The FTSE 100 was relatively steady on Thursday as investors braced for tomorrow’s Non-Farm Payrolls and potential heightened volatility in equity markets.
Without sounding like a broken record, as we’ve mentioned this a couple of times already this week, tomorrow’s Non-Farm Payrolls hold the keys to the direction of stock markets in the coming weeks as investors react to the leading economic indictor for the world’s largest economy.
Thursday’s trade was relatively benign compared to the start of the week, as investors are likely to have completed all of their positioning ahead of tomorrow’s release.
Ahead of tomorrow’s data, a softer job openings report created a sombre mood in the US overnight. This translated into a range-bound FTSE 100, which was down 10 points at the time of writing on Thursday.
“The US Labor report failed to quell fears about the direction of the world’s largest economy. Job openings fell more than expected to 7.67mn, although hires rose 0.2% month on month to 273,000,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“All eyes now turn to Friday’s pivotal non-farm payrolls count which is expected to show an increase of 161,000 and a small fall in the unemployment rate to 4.2%. Markets are still pricing in a 0.25% rate cut this month, but only just, with the odds of a 0.5% cut now shortening further.”
Nathan continued to explain the star of the AI rally, Nvidia, had a poor session overnight amid concerns about an antitrust investigation. This is important because if Nvidia falls, its very likely broad global equity indices will also fall, such is the fixation with the company currently.
“The recent flagbearer for US markets NVIDIA took a further fall as rumours emerged that it had been subpoenaed by the Justice Department in an antitrust investigation,” Nathan said.
“The chipmaker at the forefront of the AI boom has however since denied these claims. Rival Advanced Micro Devices saw its shares close up 3% on the day.”
Vistry
Vistry was the FTSE 100’s top gainer, up 4%, after releasing surprisingly good results for the first half of the year.
“Vistry looks to be bucking the trend of a housing market slowdown,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Its transformation into a Partnerships giant, which specialises in providing affordable housing, has helped it outperform the more traditional housebuilders of late. This strategy of delivering high volumes of affordable housing is well aligned with the new government’s ambitions to address the country’s housing shortage. New home completions landed at just under 8,000 in the first half, giving Vistry the confidence to reiterate its full-year guidance of over 18,000 new homes.”
AB Foods
Primark-owner AB Foods struggled on Thursday, as the retailer reported soft sales growth over the summer due to the weather.
“Primark has had a good run but it is not immune to the vagaries of the British weather and owner Associated British Food’s year-end trading update reveals the retail chain has been hit by the soggy summer,” said Russ Mould, investment director at AJ Bell.
“Blaming poor performance on the weather may not be the greatest look but it is understandable that it will have had an impact on Primark given its reliance on footfall to generate sales in the absence of an online offering, beyond click and collect.
“The operation is at least benefiting from lower costs in some areas which are helping to increase margins, although in certain areas like wages and investment in technology, outlays have gone up.”
AB Foods shares were down 5% at the time of writing.