Market snapshot: all eyes on US jobs data

US markets regained some poise after a stumbling start to the month which was prompted by some concerns over economic data alongside a flight away from technology stocks.

In another choppy session, the main indices finished mixed although the moves were marginal. A report on job openings, which fell to a low not seen in three-and-a-half years, gave some comfort that the easing labour market should confirm a likely interest rate cut from the Federal Reserve later this month.

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The last acid test ahead of that decision will come tomorrow in the form of the non-farm payrolls report, where it is expected that 163,000 jobs will have been added in August compared to 114,000 in July and where the unemployment rate is estimated to have eased to 4.2% from 4.3% previously.

AI stocks and NVIDIA Corp (NASDAQ:NVDA) in particular have recently hit a ceiling, and it remains to be seen whether this phenomenon is temporary as it becomes increasingly challenging to keep up with high expectations. Even so, the broad Nasdaq index and tech-exposed S&P500 remain up by 13.8% and 15.7% respectively in the year to date, with the more traditional Dow Jones having added 8.7% after testing new record highs over recent weeks.

Asian markets also stabilised after a bruising Monday, which left the main UK indices drifting around the flatline at the open.

The FTSE100 was weighed by a raft of companies being marked ex-dividend, including the likes of Admiral Group (LSE:ADM), Antofagasta (LSE:ANTO), Aviva (LSE:AV.), International Consolidated Airlines Group SA (LSE:IAG) and Prudential (LSE:PRU).

Associated British Foods (LSE:ABF) topped the loser board after a trading update where the flagship Primark business was reported to have had a less successful summer given the weather and where profit predictions for the Sugar business were also lowered given poorer European sugar pricing. Even so, today’s fall of around 3% should be seen in the context of a share price which has risen by 26% over the last year.

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More positively, a broker upgrade to Sage Group (The) (LSE:SGE) and a pleasing trading update from housebuilder Vistry Group (LSE:VTY), including the announcement of a share buyback programme of £130 million, lifted spirits somewhat. The FTSE100 is up by 7% so far this year, although the weakness of the last couple of trading sessions has put some light between the current level and the record reached in May to the tune of around 2%.

Currys Q1

Currys (LSE:CURY) reported further progress in a brief trading statement, which could well pique some investor interest with its mention of some promising signs in the adoption of its AI computing products.

The company previously reiterated its stance on the huge potential in the development of AI powered technology, where it is in the early stages of trialling improvements and demystifying the potential for customers, in conjunction with partners such as Microsoft and Accenture.

Alongside the group’s unique offering of face-to-face advice, such progress could both strengthen and complement the overall offering as Currys strives to create “customers for life”. This was of particular benefit to the UK business where like for like revenues grew by 5% over the period, also helped along by the interest garnered by England’s performance at the recent Euros tournament.

Currys is now targeting higher margin revenue streams which also bring recurring income, such as its mobile plans, Care and Repair, credit provision and protection plans. Indeed, the mobile business continues to grow apace, with an increase of 34% taking the subscriber base to 1.9 million as the pricing point offered clearly resonated with the more cost-conscious consumer. 

The Nordics region has been a particular thorn in the side for Currys and since it accounts for around 40% of overall revenues, the impact on the group is material. There are some signs of recovery here, however, with a 2% decline in like for like revenues suggesting some stabilisation and with Currys growing market share within a generally weak consumer environment, while also keeping a tight control on costs, such as reducing its marketing spend in the region.

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The group has maintained its guidance for the year with the improving outlook having attracted some strong buying interest. Over the last year the shares have risen by 61%, which compares with a rise of 12.5% for the wider FTSE250 although the shares remain down by 42% over the last three years, which leaves much room for manoeuvre.

While some of this recent outperformance relates to the bid approaches earlier this year which eventually came to nothing, the scale of the turnaround at Currys should not be underestimated. This measurable progress, particularly in a business which is tech-focused, is reflected in a market consensus which continues to come in as a buy.