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FTSE 100 set for flat start as unemployment fears dog UK markets

Jim Armitage
·2-min read
 (REUTERS)
(REUTERS)

The FTSE 100 was set for small rise today although analysts said it could go either way in what will be a mixed session for EU stocks.

US markets raced to new records last night with retail investors driving the tech-heavy Nasdaq to new highs. The surge in Joe Public’s interest in US shares has triggered a volatile market as day traders move in and out of stocks rapidly.

This week’s surge in retail interest appears to be ahead of earnings announcements coming from Microsoft today and Apple tomorrow, CMC Markets analyst Michael Hewson said.

Any disappointment on those profit figures could see a massive sell-off in the sector, bursting - for now at least - the bubble that has been inflating in US stocks since last Autumn.

European stocks, like Asian ones this morning, are likely to have a mixed session. The FTSE 100 is being called up 4 at 6642 - an irrelevant move that could easily turn negative by the time trading opens.

The Dax in Germany was being called down 9 at 13,635 and France’s CAC 40 10 points lower at 5462.

Unemployment is the key economic data of the day, with the UK monthly jobless figures likely to show the unemployment rate moved up from 7.4% in November to 7.5% in December.

The more lagging ILO measure for November is likely to show a move above 5% for the first time since April 2016.

The Chancellor suggested UK unemployment will peak in the second quarter of the year at 7.5%.

Today’s grim data will put further pressure on him not to raise taxes at the March Budget. He has been indicating that it is time to start paying down some of the spiralling debts the country has built up during the Covid crisis, but businesses fear it is too early to start landing them with yet more financial hurdles to stay afloat.

Any attempt to wring extra taxes from business now could easily trigger more redundancy notices to go out across the UK.

One more palatable alternative could be a digital sales tax on tech companies who have thrived in the crisis.