No recommendation
No news or research item is a personal recommendation to deal. Hargreaves Lansdown may not share ShareCast's (powered by Digital Look) views.
(Sharecast News) - There are no FTSE 350 corporate releases due on Friday, so investors will turn their attention to the non-farm payrolls report, average earnings and unemployment rate for May.
Kathleen Brooks, research director at XTB, said this will be one of the most important readings for months, as it could shape Federal Reserve policy under new chair Kevin Warsh.
"Analysts are expecting a 90k increase in payrolls, however, the stronger-than-expected ADP report on Wednesday suggests that the market is already positioning for an upside surprise," she said. This would explain the rise in Treasury yields, and the dip in sentiment towards stocks yesterday, since a strong jobs report could push the Fed closer to ditching its loosening bias at its meeting later this month.
"Warsh's first public speaking engagement will be the press conference after the 17th June FOMC meeting. Warsh has said that he doesn't believe in forward guidance, so he may choose not to contribute to the updated Dot Plot. His thinking on this is sound, he believes that the Fed does not have a good track record of forecasting and it can threaten the Fed's credibility.
"However, the risk is that his speech is vague, which confuses the market, triggering more volatility. This is something to watch in the coming weeks. Otherwise, we expect Warsh to be wary of rocking the boat. He has already told Fed staff that he will stick to the 'best of Fed traditions', whatever that means."
Danske Bank is expecting non-farm payrolls to have risen by 110,000, slightly above consensus, the unemployment rate at 4.2%, and average hourly earnings at 0.3% month-on-month. It said "a solid report could tilt the Fed's balance of risks further towards a tightening bias".
Figures released by ADP on Wednesday showed that US private sector employment rose more than expected in May.
Employment rose by 122,000 from April, versus expectations for a 110,000 increase. Meanwhile, the figure for April was revised to 105,000 jobs added, from 109,000.
Small businesses with fewer than 50 employees added 67,000 jobs while medium businesses with between 50 and 499 employees added 17,000. Large business with more than 500 employees created an additional 40,000 jobs.
The service sector added 114,000 jobs, while the goods-producing sector saw an 8,000 increase.
Year-over-year pay growth for job-stayers was steady at 4.4%, while for job-changers, it eased to 6.5% in May from 6.6% the month before.
Nela Richardson, chief economist at ADP, said: "Hiring was more broad-based in May than we've seen in the last few years. The labour market continues to show sustained momentum going into the summer hiring season."