The FTSE 100 opened in positive territory although the gains weren’t of the scale of those seen in Asia’s main markets as they welcomed the strong economic recovery in the US.
Jobless claims fell to the lowest level since March of last year, while the annualised rate of growth of the world’s largest economy was 6.4%.
Stimulus rather than inflation is likely to be the key theme on the last day ahead of the long weekend here in the UK following a report the Biden administration is seeking US$6 trillion in federal spending for 2022.
However, this could easily change with the release of Personal Consumption Expenditure data.
“The measure tends to be one which the Federal Reserve monitors closely and is more influential in deciding policy than the more obvious consumer price index,” explained Richard Hunter, head of markets at Interactive Investor.
“Inflationary concerns continue to bubble under the surface. Although in abeyance for the moment, this could be short-lived as the economic data continues to point towards excess demand as growth kicks in, with supply struggling to keep pace.
“As such, a further switch into cyclical, value stocks underpins a flip-flop from investors trying to position themselves for all eventualities.”
The buoyant markets of Asia provided a 2% lift in the value of HSBC (LON:HSBA), which has a significant presence in the region.
Housebuilder Vistry (LON:VTY) was up 2.5% on the back of a Barclays Capital upgrade to ‘overweight’.
6.50 am: Footsie set to float modestly higher
London’s leading shares are set to open modestly higher after a strong showing from US stocks yesterday.
Spread betting quotes indicate the FTSE 100 will rise 24 points to 7,044 at the open.
“The overnight data from the US was a mixed bag,” declared Jeffrey Halley at OANDA.
“Durable Goods ex transport rose respectably by 1.0%, above expectations of 0.80%. Pending Home Sales fell 4.40%, which isn’t much of a surprise given mortgage applications have been falling. With the US freshly vaccinated, escaping the zombie apocalypse in the city and escaping to suburban Wisteria Lane is now less appealing. Most notably, Initial Jobless Claims fell to 406,000, which seems to have supported some modestly bullish sentiment for the remainder of the session,” he added.
The Dow Jones industrial average climbed 142 points to 34,465 while the S&P closed in on another record high, rising 5 points to 4,201.
In Asia this morning, most markets have picked up the baton from the US. Japan’s Nikkei 225 is 603 points heavier at 29,153 and Hong Kong’s Hang Seng is 184 points to the good at 29,297.
The agenda for the UK today is emptier than my book of pithy metaphors.
A couple of FTSE 100 companies have annual general meetings scheduled for today, of which the HSBC Holdings PLC (LON:HSBA) looks the more interest, given the banking giant announced yesterday it would be exiting the US retail banking giant.
On the macroeconomic front, the only items likely to be of interest all relate to the US and include the personal income and spending data releases.
“The former jumped more than 21%M/M [month-on-month] in March due to the receipt of stimulus payments,” reported Daiwa Capital Markets.
Daiwa’s chief economist for America, Mike Moran, expects a 13.0% month-on-month (M/M) downward correction this month.
“Encouragingly, given the resilience seen in the retail data, Mike expects a modest 0.2%M/M lift in spending in April despite the strong 4.2%M/M uplift seen in March. Meanwhile, following the shock CPI reading, Mike estimates that the core PCE deflator will post a 0.5%M/M increase – the most since 2001 – which given reinforcing base effects should lift annual inflation to around a three-decade high of 2.8%Y/Y.”
Good old Mike.
“Finally, Friday will also bring the Chicago PMI for May and the advance merchandise trade report for April. Regarding the latter, Mike expects both exports and imports to ease, but the decline in imports should dominate to deliver a modestly narrower trade deficit for the month,” Daiwa reports.
That’s enough from Mike. Let the trading commence!
Around the markets
- Sterling: US$1.4198, down 0.05 cents
- 10-year gilt: 0.812%, + 5.75 basis points
- Brent crude: US$69.48 a barrel, up 28 cents
- Gold: US$1,895.30 an ounce, down US$3.20
- Bitcoin: US$37,583, down US$893
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were higher on Friday as shares of newly listed JD Logistics opened at 46.05 Hong Kong dollars before surging to more than 18% from its issue price.
The Shanghai Composite in China gained 0.18% and Hong Kong’s Hang Seng index lifted 0.63%
In Japan, the Nikkei 225 surged 2.19% while South Korea’s Kospi rose 0.99%.
Shares in Australia jumped, with the S&P/ASX 200 trading 1.26% higher.
Proactive Australia news:
Piedmont Lithium Inc (ASX:PLL) (NASDAQ:PLL) (OTCMKTS:PDDTF) and Sayona Mining Ltd (ASX:SYA) (OTCMKTS:DMNXF) are advancing a joint bid to acquire North American Lithium (NAL) via subsidiary Sayona Québec (Piedmont 25% and Sayona 75%).
KneoMedia Ltd (ASX:KNM) (OTCMKTS:KNEOF) has secured the first 100 Seat Licences for its KneoWorld Career Technology Education (CTE) program for phase-1 deployment by the Albany School District in New York State.
Andromeda Metals Ltd (ASX:ADN) has signed an MoU with AEM Technologies Inc to explore a joint technical and commercial development under which the company can access AEM’s patented process to construct a facility to produce high purity alumina (HPA) using ADN kaolin.
Ora Banda Mining Ltd (ASX:OBM) (FRA:M6N) has received further broad, high-grade results in resource extension and infill diamond drilling at Golden Eagle deposit within the wider Davyhurst Gold Project in Western Australia, supporting pre-mining expectations and providing important information into remodelling the Southern Mining Area.
European Lithium Ltd (ASX:EUR) (FRA:PF8) (VIE:ELI) has received the all-clear to finalise a definitive feasibility study (DFS) for Wolfsberg Lithium Project in the heart of Europe following the settlement of a legal dispute.
Buru Energy Limited (ASX:BRU) (OTCMKTS:BRNGF) (FRA:BUD) has taken another step towards its 2021 exploration program at the Canning Basin Joint Venture with Origin Energy Ltd (ASX:ORG) (OTCMKTS:OGFGY) (FRA:ORL) with mobilisation of the Ensign 963 drilling rig underway.
Carnavale Resources Ltd (ASX:CAV) (FRA:YBB) has successfully completed its third aircore drilling program of 135 holes for 7,432 metres at the Kookynie Gold Project 60 kilometres south of Leonora in the Western Australian Goldfields.