The FTSE 100 extended Friday’s gains of 125 points today as investors remained in risk-on mode following Friday’s jobs report from the Department of Labor. The UK’s blue chip index stood at 5,810 this afternoon, up 23 points (0.4 percent) from last Friday’s close.
The report showed that the US economy added 163,000 jobs last week, however, the unemployment rate climbed to 8.3 percent from 8.2 percent.
“We know that the Fed is keenly focused on the labour market because, whilst the economy has recovered the loss in output from the credit crisis, the labour market remains a long way behind,” said chief economist at FXPro Simon Smith.
He noted that the participation rate – those who are either employed or actively looking for work – stands at 63.7 percent, which he said is not encouraging for the long-term health of the US economy.
“The market was a little more perplexed as to the implications for the Fed, but further policy measures are still likely,” said Smith.
“Both the BoE and the ECB have moved into new areas in recent weeks (or announced their intention to do so) and the Fed will likely do the same as the impact of both low rates and also bond-buying starts to fade.”
Demand for equities was also supported by last week’s comments from ECB president Mario Draghi, who said the ECB could buy euro zone bonds to bring down borrowing costs. Today, German Chancellor Angela Merkel’s spokesman said the German government backed the proposal.
Russian steelmaker Evraz (LON:EVR, up 4.7pct at 250.8p) was the best performer in the blue chip index after UBS removed it from its least preferred list.
Engineering group IMI (LON:IMI, up 3.1pct at 865p) and banking group Barclays (LON:BARC, up 2.9pct at 176.25p) also made the FTSE 100 leaderboard.
Investors also bought mining stocks including Vedanta Resources (LON:VED, up 2.6pct at 979p) and ENRC (LON:ENRC, up 2.5pct at 397.9p), which were the top risers in the sector.
Commodities trader Glencore (LON:GLEN, up 2.5pct at 329p) and retailer Marks & Spencer (LON:MKS, up 2.5pct at 349.6p), which got a boost from takeover rumours, also did well.
Speciality chemicals firm Johnson Matthey (LON:JMAT, down 3.9pct at 2,198p) slid of the bottom of the FTSE 100 pile.
Shares in water groups Pennon (LON:PNN, down 1.4pct at 757.5p) and Severn Trent (LON:SVT, down 1.2pct at 1,718p) also were out of favour today.
British Airways owner International Airlines Group (LON:IAG, down 1.3pct at 149.1p) fell after it was reported that the group is considering acquiring a stake in American Airlines.