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FTSE 100 opens flat, UK houseprices soar and copper drops again

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FTSE 100 called to open flat at 6810, holding around the 6800 level of yesterday and after a muted US close on mixed US data and a similar Asian performance overnight as investors hold fire ahead of US employment data today to provide more clues about the US economy and path for monetary policy and some in Europe extend yesterday’s Labour day holiday into the weekend.

There have been reports of Ukrainian military storming the rebel stronghold town of Slaviansk with witnesses talking of gunfire in and around the city and reports of a Ukrainian helicopter shot down. Quartz is also reporting that while the US and Europe have yet to deploy their bluntest weapon amid sanctions, Russian President Putin is vowing to make life difficult for western oil companies doing business in his country.

In the UK, the BoE’s Cunliffe said surging house prices pose the single biggest threat to the financial stability and that policy makers must decide swiftly whether to act to cool the market. The Wall Street Journal reports that we should prepare for ECB action in June (rate cut, structured QE).
Overnight data included Japanese unemployment stable, but a surge in household spending, while PM Abe said corporate wage growth increases have been encouraging but must improve visibly more to overcome deflation. In Australia, while New Home Sales cooled markedly, Producer Prices picked up pace more than expected.

On the M&A front, after all the excitement in the Healthcare sector we note Pfizer (PFE) increasing its bid for AstraZeneca (AZN) from 4661p to 5000p/share, with a bit more cash to sweeten the recently rebuffed offer. Results from Royal Bank of Scotland (RBS.L) show a trebling of Q1 profits, only the sixth time it has reported a quarterly profit since the 2008 financial crisis. Attributable profit of £1.2bn vs £200m est, Operating profit £1.5bn vs 800m est, Pre-tax profit £1.6bn vs £300m est. Good news for state-owned banks after LLOY impressed yesterday too.

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In focus today: Eurozone PMI Manufacturing data with ES, CH and IT all expected to have nudged up and FR, DE and EZ seen confirming their flash readings. FR still close to breakeven while DE and EZ solidly in growth. Unemployment for the region seen unchanged.

In the afternoon, all eyes on the monthly big one, the US Employment Report where consensus is looking for jobs adds of 215K (all from private sector, most since November) in April and an end to all the weather related excuses of Q1. The unemployment rate is also seen falling by a point to February’s 6.6% (lowest since Dec ‘08), however, recent Fed rhetoric would suggest that even that is still high sub-target and inflation a worry so improvements on these figures might not get the markets too excited into the week-end especially after recent equity gains.
In commodities, most metals lower, with copper heading for its biggest weekly loss in seven weeks as bullish option bets on the USD/JPY climbed as economists estimate US Non-farm Payrolls will show the biggest increase since November. Gold is in a holding pattern $1280-1285, but still in decline over the week.

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