Investors consolidate ahead of Non Farm Payrolls

Joshua Raymond, Market Strategist at City Index commented: "European markets traded largely sideways on Thursday, as investors looked to consolidate their holdings as they prepared for the all important Non Farm Payroll figures out tomorrow.

We saw European Indices post gains in the morning session, largely on the back of a stronger banking sector but as we drew closer to the close, we saw investors looking to take some profits off the table and consolidate their holdings with an eye firmly towards tomorrow's jobs data.

The market is expecting a loss of 130,000 payrolls and if we get a loss lower than 100,000, there is every chance equities could get a significant boost to finish the week on a high with the Dubai World debt concerns a distant memory.

The majority of the profit taking has taken place within the mining sector which has rallied over 13% in the last 5 trading days. Weaker Copper prices and a stronger US Dollar has also helped to facilitate the consolidation we have seen as investors move to protect their gains should tomorrows jobs figure disappoint. Xstrata and Lonmin are the main sufferers, both falling over 3% to finish the day as the worst fallers on the FTSE 100.

FTSE 100 range bound

The FTSE remains range bound for now and it is looking increasingly likely that it will take a brightening macro picture to help push us through the 5400 level and there is no reason why this cannot come from tomorrows Non Farm Payrolls should we get a terrific number.

However, investors have been happy to come in and sell the FTSE 100 from the top of its current trading range and so the more we fail to break out, the harder it will become to do so before the year ends.

With volumes starting to thin as we head deeper into December, we may get that extra bit of volatility needed to break out of this range should the macro economic picture continue to improve.

Bank of America lifts Banks

The banking sector has been in demand today with stocks getting a boost from the news that the Bank of America are set to pay back $45bn to TARP. The move is a strong sign of confidence by the US bank that they are ready to return to normality and boosts hopes that a number of other major US banks such as Citigroup could be set to follow suit. As a result, stocks such as Lloyds and RBS have been in high demand and have helped to lead the FTSE winners list."

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