UK & Europe
European markets pulled back from weekly highs as service sector data came in mixed, healthcare stocks dropped and traders pulled positions ahead of Friday’s US jobs report.
A downgrade to the global pharmaceuticals industry from ‘positive’ to ‘stable’ by credit rating agency Moody’s sent shares of GlaxoSmithKline, Shire and AstraZeneca to the bottom half of the FTSE 100. Moody’s cited the effect of pricing pressures on earnings which has been a hot-button issue since the rise and fall of hedge fund manager Martin Shkreli who was publically lambasted for price gauging.
Strong results from insurer Admiral Group (LON:ADML), asset manager Schroders (LON:SDR) and building materials supplier Travis Perkins (LON:TPK) as well a good performance from mining shares helped the UK benchmark outperform its continental peers.
The basic materials sector led gains on the FTSE 100 helped by a breakout to a 3 ½ month high in the price of copper. Admiral Group was top riser after the insurance group reported a 6% rise in pre-tax profits in 2015.
Travis Perkins shares rose as investors looked through impairments in its plumbing business and focused on the 5.5% rise in adjusted pre-tax profits in 2015.
US
US markets opened slightly lower on Thursday as the price oil dipped, service sector and durable goods data improved, all as presidential politics appears to be getting more fraught over the success of republican candidate Donald Trump
FX
The US dollar was down across the board as investors showed signs of twitchiness ahead of Friday’s US jobs report despite a rebound in durable goods orders and stable service sector data that went some way to allay concerns about the contraction in US manufacturing.
The British pound was on track for its fourth successive higher close versus the dollar though was down slightly versus the euro after a big slide in the UK service sector which fell to 52.7 in February, the lowest since March 2013. A figure of 55.1 was expected after a reading of 55.6 in January.
The slide in the service sector makes for an unhappy trifecta of weak UK purchasing manager surveys for February, with manufacturing and construction PMIs having also missed expectations.
Commodities
Oil prices slipped back for most of Thursday before rebounding after the large 10.4m barrel build in weekly inventories took the wind out of the sails of a market which has been gaining for the past three weeks thanks to slowing US output and an agreed production freeze between Saudi Arabia and Russia.
The price of gold jumped above $1250 per oz for the second time since its peak on February 11. Gold is higher for the week leading into Friday’s US jobs figures, which could be an important data point for the Fed’s decision whether to raise rates this month. The price has recently been capped by $1250 per oz but each sell-off since February has been smaller, suggesting buyers are getting more aggressive.
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