The open of US markets on Friday is set to be dominated by the results of the monthly unemployment figures released before the opening bell. Expectations have moderated slightly from January but job gains are expected to remain broadly strong and underpin the strength of the US economy and its divergence from the rest of the world.
US markets finished higher on Thursday following the announcement that Eurozone QE will begin on Monday. The uplift in US stocks was definitively more subdued than that of Europe and the UK which is understandable given they are not direct beneficiaries of the ECB’s latest policy.
The sub-par rally on Thursday has given rise to a modest pullback with US stocks expected to open lower on Friday.
A headline number under 200K for non-farm payrolls could be a major catalyst for US equities to catch up with their QE-boosted European peers given the implications for a later US rate hike. If the NFP falls between 200k and 300k; the direction the market takes may be more reflective of the report’s internals, especially wage growth. Above 300k would be unexpected given the misses in ADP and weekly jobless claims and could be a major headwind for US stocks despite the positive sign it would give for the US economy.
Wage growth accelerated in January, should this turn out to be a one-off prompted by a hike in minimum wages across multiple US states, then the timetable for a US rate-hike could be pushed back to the tail end of 2015 in a boost to equities.
Earnings are expected from Staples Inc (NASDAQ:SPLS), Foot Locker Inc (NYSE:FL) and Big Lots Inc (NYSE:BIG) on Friday.
Futures suggest the:
S&P 500 will open 2 points lower at 2,099 with the
Dow 30 expected to open 12 points lower at 18,123 and the
Nasdaq 100 2 points lower at 4,450.
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