FTSE turning lower despite strong jobs report

Another encouraging jobs report puts further pressure on the BoE, with the FTSE showing signs of further weakness.

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The FTSE looks likely to extend yesterday’s losses despite early gains, with markets waking up to the idea of recent gains unravelling sharply. The commodity sector appears to be struggling to sustain recent gains, with Anglo American and Glencore tumbling alongside iron ore and copper prices. Meanwhile, a profit warning for Pearson sets the firm on track for its worst day ever, amid plans to sell their Penguin Random House business. It is clear the firm has struggled to keep up with the times, with today’s £180m profitability write-down coming off the back of a 15% drop in the company’s share price in the last 6 months.

The UK has once more shown itself to be incredibly resilient during a period of great uncertainty, with an incredibly encouraging jobs report showing a 14-month high in average earnings and claimants falling by the fastest rate in 10-months. Following yesterday’s strong UK CPI showing, it is clear that the UK economy is performing enviably and should this trend continue, it will raise the pressure on the BoE to roll back some of their easy monetary policy.

US banks suffered a difficult session yesterday, but the focus on the sector remains intense today as Goldman Sachs and Citigroup both unveil their earnings. The sector drove the rally in the wake of the election, but perhaps now it is signalling that a turn is due. Ahead of the open we expect the Dow Jones to open flat, at 19,826.