FTSE 100 to creep higher ahead of UK jobs data

The FTSE 100 index was being eyed slightly higher ahead of Tuesday’s open, amid mixed reports about progress on a Brexit deal and mixed Asian markets.

London stocks are seen adding around eight points, according to City spread-betters, a day after dropping almost 34 points to 7,213.45. 

Overnight, US stocks closed lower amid thin holiday volumes and further vicissitudes on the neverending China trade tussle. 

China, apparently, now wants to hold further discussions with the US before signing Donald Trump’s so-called “phase one” trade deal.

“We could already feel that the Chinese were not fully satisfied with their Washington visit, unlike Donald Trump,” said market analyst Ipek Ozkardeskaya at London Capital Group. 

“It now looks like Donald Trump needs a deal more than his Chinese counterparts. This is of course just a game of power.”

The power was down for the Dow Jones, which fell 29 points to 26,787.36, a fall of around 0.1%, the same as befell the S&P 500 and the Nasdaq Composite.

The dollar also weakened against the pound, slipping 0.2% as sterling watchers took in newspaper reports that a possible solution had been found to the Irish border enigma.

But with EU chief negotiator Barnier having recently pooh-poohed Johnson’s plan in Northern Ireland, there remains some scepticism, which showed with GBPUSD only slightly higher at 1.2635.

The pound could shift a little later in the morning, when attention turns to UK labour market data, with both vacancy data and business surveys having deteriorated of late. 

The headline unemployment rate is expected to hold steady at 3.8% for the three months to the end of August, while average weekly wages are expected to dip to an annual rate of growth of 3.9% from July’s 4.0%.

Employment for the three-month period is predicted by economists to have increased 26,000 compared to the previous three months, from 32,000 in July.

Corporate news

In terms of company news, updates from housebuilder () and recruiter (LON:HAYS) will be up for scrutiny.

Shares in () hit an 18-month high at the end of last week, on the back of the market’s excitement about a potential Brexit deal.

While this optimism was somewhat curtailed at the start of this week, it may have rekindled interest in the sector and other domestically focused industries.

Bellway’s full-year numbers are not expected to contain any major surprises after an August trading update confirmed the group was on track to meet its full-year expectations.

Investors will be keeping a close eye on any changes caused by the wider economic uncertainty and trends on costs, pricing and volumes post-year-end “and the extent to which margin pressure can be offset by volumes and self-help cost initiatives”.

In contrast, Hays shares sank to a year-low of 139p last week after profit warnings from fellow hiring groups and .

It may be interesting to see how Hays has managed in its UK business, with a sector decline being blamed on Brexit-related uncertainty that said is now “impacting candidate and client confidence at all levels”.

Later in the day, around 3.30pm in fact, there should be some important news for Royal Mail Group (), as that’s when the result of a ballot of 100,000 members of the Communication Workers Union (https://www.proactiveinvestors.co.uk/companies/news/901405/more-pressure-on-royal-mail-s-black-as-unions-call-strike-ballot-901405.html) will be revealed.  

Postal workers are mulling whether to go on strike during the company’s important Black Friday and Christmas periods, with the CWU accusing the delivery group of breaching “the spirit and intent” of a deal signed last year to increase pay, reduce the working week to 37 hours and spruce up pensions.

Analysts have been sceptical of the group’s five-year turnaround plan to boost profitability, unveiled at its full-year results in May, mainly because this deal will lead to a rise in people costs. 

Significant events on Tuesday 15 October:

Finals: Bellway (), Nanoco (), Sareum ()

Interims:  PLC (), Lidco Group PLC (),  ()

Trading statement:  ()

Economic announcements: UK unemployment, German ZEW

Business headlines

Financial Times:

German companies have called for help from Brussels and a business-friendly stance from EU lawmakers amid Brexit fears and a global economic slowdown.

Graft under Jacob Zuma is likely to have cost South Africa more than R500 billion, President Cyril Ramaphosa said on Monday.

New energy vehicle sales in China, the world’s largest car market, fell for the third month in a row.

The Times:

• Pound slipped on Monday amid faltering optimism among investors that Britain and the European Union will strike a Brexit deal this week.
• Increasing concerns about a stopgap trade deal between the US and China sparked uncertainty in share markets around the world yesterday.
• A prolonged period of ultra-low interest rates could exacerbate future economic downturns, a deputy governor at the has warned.
• Thousands of people have signed an online petition urging to reverse its decision to prevent its customers withdrawing cash from post offices.
• Matalan has registered a 28.5% drop in quarterly underlying profits blaming political uncertainty and poor weather.
• The City watchdog has begun to meet junior bankers as well as senior members of the industry to help to promote better conduct.

The Daily Telegraph:

• Brexit deal hopes have increased after sources in both Brussels and London said a positive day of negotiations had yielded a potential solution to the Northern Irish border problem.
• Neptune Energy, an energy start-up backed by private equity and chaired by former Centrica boss Sam Laidlaw, was the buyer of a parcel of North Sea assets from oil and gas explorer Energean. 
• Trendy sofa start-up Loaf posted a rise in sales last year even as its high street rivals suffer turmoil.
• Hargreaves Lansdown’s founder Peter Hargreaves has accused the firm of failing in its duty to shareholders amid a row about political donations.
• The official launch of Facebook’s new cryptocurrency alliance was overshadowed on Monday by the abrupt departure of Booking.com, leaving the project with just 21 of its original 28 backers.

The Guardian:

• Sports Direct has demanded a Europe-wide probe into the dominance of Nike and Adidas in the sportswear market.
• Theresa May and David  both lobbied a Middle Eastern royal family to award a multi-billion dollar oil contract to Petrofac, a company headed by a major Tory donor.
• Cuadrilla is not abandoning its fracking ambitions in Lancashire and still plans to apply for an extension to its shale gas campaign.
• China has built ‘massive global data-collection ecosystem’ to bulwark the nation’s security, but most critically to secure the political future of the Communist party, a new report argues.
• PricewaterhouseCoopers handed a £100 million windfall to a group of former partners this year after the accountancy and consulting company reported record profits.