Market snapshot: UK stocks pull back ahead of key data

There's some big data in the diary and investors are nervous ahead of its release. Our head of markets explains what's moving share prices today.

Markets moderated after the strong push of the previous day, as investors turned their attention to the next important indicator for the economy.

Despite inflation and jobless claims numbers which both tended to support the case for the Federal Reserve to tap the brakes on interest rate hikes, the major US indices slipped back after a positive open.

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There was further evidence that the rate rises may be beginning to impact, as factory activity slowed to a low not seen for over two years. At the same time, manufacturing activity also cooled, with higher borrowing costs weighing on demand for goods.

Even so, the non-farm payrolls report later today is probably the most closely watched release of all, and the current consensus is that 200,000 jobs will have been added in November, as compared to 261,000 the previous months.

Nervous Fed-watchers will be hoping that the non-farm number comes in somewhat below consensus to strengthen the case for a moderation of what has been a round of aggressive rate hikes so far. On the other hand, a stronger-than-expected reading, while positive for the economy, would be damaging for that case in another example of good news being bad news for investors.

The languid performance overnight from US markets did little to improve overall numbers, and in the year to date, the Dow Jones remains down by 5%, the S&P500 by 14% and the Nasdaq still has a mountain to climb, having dropped by 27%.

Asian markets were also mixed, with the Covid-19 situation in China continuing to dominate sentiment. A further rise in cases was partly offset by the expectation that the country will be easing some of its zero-tolerance protocols in the coming days, possibly influenced by the widespread protests so far. Investors are increasingly impatient to see the shackles being loosened on an economy which has suffered in recent months. Hopes of some stimulus from the authorities remain in the background but, in the meantime, growth prospects and indeed consumer confidence have been blighted by curbs which have shackled any ability for the economy to recover naturally.

With little encouragement from elsewhere, UK markets have also had a tepid start as investors braced for the news from stateside later in the day. Majors struggled to find support from an uptick in the oil price, which remains far from its highs but is nonetheless still ahead by 12% in the year to date.

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Elsewhere, broker upgrades provided small boosts to the likes of International Consolidated Airlines Group SA (LSE:IAG) and Primark owner, Associated British Foods (LSE:ABF).

In the meantime, the premier index continues its quiet and measured progress overall, with the FTSE100 remaining ahead by 2% in the year to date, as compared to many of its global peers which have been caught squarely in the crosshairs of an increasingly uncertain economic outlook.