Very Un-like Kim

Very Un-like Kim

FTSE 100 Index called to open flat at 7202, testing 7200 for support after breaking above 5-week falling highs resistance. Bulls need a break above 7230 overnight highs to convince of further upside. Bears require a break back below the aforementioned trendline – now around 7190 – for a retrace of the recent rally from 7070. Bullish 7230,Bearish 7190

Calls for a flat open come in spite of gains on Wall St and in Asia overnight as investors struggle to digest what was a busy night in terms of market drivers. These include the introduction of US metal tariffs (albeit with exceptions for NAFTA partners Canada and Mexico), China Consumer Price Inflation surging to a 4yr high (and credit growth cooling), and then the big one, North Korea offering an olive branch by pledging denuclearisation and Kim Jong Un and Trump agreeing to meet. All this ahead of the US jobs report this afternoon which may update market expectations on the trajectory of Fed policy normalisation with a knock on for currencies, commodities and equities on both sides of the Atlantic.

Corporate news this morning: Inmarsat Q4 revenues at top end of consensus, EBITDA misses but adj. EBITDA (ex-restruc,) beats, reduces annual dividend to 20c to preserve cash (3.1% yield vs prev 8% consensus), 2018 revenue guidance unchanged but CAPEX to stay at $500-600m through 2020.  SIG FY revenues +7.4%, like-for-like +3.8%, underlying pre-tax profit +4.3% (-9.8% excl. property), final dividend +2.4%; confident markets in EU, first signs of capacity & labour constraints, increasingly challenging UK, due to macro uncertainty and recent events in construction industry.

US equity markets closed higher on Thursday, despite the imposition of tariffs by President Trump, as key exemptions were granted to Canada and Mexico with Trump leaving the door open for other allies to receive exclusions. The Dow Jones finished 0.4% higher as Johnson & Johnson led risers, coming in just ahead of the Tech-heavy Nasdaq. The S&P 500outperformed with sectors lead higher by Utilities and Consumer Staples.

Gold has extended its decline from Wednesday’s highs as the US dollar rallied sharply from yesterday’s lows in reaction to Trump signing tariffs into law. This saw the precious metal break below week-long rising lows support at $1324, falling to a fresh 1-week low before climbing off session lows as the US dollar retreats from highs. Today’s US Jobs Report and its implications for the greenback will be key to Gold’s performance. Crude Oil benchmarks continued to retreat after Wednesday’s EIA inventories data, falling to fresh 1-week lows as the US dollar climbed in reaction to US tariffs being imposed. While both Brent and US crude benchmarks are trading off overnight lows, the former has so far been unable to regain a $64 handle, while the latter trades at support around $60.2.

In focus today will be the US Jobs report (1:15pm) and the always closely watched Non-Farm Payrolls print, as well as key Average Earnings metrics.

While ADP employment, the NFP curtain raiser on Wednesday, came in 40k ahead of expectations at 235k, today’s employment metric is expected just 5k ahead of last month’s 200k. However, after a hotter than expected Earnings print last month stoked fears that the Fed may need to hike rates faster and further to combat inflation, these figures will likely once again steal the headlines should anything other than a slight cooling from last month’s 0.2% monthly and 2.8% yearly growth.

Other data today includes UK Industrial & Manufacturing Production (9:30am), the former expected to return to growth following its worst month since late 2012, while the latter recovers from a 7-month low. At midday, the UK NIESR GDP Estimate is expected to see growth revised to 0.4%, while US Wholesale Inventories (3pm) are expected unchanged in January.

Speakers today include a triple helping of the Fed’s Evans (non-voter), starting on CNBC’s Squawk Box at 1:40pm before heading over to Bloomberg TV at 3:45pm, rounding things off at the Manhattan Institute Shadow Open Market Committee at 5:45pm, while colleague Rosengren (non-voter; 5:40pm) also speaks.

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