Heading into the close, the FTSE 100 is 20 points lower, as dismal NFPs fail to enliven the market.
- US job growth falters, weakening June rate hike theory
- Tough week sees sellers take control
- UK housebuilders and BoE on the list for coming week
Despite a late attempt at a rally, the FTSE seems likely to finish a tough week in the red, having essentially moved relentlessly lower since the beginning of the month. Today’s US job numbers, which were worse than expected, have wiped expectations for a June rate hike off the map. June seemed to be something of a long shot, especially given that other central banks continue to ease, but with unemployment stuck at 5% and little sign of enthusiastic job creation, it has become a non-starter. That, however, did little for indices, which remain the prisoners of widespread caution about the outlook for the global economy. The risk is now that we continue to move lower as bears awake from their hibernation, spurred on by the refusal of economic data to improve, while positioning has shifted back to bullishness, depriving the rally of fresh money moving in from the sidelines.
Housebuilders will take centre stage next week for UK investors, with the sector’s big names needing to provide some cheery news if the general pullback in their shares is not to turn into a full-blown rout. As price growth stalls, and cost pressures rise, the sector might now be caught in a vicious cycle. On the economic front, the Bank of England’s latest meeting and inflation report will be one of the highlights, and with UK price growth weak too we will be watching to see if any doves break cover and vote for a rate cut.
- US job growth falters, weakening June rate hike theory
- Tough week sees sellers take control
- UK housebuilders and BoE on the list for coming week
Despite a late attempt at a rally, the FTSE seems likely to finish a tough week in the red, having essentially moved relentlessly lower since the beginning of the month. Today’s US job numbers, which were worse than expected, have wiped expectations for a June rate hike off the map. June seemed to be something of a long shot, especially given that other central banks continue to ease, but with unemployment stuck at 5% and little sign of enthusiastic job creation, it has become a non-starter. That, however, did little for indices, which remain the prisoners of widespread caution about the outlook for the global economy. The risk is now that we continue to move lower as bears awake from their hibernation, spurred on by the refusal of economic data to improve, while positioning has shifted back to bullishness, depriving the rally of fresh money moving in from the sidelines.
Housebuilders will take centre stage next week for UK investors, with the sector’s big names needing to provide some cheery news if the general pullback in their shares is not to turn into a full-blown rout. As price growth stalls, and cost pressures rise, the sector might now be caught in a vicious cycle. On the economic front, the Bank of England’s latest meeting and inflation report will be one of the highlights, and with UK price growth weak too we will be watching to see if any doves break cover and vote for a rate cut.
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