Little cheer despite US unemployment drop

Heading into the close, the FTSE 100 is 20 points lower, as markets turn red despite good news on US jobs.

• US job numbers fail to excite
• Miners continue to push higher
• Chinese FX reserves key to the Monday open

The lowest US jobless rate for eight years was not enough to inspire markets to rally this afternoon, which is perhaps indicative of the lack of risk appetite that still prevails. Admittedly the headline job number missed estimates, while the storming December figure was revised down, but these are likely to be a reflection of a tightening labour market. The theory is given further credence by the healthy growth in wages, which will comfort any Fed policymakers that have been losing sleep over their decision to increase rates in December. It was another strong showing for the mining sector, with shorts in names like Anglo American still being forced to run for cover. However, we have yet to
see a real shift in the fundamental backdrop to warrant a more extended rally in these beaten-down firms, even if iron ore prices in China have looked firmer of late.

The coming week is expected to be one where earnings rather than economic data predominates, with the UK reporting calendar full of full-year figures. Rio Tinto becomes the first miner to brave the light of reporting season, with ARM Holdings and troubled defence firm Rolls-Royce also in the spotlight. Chinese FX reserves data on Sunday night does not usually command too much attention, but with all eyes on the PBoC’s attempt to stem capital flight, any signs that money continues to desert that economy will lead to a fresh bout of selling come the London open on Monday morning.