Financial market research and analysis

Despite the European equity markets initially viewed the US NFP number as a negative for stocks and is ultimately playing catch up with the rally witnessed in US markets in late trading last Friday. The bounce in Asian markets has also imbued a sense of optimism this morning with all sectors marching higher and basic materials once again in the lead.

Brent crude oil prices remain in a fairly steady range, consolidating and somewhat directionless and unable lately to make a move through $50/bbl. The poorer than expected payrolls number has left the ‘October camp’ looking fairly spare in numbers and has ultimately permitted many to discount 2015 as the year the FOMC will hike. This is negative for the dollar index but essentially somewhat positive for the emerging markets complex and commodities overall.

This should therefore be something of a boon to the FTSE100 and despite the fact that English hopes of winning the rugby world cup has been absolutely dashed over the weekend, maybe there are some that can take solace in the fact that not a single FTSE stock is trading lower this morning.

What is of concern is that the FTSE has failed to break towards and through the 6300 level throughout the month of September so the key test of a reversal of fortune for the index will be a close through this metric, preferably on a weekly basis. Until this occurs, we can expect the usual range bound activity with the FTSE essentially in a sideways mode. The UK services PMI has failed to offer any real consolation, falling to 53.3 against an estimate of 56 with its weakest rise in activity in almost 2.5 years. New business growth showed its weakest quarter since the second quarter in 2013. Given the importance this macro point is to the UK economy, it’s becoming clear that the UK is not immune to the current state of global economic uncertainty. The impact of higher wages and the concerns about the new living wage are also starting to bite.

Glencore is once again taking the top spot on the FTSE this morning as investors clearly cannot decide on a fair price, the shares at one point saw a 20% gain. Shares in Hong Kong rose as much as 72% as discussions are believed to be underway in regards to the offloading of its agricultural business. Management is also apparently open to takeover offers, but rumours of this kind are the norm in the aftermath of a fairly ruthless sell-off and should hardly to be taken as gospel.

Fair value of the company is likely to be a massive issue in light of the recent share price demise, the asset sell-off and the recent rout and choppiness in commodities; prices of which appear for now to be stabilising but copper prices are having difficulty breaking above the $2.40/lb level.

Prudential is also a riser adding 1.83% this morning. Although the company is downplaying a report that it may seek to headquarter itself in Asia, it seems that it is a strong possibility that this might take place if the firm is to avoid EU regulations and the requirement to increase capital reserves next year.

Lloyds is also staging a small bounce adding 1.52% this morning. News that the government is to sell at least £2bn shares to consumers in 2016 is the catalyst.  Members of the public will be offered a discount of 5% of market price. Proceeds will be used to pay down the national debt. The majority of brokers are bullish on the stock with an average price target of 91.73p implying around a 15% upside on the share price from current levels.

Other equity highlights.

Carnival +2.17% Has signed a multi-year agreement with New Orleans Saints. 

Tesco +2.28% is to balance its retail revival with debt reduction. It also seems that Morrison’s move to abandon its price matching scheme is working in Tesco’s favour.

We are calling the Dow higher by 38 points higher to 16507.