US jobs’ a good’un

US jobs’ a good’un

FTSE 100 Index called to open +20pts at 7245, extending Wednesday’s rebound into the new week and adding to Friday’s break beyond falling highs resistance at 7200. Bulls need to see a break above 7255 overnight highs to add to the uptrend. Bears require a breach of overnight lows and rising support around 7225 before any retrace. Bullish 7260, Bearish 7230

Calls for a positive open comes as Asian bourses echo Friday’s Wall St gains fuelled by a stronger than expected US jobs report inspiring confidence in continued US growth that can cope with further Fed rate hikes. Add to this a thawing in the North Korean standoff and the threat of US tariffs and an ugly global trade war eased, helped further by President Trump signalling willingness towards exemptions beyond neighbours Canada and Mexico. Note dual-listed Miners BHP and RIO up 2% in Australia overnight, thanks to USD weakness, although commodity prices are since off their highs. More M&A in Europe to keep markets interested (GKN/Melrose, E.ON/RWE/Innogy).

Corporate news this morning: Melrose Industries makes final 467p offer for GKN (43% premium to 5 Jan closing price); GKN shareholders to own 60% of new combined group with 1.69 shares (up from 1.49) and unchanged 81p cash (17.3%). GKN publishes 2nd response circular, rejecting Melrose’s prior offer. Hikma Pharmaceuticals and partner Vectura: FDA upheld previous decision on generic version of GSK’s Advair Diskus, requesting additional clinical endpoint study, results not until 2019.

Polymetal cuts dividend to 30c vs 42c, adjusted FY EBITDA -2%, net profit -10%, CAPEX +41%, net debt higher. AstraZeneca and MedImmune say results for Phase III MYSTIC trial of Imfinzi for non-small cell lung cancer (NSCLC) not expected until H2 2018 (H1 previously).  The Sunday Times reports Capita planning to sell £700m assets as part of transformation programme and launch rights issue in coming weeks. Petrofac wins $135m contract from Bharat Petroleum for its Kochi refinery in Kerala, India. Clarkson 2017 revenues rise but pre-tax profit slips.

After an impressive US Jobs Report, US equity markets closed sharply higher on Friday, with the Tech-heavy Nasdaq climbing to a fresh record high for the first time since late January. Meanwhile, the Dow Jones climbed 1.8% (over 440 points) as all 30 stocks closed flat to higher, lead by Goldman Sachs, while the S&P 500 rallied 1.7% as Financials outperformed.

Gold continues to test falling highs resistance around $1323 as the US dollar retreats from its post-US jobs report highs, with any breakout likely to open the door to last week’s $1340 highs. While there is a significant lack of macro data or Fed speakers to drive/dock the dollar today, any further information regarding Trump administration tariffs could move the greenback. Crude Oilbenchmarks are retreating from key intersecting resistance levels following impressive rallies on Friday, amid an element of profit taking. Brent crude has edged back from $65.9 following a 3.7% rally from Friday’s overnight lows, while US crude drops from overnight highs of $62.3 after a 3.5% rally to end last week.

In focus today, amid a significant lack of macro data or speakers, will be any pre-released snippets from tomorrow’s UK Spring statement. While Chancellor Hammond has revised the Budget schedule so that the full fiscal event will now be delivered in the Autumn, tomorrow’s brief address is likely to cover public finances, the economy and the running Brexit bill. The only macro data release of note today will be US Consumer Inflation Expectations (3pm), which will be closely watched for any reciprocal retreat after Friday’s job report revealed slower wage growth, while the Eurogroup will hold a debate on the ‘digitalisation of the EU economy’, featuring the participation of ECB President Draghi and colleague Coeure.

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