European stocks waver in thin trading ahead of US payroll data

European stocks hovered in a tight range on Thursday with investors cautious about making new bets ahead of Friday’s monthly US employment report and trading activity remaining muted as summer kicks off.

The region-wide Stoxx 600 was down 0.2 per cent in morning dealings, while Germany’s Dax and France’s Cac 40 were both off by around the same margin.

London’s FTSE 100 was among the biggest movers, slipping 0.6 per cent, led by National Grid, BT and Kingfisher. Both National Grid and Kingfisher were trading ex-dividend, meaning investors who purchase the shares today are not entitled to the next round of shareholder payouts.

The overall picture remained stable ahead of US non-farm payroll numbers due out on Friday, said Roger Lee, head of UK equity strategy at Investec. Trading volumes of companies listed on the Stoxx 600 were running around 40 per cent below typical levels, according to Bloomberg data.

“We’re potentially seeing the calm before the storm,” Lee said, pointing to overall US equity volatility at close to year lows with trading also mostly calm in the vast American government bond market.

“At the moment we’ve got emergency fiscal policies in place as the medical emergency is passing,” he added. “I think what the market is grappling with is how the Federal Reserve will deal with that or communication that.”

On Tuesday, James Bullard, president of the St Louis Fed, said the US labour market was tighter than it looks. The stronger labour market coupled with rising signs of inflation could mean the central bank will ultimately need to accelerate the timeframe for slowly pulling back on its bond-buying programme, investors have said.

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In the US, stock index futures were trading slightly lower, with those tracking the S&P 500 down by 0.1 per cent and those for the Nasdaq off 0.14 per cent.

Meanwhile, “meme stocks”, favourites of amateur investors, have continued their resurgence. Software producer BlackBerry soared 35 per cent in pre-market trading, while cinema chain AMC jumped by a fifth.

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