The FTSE 100 traded with a cautious tone on Thursday ahead of key US jobs numbers tomorrow and central bank meetings next week.
London’s leading index was flat at the time of writing, having bounced off lows of 7,480 earlier in the session.
Investors will be bracing for US jobs numbers and a gauge of the strength of the US economy. Markets have quickly priced in rate cuts early next year, providing support for equities, particularly US stocks.
The headline Non-Farm Payrolls report due to be issued tomorrow is widely considered to be the world’s single most important data point. Economists predict the US added 185,000 jobs in November, up from the 150,000 added in October.
Should the actual number significantly beat estimates, it would dash hopes of softer rates in early 2024.
“US jobs numbers tomorrow and central bank meetings next week could inform the market if it has got carried away with the level of rate cuts which are now being priced in for 2024,” said AJ Bell investment director Russ Mould.
This uncertainty was weighing on markets Thursday. In addition, weaker oil prices dented enthusiasm for commodity-heavy UK equity indices.
“Oil prices continued to slump as oil exports from the US surge,” Russ Mould said. “A weaker crude market should at least help on the inflation front but it is not good news for two of the FTSE 100’s heavyweights: BP and Shell.”
BP and Shell were marginally lower at the time of writing after bouncing back from harsher losses at the open on Thursday.
Rising UK house prices
Housebuilders and companies exposed to the property market were a bright spot for UK markets. According to data released by Halifax, UK prices gained 0.5% in the month to November as a lack of supply drove higher prices.
“House prices rose in November, for the second consecutive month. And while sellers still face the tricky business of persuading someone to buy before they can realise these higher prices, we’ve had some more positive news on that front too. It has been a good month for a tough market, but we can’t get carried away just yet,” said Sarah Coles, head of personal finance, Hargreaves Lansdown.
“House prices are robust, and the annual fall is now a modest 1%. In the next couple of months, as we compare to lower prices a year earlier, we could climb back into positive territory on an annual basis, especially if we see more monthly rises.”
The news buoyed housebuilders, with Taylor Wimpey gaining 0.9% and Barratt Developments rising 0.8%.
Rightmove was one of the FTSE 100’s top risers, gaining 1.7%.
Reflecting the cautious tone in markets, utility companies National Grid, United Utilities, and Severn Trent were among the best performers on the day.
