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Market overview: FTSE closes down 30 at 5663

Date: Friday 06 Jul 2012

Market overview: FTSE closes down 30 at 5663

1630: Today the International Monetary Fund (IMF) has warned that it is planning to lower its growth forecast in light of the economic situation becoming 'more worrisome'. Its current estimate stands at 3.5 per cent. Meanwhile, UK producer prices fell at an 0.4 per cent month-on-month rate in June (2.3 per cent year-on-year), according to the latest data from the ONS, the largest monthly fall since November 2008. In other news, the Serious Fraud Office (SFO) confirmed that it has officially launched a criminal investigation into the now infamous LIBOR scandal involving Barclays. The FTSE 100 closed down 30 points at 5,663.

1332: As is too often the case, at first glance yesterday´s ADP employment report seems to have been a bit misleading. US non-farm payrolls grew by 80,000 in June, not far below the 90,000 expected by the consensus. However, there is reason to believe that in the last 24 hours the consensus estimate had been rising. Some of other details of the report did come in slightly ahead of expectations, but to little avail. Hence the poor reaction now by UK stocks. FTSE 100 down by 24 to 5,669.

1024: Shares of Aviva continue to lead gains on the top share index, helped along in part by an upgrade out of Societe Generale to hold from sell. Aveva Group is also doing well after a price target revision from Berenberg. Wolseley and Intertek, on the other hand, have come under pressure following negative comments on the two from the likes of Morgan Stanley. UK producer prices fell at an 0.4% month-on-month rate in June (2.3% year-on-year), according to the latest data from the Office for National Statistics. The consensus estimate was for a decrease of -0.2% (2.4% year-on-year). Worth noting as well, comments from Nouriel Roubini to the effect that Italy and Spain will lose market access in the next 3 to 6 months may be weighing on periphery bonds (not to mention data yesterday showing increased ECB lending to Spanish banks). Relevant as well, economists at Goldman Sachs have nudged up their forecast for today´s US non-farm payrolls number to 125,000 from 75,000 before. Ironically, for some observers better than expected data reduces the probability of further action by the Federal Reserve in the immediate future. FTSE 100 down 8 to 5,685.

0930: Footsie continues to trade sideways ahead of this afternoon's US jobs data, the first significant economic indicator for June. Aviva remains the best performer, as the group's commitment to raising money through disposals makes the maintenance of the dividend more likely; the shares are yielding 9.1% based on last year's pay-out, suggesting the market thinks a dividend cut is inevitable. A disappointing trading update from home improvement and garden furnishings retailer Marshalls has had an impact on the share price of DIY retailer Kingfisher; the B&Q owner is the worst performing blue-chip. FTSE 100 is down 4 at 5,689.

0823: London has opened modestly lower, with many traders sitting on their hands ahead of the release this afternoon of US non-farm payrolls data for June. Expectations are that around 106,000 (106k) jobs will have been added in June, following on from May's payrolls increase of 69k. The unemployment rate is tipped to remain at 8.2%. In the UK, producer prices are due out at 09:30. Expectations are for Input Prices to have fallen 2.3% in June, after easing 0.1% in May, while Output Prices are forecast to have fallen 0.3% after dipping 0.2% in May. Core Output Prices are tipped to have edged up 0.1% in June after showing no change in May. On the corporate front, Aviva is the best performing blue-chip after strong demand in the market encouraged it to increase the size of the sale of some its shares in Dutch insurer Delta Lloyd. FTSE 100 is down 8 at 5,684.

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