MID SESSION MARKET WRAP

The Mid Session Wrap is a report on the biggest movers in the FTSE 100 and macroeconomic news that impacts movements in share prices. The report also previews macroeconomic data that is due to be released over the course of the session.

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Friday, February 03, 2012

FTSE 100 rises after non-farm payrolls, US futures jump - UPDATE

FTSE 100 rises after non-farm payrolls, US futures jump - UPDATE

UK stocks rallied this afternoon after today’s data from the US Department of Labor revealed the biggest monthly increase in non-farm payrolls in nine months in yet another sign that the recovery in the US is picking up speed.

The FTSE 100 stood at 5,862 in early afternoon, up 65 points (1.15 percent) from Thursday’s close.

The jobs figures showed that the US economy created 243,000 new jobs last month following a 200,000 gain in December, while the unemployment rate unexpectedly dipped from 8.5 percent to 8.3 percent.

Analysts expected to see a gain of 140-150,000 and no change in the jobless rate.

The figures followed Wednesday’s report from payrolls processor ADP, which said the private sector in the US added 170,000 jobs in January.

The impact from the strong jobs data was partly offset by weak euro zone sales figures for last year’s festive shopping season released by Eurostat today. Sales in the 17 countries that make up the monetary union dipped 0.4 percent in December, however, retailers including Next (LON:NXT, up 2.7pct at 2,768p) held up well.

Car insurer Admiral Group (LON:ADM, up 6.9pct at 1,028p) topped the FTSE 100 leaderboard after extending contracts with its reinsurers.

Other notable risers included hedge fund manager Man Group (LON:EMG, up 3.6pct at 131.4p) and insurance company Old Mutual (LON:OML, up 3.4pct at 156.7p).

Mining stocks were in decline today after an official report that came out in China, the world’s largest importer of base metals, showed a decline in the non-manufacturing PMI index from 56 in December to 52.9 last month.

Rio Tinto (LON:RIO, down 1.8pct at 3,908p) was the heaviest faller in the mining sector, followed by Vedanta Resources (LON:VED, down 1.7pct at 1,301p) and BHP Billiton (LON:BLT, down 1.4pct at 2,164p).

Investors also sold mining companies to take profits following yesterday's strong rally that followed Xstrata's (LON:XTA, up 3.5pct at 1,273p) comfirnation of merger talks with Glencore (LON:GLEN, up 3pct at 475.45p).

Russian steelmaker Evraz (LON:EVR, down 2pct at 446.4p) also was in decline.

US markets

Financial bookmakers are expecting an early rally on Wall Street following today’s stellar jobs figures from the Department of Labor.

Futures for the Dow Jones Industrial Average (DJIA) climbed 109 points (0.85 percent) in pre-market and futures for the broader S&P 500 index jumped 12 points (0.9 percent).

Traders in the US will have more data to digest later this afternoon with the Institute for Supply Management set to release its non-manufacturing index for January, while the Commerce Department will release factory orders figures for December.

A survey by FactSet forecast an increase from 52.6 in December to 53.2 in January in the non-manufacturing index.

UK corporate news

Back in the UK, other announcements in the top flight included a quarterly report from BT (LON:BT.A, up 3.8pct at 213.7p). The telecom major saw its adjusted pre-tax profits jump 48 percent to 18 percent to £628 million during the last three months of 2011 despite a five percent drop in revenues to £6.77 billion.

BT also told investors it expected to achieve its 2013 EBITDA target of over £6 billion this year, while delivering a free cash flow of £2.4 billion.

Fellow blue chip, insurer Old Mutual said that it will return £1 billion to shareholders after selling its long-term savings and banking operations in Sweden, Denmark and Norway for £2.1 billion.

The remaining proceeds of £1.1 billion will be used to reduce deBT, said Old Mutual.

Elsewhere in the FTSE 100, Tullow Oil (LON:TLW, up 1.5pct at 1,462p) has secured signed two new production sharing agreements covering the EA-1 and Kanywataba licences in the Lake Albert Rift basin and said it will now finalise farm-down deals with CNOOC and Total.

In addition, the Ugandan government has granted Tullow a production license for the Kingfisher project.

In the FTSE 250, software group Misys (LON:MSY, up 1.7pct at 331.2p) confirmed it is currently in discussions with Temenos Group AG over an all-share merger.

“Discussions are continuing and there can be no certainty that a transaction will ultimately take place, nor as to the terms on which any transaction might be constituted,” Misys said in today’s statement.


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