Stocks to bounce back despite US jobs fright

THE FTSE is expected to climb back up above the 6,000 level this morning, after US stocks staged a rebound from the lows on Friday when stock markets globally were hit by the dismal jobs data.

Just 18,000 new jobs were created in June, compared to analyst expectations of anything up to 175,000.

The FTSE 100 index is called to open up 30 points at 6,020. The German DAX is forecast to open up 28 points at 7,430, and the French CAC 40 is quoted to open up 18 points at 3,931.

The lowest growth rate in job creation for nine months in the US economy was a major disappointment, especially when combined with the 9.2 per cent unemployment rate – the highest reading this year.

Nevertheless, the Dow managed to finish off session lows; about 50 points higher than when European bourses closed. As a result, the blue chip US index actually closed up 0.6 per cent, its third gain in four weeks.

The bounce in stock markets is expected to be led by an optimistic prevailing mood heading into the results season in the States, which kicks off (unofficially) today with Dow component Alcoa, the world’s leading producer of aluminium. Second quarter earnings per share for Alcoa, due out just after the US market close, are forecast to jump from 13 cents to 34 cents – setting the stage for a strong results season over the next few weeks. JP Morgan, Citigroup, Goldman Sachs and Yahoo will also report.

Whilst American companies will likely provide the main direction for stock markets this week, the buzz in the City will surely continue to be the ramifications of the News of the World closure, with Rupert Murdoch flying over at the weekend in an attempt to mitigate fallout scuppering the News Corp takeover of BSkyB.

Martin Slaney is head of global dealing operations for GFT