Georgieva at the Reuters NEXT conference Thursday, referring to the fund's recent expectations for 2023.

Gold was quoted at USD1,799.20 an ounce early Friday, higher than USD1,796.43 on Thursday.

Brent oil was trading at USD86.95 a barrel early Friday, lower than USD88.89 late Thursday.

EU member states are close to agreeing a USD60 dollar per barrel price cap on Russian oil, with just Poland left to give the final nod.

Europe will begin enforcing an embargo on Russian crude shipments from Monday, so the price cap will apply to oil exported by sea by Moscow to ports around the world. 

In Friday's corporate calendar for London, there are half-year results from behavioural science firm Mind Gym and real estate investor Industrials REIT, and annual results from asset manager Premier Miton Group.

In the economic calendar, EU producer inflation figures are released at 1000 GMT before US nonfarm payrolls for November at 1330 GMT.

By Heather Rydings; [e-mail]

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