UK Markets Push Higher After Quarterly Trading Statements

Having seen US markets reopen without a hiccup yesterday, the focus in Europe returns to earnings and a very busy day for UK corporates. The FTSE 100 has so far gained around 15 points having found support pre-market at 5780.

Positive reactions to quarterly trading statements are pushing the market higher, but downgrades for yesterday’s wounded party BG Group (-4.5%) keep the market anchored from further gains. Guaranteed to make the headlines are numbers from Lloyds (+3%), who despite reporting an increase in PPI mis-selling provisions, have been greeted warmly by investors as the underlying performance and progress the bank is making is outweighing so-called "legacy issues."

The fact that other banks have already raised PPI provisions this quarter has priced the news into the shares. Just stretching ahead of the Black Horse are BSkyB (+3.6%) and BT (+5%) on the back of their numbers. Today’s AGM will be in focus for the former, while cost-cutting measures have improved figures for the latter.

Having assessed the damage of hurricane Sandy, trading resumed in New York yesterday despite the fact that much of the region is without power, and it will be some days before we see the city fully operational. The election will be back centre stage, after a relative ceasefire was called last weekend.

Possibly coming too late to change people’s minds, jobs numbers today and tomorrow are still a stepping stone to Tuesday’s polling. Changes to the methodology of today’s private ADP payrolls number will be keenly debated, and we may have to wait some months to see them bed in before we understand the significance of the changes. There are no structural changes to Friday’s nonfarm payrolls number, but with the election and clean-up to hurricane Sandy on the agenda, we expect trading to be even more cautious than normal. After a flat day yesterday, our current opening call for the Dow is 30 points lower at 13,064.