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FTSE 100 closes in positive territory, boosted by better-than-expected US March jobs figures as Brexit uncertainty continues

"Small gains are the order of the day aside from in the UK, where again sterling weakness has allowed the FTSE 100 to register some reasonable gains," says Christ Beauchamp from IG
Chart of unemployment figures
Payrolls rebounded in March from the aberrantly weak gain reported for February
  • FTSE 100 index gains 44.93 points

  • The US economy added 196,000 jobs in March

  • US indices remain in positive territory

The FTSE 100 closed the week higher, closing up 44.93 points at 7,446.87, led by positive US jobs data for March. 

The FTSE 250 also registered gains, up 30.97 at 19,538.30, putting aside the Brexit uncertainty in the UK which dampened the pound.  

On the other side of the pond, the DJIA added 0.03% while the S&P 500 was up 0.31%. The NASDAQ composite index continued in line with rises, up 0.49%.

 

On the homefront, Prime Minister Theresa May and opposition leader Jeremy Corbyn are set to continue Brexit talks. May has written to European Council President Donald Tusk, asking for a delay until 30 June for Brexit. Tusk, on the other hand, has generously proposed a longer delay of one year, which could give rise to some issues over the upcoming European elections.

Top gainer for the day was Prudential (LON:PRU) which rose 2.69%  to close at 1680.50, followed by Rolls Royce, (LON:RR.) up 2.52% at 926.89 and Anglo American, closed up 2.20% at 2,184.50. 

 

3.30pm: The Footsie racks up a half-century

The FTSE 100 was getting on a giddy-up entering the final hour of trading after solid US jobs data.

The index of heavyweight shares was up 52 points (0.7%) at 7,454.

"The latest results suggest that the soft reading in the prior month (33,000; revised from 20,000) contained a strong element of random volatility. The pace of job growth has eased some in recent months, as the average gain of 180,000 in the first three months of the year trailed the average of 223,000 in 2018, but it was still well maintained (in line with 193,000 in 2016 and 179,000 in 2017),” commented Daiwa Securities.

“Although the jobless rate improved marginally, it had a soft tone, as the household survey showed a drop in employment (off 201,000) but the labour force contracted by a larger amount (off 224,000). The size of the labour force has declined for three consecutive months, but it was up sharply in two of the three months before the recent slide,” Daiwa added.

US indices opened higher after the jobs data, with the Dow up 28 points (0.1%) at 26,413 and the S&P 500 10 points firmer (0.3%) at 2,889.

2.15pm: US jobs data should stave off a rate rise from the Fed for a bit longer

The FTSE 100 received a boost from better-than-expected US jobs figures.

The index of leading shares was up 31 points (0.4%) at 7,433, about five points below its intra-day high.

“After disappointment in February, job creation bounced back nicely in March. With pay set to continue grinding higher consumer fundamentals are in decent shape,” suggested James Knightley, the chief international economist at ING Economics.

“We seem to be back on track with a 196,000 gain for March, above the 177,000 consensus. Separately, wage growth slipped a little to 3.2% YoY [year-on-year] from 3.4% but the unemployment remains close to 50-year lows at 3.8%.

“The details on payrolls show that manufacturing employment fell 6,000 which is the first fall for this component since July 2017. Unfortunately for President Trump it doesn’t fit with his narrative that talking tough on trade and offering corporate tax cuts leads to re-shoring of jobs. Construction employment rose 16,000 while private sector services saw employment rise 170,000 and government was up 14,000. All these latter components are broadly in line with recent trends,” Knightley observed.

Nick Kilbey, a sales trader at Foenix Partners, said it was a mixed jobs report.

“The latest non-farm payrolls printed a significant increase at 196K, eliminating concerns that the US job market had weakened after February’s lacklustre print. Unemployment held at 3.8% and average earnings (MoM) dropped to 0.1%, with no major shocks from the headline prints we should begin to see some traction for the dollar,” he opined.

Rupert Thompson, the head of research at Kingswood, said: “The US non-farm payroll numbers, along with the spate of economic data released earlier in the week, appear to confirm that while US growth is undoubtedly slowing, it is far from collapsing.

“Payrolls rebounded in March from the aberrantly weak gain reported for February. At the same time, a smaller than expected gain in average hourly earnings shows that wage pressures continue to build only slowly in response to the very low unemployment rate. Altogether, these numbers should make pleasant reading for the markets – keeping the Fed firmly on hold while providing reassurance that there is no sign of the impending recession heralded by the recent inversion of the yield curve,” he added.

1.45pm: The Footsie perks up after US jobs data

The US economy added 196,000 jobs in March, according to the latest non-farm payrolls data.

Economists had predicted a rise of 179,000. The previous month’s increase was revised up from 20,000 to 33,000.

Average earnings rose by 4 cents to US$27.70 an hour.

 

Futures contracts for the US benchmark indices headed higher after the release of the data.

In the UK, the FTSE 100 shook off its lethargy, rising to 7,436, up 34 points.

12.50pm: All quiet on the western front ahead of US jobs data

The FTSE 100 was holding station a few points above 7,400 in the countdown to the release of US jobs data at 1.30pm.

Since noon, the Footsie has drifted ever so slightly lower to 7,416, up14 points (0.2%), mirroring the situation on futures markets for US index contracts.

All of that could change with the release of the jobs data.

“US futures are marginally higher but we have lost a little momentum. That may simply be because we’re awaiting the latest labour market data from the US, a report that is arguably the most closely followed each month. It also comes after a dreadful month of job creation in February when only 20,000 were added, although the data has been very inconsistent since the shutdown and another revision may come today,” said Craig Erlam at OANDA, setting the scene.

“Broadly speaking the labour market remains very strong and the economy, while slowing, is very healthy. With unemployment running at only 3.8% and wages rising at 3.4% annually, there’s clearly nothing to worry about just yet. That said, the US is not immune from the global slowdown and investors will only accept weak job growth for so long. It will be interesting to see what happens today if we get another bad reading, especially if it isn’t accompanied by a big revision to the February number. The market is not expecting this though, with around 180,000 forecast,” he said.

12.05pm: The index of blue-chips plodded higher throughout the morning session

The FTSE 100 plodded higher in the morning session, little affected by underwhelming US labour productivity data for the UK.

The FTSE 100 was up 16 points (0.2%) at 7,418.

UK labour productivity in the fourth quarter of 2018, as measured by output per hour, fell by 0.1% compared with the same quarter a year ago.

On the plus side, productivity improved quarter-on-quarter by 0.3%, the Office for National Statistics (ONS) estimated.

Howard Archer, the chief economic advisor to the EY ITEM Club, said the figures were disappointing.

“This completed an overall weak performance in productivity during 2018, with erratic quarterly movements,” he said, adding that the UK has a lot of catching up to do on productivity – a statement that could have been written any time in the last 50 years.

“The weak performance in Q4 2018 and weakness over the year reinforces concerns over the UK’s overall poor productivity record since the deep 2008/9 recession. Indeed, the ONS reported that labour productivity rose just 0.5% over 2018 as a whole, which was below the annual average growth rate of 2.0% seen before the 2008/9 downturn.

The ONS reported that “more than 10 years on, since the 2008 financial crisis, labour productivity (as measured by output per hour worked) is only just ahead of its level at the end of 2007”.

11.00am: Traders sit on their hands

The FTSE 100 continued to mark time waiting for developments in US-Sino trade talks.

At 11.00am, the FTSE 100 was up 7 points (0.1%) at 7,409, with mining stocks account for the bulk, if not all, of that rise.

“The US and China have failed to conclude their ongoing trade negotiations with a deal the two sides have yet to resolve issues around existing US tariffs and the monitoring and compliance procedures that would accompany an agreement for now at least this can has been kicked down the road once more,” said Darren Sinden, a market analyst at Pepperstone.

There has been precious little news flow among FTSE 100 companies but FTSE 250 constituent GVC Holdings PLC (LON:GVC) has given a tiny morsel to get its teeth into with a broadly well-received trading update that saw the shares rise 1.3% to 590.4p.

“It was only a brief first-quarter trading update, but this announcement was important for GVC after market confidence was rocked by senior management dumping millions of shares last month. With the group still cantering towards its targets of double-digit online revenue growth, we think these numbers are generally reassuring,” said George Salmon, an equity analyst at Hargreaves Lansdown.

“One blot on the copybook is that win margins are lower, meaning customers have had a comparatively good run recently. But the bookie always wins in the end. Punters often recycle a significant chunk of their winnings into another bet, and bookmakers can count on time taking its toll on a gambler’s roll. GVC will be hoping the tide turns over Grand National weekend, which is of course one of the most lucrative in the sporting calendar,” he added.

9.30am: Still slow going; housebuilders friendless after release of Halifax Price Index 

The FTSE 100 was marginally firmer in early deals but dealers clearly had at least half an eye on this afternoon’s US jobs figures.

The Footsie rose 15 points (0.2%) to 7,417, with what enthusiasm there is in the market engendered by hopes of progress in the trade talks between the US and China.

“Investor risk appetite towards stock markets is edging cautiously higher on further optimism that the US and China are nearing closer to agreeing a ‘very monumental’ trade deal,” reported Lukman Otunuga at FXTM.

“With US President Donald Trump stating that negotiations are ‘rounding the turn’ and Chinese Vice Premier Liu He hailing the ‘new consensus’ achieved recently, confidence is reaching new levels that a trade deal will eventually be signed after many months of protracted negotiations,” he added.

On a day when German Berenberg issued broker notes on estate agents (see below), there was some mixed news for the housing sector.

The Halifax’s house price index for the three months to the end of March suggested house price rose by 3.2% the year before, up from a 2.8% rise the previous month and ahead of the 2.3% rise predicted by economists.

On the down side, prices in March were down 1.6% on February’s levels after rising 6.0% in February.

“Yet more erratic monthly price movement is to be expected given the unpredictability of the wider political landscape and the extreme spike in prices seen the previous month,” commented Alastair McKee, the managing director of One77 Mortgages.

“Although the number of mortgage approvals remains below pre-financial crisis levels, this isn’t necessarily a bad thing as the ease of obtaining a mortgage and the relaxed approach to providing them was part of the problem in the first place.

“While we continue to see a consistent level of demand for mortgage products and the cost of borrowing remains low, the current market has been built on a more stringent lending foundation and as a result, we will continue to see buyer demand fuel positive house price growth in the long-term,” McKee said.

Housebuilders were generally weaker this morning, with Barratt Developments PLC (LON:BDEV) down 0.8% at 621p, Berkeley Group Holdings PLC (LON:BKG) down 0.8% at 3,814p and the bad boy of the sector, Persimmon PLC (LON:PSN), down 0.4% at 2,237p.

Taylor Wimpey PLC (LON:TW.) was up, however, advancing 0.2% to 185.38p.

8.45am: Little progress first thing

The FTSE 100 made a subdued start with investors keeping their powder dry ahead of US jobs data.

The index of blue-chip shares nudged just 4 points higher to 7,406.37 after a bout of profit-taking Thursday.

Dealers, meanwhile, were keeping a weather eye on the two issues currently driving market sentiment – Sino-American trade talks and Brexit.

However, American payroll data could be the decisive mood-changer, particularly if the new jobs figure undershoots consensus, which is around the 177,000-mark.  

“The pitiful number in the last report might be a sign of weakness in the US economy, or it might be an indication the US labour market is tightening, and employers should offer higher wages in order to fill vacancies,” said David Madden of CMC Markets.

Turning to the London market, German Bank Berenberg was taking pot shots at the estate agency sector.

It moved Purplebricks (LON:PURP) to ‘sell’ from ‘buy’, precipitating a 10% fall in the share price. Investor Neil Woodford’s company on Thursday sold down a small slither of its near-29% holding in the business.

On the upside, Countrywide (LON:CWD) was upgraded to ‘buy’, while Berenberg upped Foxtons (LON:FOXT) to ‘hold’.

Proactive news headlines:

Seeing Machines Limited (LON:SEE) has partnered with National Transport Insurance (NTI), an Australian specialist insurer, to promote its Guardian driver monitoring system to policyholders.

Irish explorer Erris Resources PLC (LON:ERIS) told investors that it is presently reviewing new projects that fit its investment criteria. The company, which in 2018 advanced the Abbeytown project in County Sligo, has today released its financial results describing a strong cash position.

BATM Advanced Communications Limited (LON:BVC) said its joint venture company has received the first tranche of a US$30mln investment. Ador Diagnostics will use the US$14.5mln to develop the NATlab reader, a rapid-results molecular biology diagnostics system. The remainder of the cash will be handed over next year.

Gaming technology platform operator Nektan PLC (LON:NKTN) saw record revenue growth in its business-to-business (B2B) division in the first three months of 2019.

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) recently revealed a significant extension to the SOP (sulphate of potash) resource at Lake Way in Western Australia. The new resource will enable the company to finalise technical studies for a larger production scenario with an anticipated release date towards the end of Q2 2019.

ADES International Holding PLC (LON:ADES) has reissued its results for the year ended 31 December 2018, previously announced on 25 March 2019, following an internal redetermination of the accounting treatments of certain transactions to reflect an adjustment in date of the recognition of derivative instruments. The company said there is no impact from the adjustments on its actual cash flows or liquidity, and its 2019 guidance remains unchanged.

Bushveld Minerals Limited (LON:BMN), the AIM-listed, integrated primary vanadium producer which owns high-grade vanadium assets in South Africa, has announced the appointment of Bertina Symonds as general manager of Bushveld Vametco and Hiten Ooka as the unit’s group head of finance.

ReNeuron Group PLC (LON:RENE), a UK-based global leader in the development of cell-based therapeutics, announced that its chief executive officer, Olav Hellebø will present at the HC Wainwright Global Life Sciences Conference on Tuesday, April 9, 2019, at 3:30 pm BST at the JW Marriott Grosvenor House London. A live and archived webcast of the presentation will be available on the company's website at www.reneuron.com.

6.40am: FTSE 100 set for slow start

The FTSE 100 was expected to open little changed ahead of this afternoon's release of the non-farm payrolls data in the US.

Spread betting quotes indicated the index of leading shares would open around 2 points higher at 7,404 in the wake of a solid trading session on US markets yesterday.

The Dow Jones industrial average advanced 167 points to 26,385 and the S&P 500 rose 6 points to 2,879.

This morning in Asia, Hong Kong's Hang Seng has been weak, shedding 50 points at 29,936 but in Tokyo, the Nikkei 225 was 63 points to the good at 21,788.

Non-farm payrolls in focus

“The US labour market looks strong on most parameters and the weak increase in non-farm payrolls in February was most likely a fluke after the big increase in January,” suggested Danske Bank, commenting on today’s release of US jobs data for April.

“We expect non-farm payrolls rose 190,000 in March and that average hourly earnings rose +0.25% m/m, implying a fall in the annual growth rate to 3.3% y/y [year-on-year] from 3.4% y/y. If we are right, the jobs report should support markets, which have rallied this week based on renewed growth optimism, as the US is not about to fall into recession just yet,” the bank added.

Wednesday’s private sector payrolls data from ADP – not always a reliable indicator of the official figures – registered a 129,000 increase in jobs, versus the 175,000 the market had been expecting, although the previous month’s figures were revised to show a 197,000 increase, prompting most pundits to regard February’s paltry 20,000 increase in non-farm payrolls to be an aberration.

In the UK, traders will, as usual, be on the look-out for any new developments – or reheated old developments – in the Brexit saga.

Bets on GVC

Turning to expected corporate news flow, with the UK’s biggest horse racing betting event, the Grand National at Aintree, coming up on Saturday, bookmaker GVC Holdings PLC (LON:GVC) has chosen a good time to release its first-quarter update.

Just a month after the FTSE 100-listed firm – which acquired Ladbrokes Coral last year – reported its full-year numbers, investors will be keen to see how the bookmaker did over the Cheltenham Festival of horse-racing in the middle of March, which mostly saw the favourites come in – never a good outcome for the bookies.

At the time of the announcement of its 2018 results, the group revealed that in the first eight weeks of 2019, net gaming revenue rose by 11% year-on-year, driven by a 22% increase in online revenues.

With profits from betting shops expected to fall this year as a result of the introduction the week of a £2mln maximum stakes on the fixed odds betting terminals (FOBT) that are often referred to as “the crack cocaine of gambling”, investors will be hoping that online growth has continued to be strong at GVC and that massive share sales by the chief executive and chairman last month were not a harbinger of troubled times ahead.

Significant announcements expected on Friday:

Trading update: GVC Holdings PLC (LON:GVC), Ferrexpo PLC (Q1) (LON:FXPO)

Traffic figures: International Consolidated Airlines Group PLC (LON:IAG)

Finals: Creo Medical PLC (LON:CREO)

AGMs: Tekcapital PLC (LON:TEK)

Economic data: US non-farm payrolls; US average hourly earnings; US consumer credit change

Around the markets

  • Sterling: US$1.3107, up 0.32 cents
  • 10-year gilt: yielding 1.087%
  • Gold: US$1,293.80 an ounce, down 60 cents
  • Brent crude: US$69.27 a barrel, down 13 cents
  • Bitcoin: US$4,982.96, up US$120.23

City headlines:

  • Financial Times

  • UniCredit is preparing to gate-crash the Commerzbank/Deutsche Bank wedding ceremony and bid for Commerzbank.
  • Carlos Ghosn, the former Nissan chairman, was arrested on Thursday morning over allegations he enriched himself and caused $5 million in damages to the Japanese cars maker.
  • The wife of Jeff Bezos is to receive more than US$35 billion of Amazon stock when she divorces the founder of the online shopping behemoth.
  • Never mind investing in players … Tottenham Hotspur reported a pre-tax profit of £138.9mln in the year to the end of June 2018, which the largest annual profit of any football club in history
  • The Times

  • Cabinet ministers are seeking to block Theresa May from agreeing on a Brexit delay of up to a year with the threat of resignations.
  • Boeing, facing the first of several lawsuits that could cost it $1 billion or more, has acknowledged that two fatal crashes of its new 737 Max airliner may have been triggered by the same malfunction.
  • New car sales fell to their lowest level in five years as the 19-registration plate change month of March failed to lift the motor trade.
  • The independent film distributor Entertainment One said its revenues had risen by 50% in China, predominantly driven by demand for the cartoon character.
  • AO World has been hit by exceptional costs linked to the restructuring part of its management team as well as a loss-making contract in its German business.
  • The Daily Telegraph

  • Shares in the over-50s insurance and travel company Saga fell almost 40% yesterday after plans for a dramatic overhaul of its insurance arm; investors have warned the company could be vulnerable to a takeover.
  • Cutting Huawei out of the UK's planned high-speed mobile network would cost £7 billion and delay its launch for years.
  • ITV has made an update to the systems behind its catch-up service, in a belated attempt to meet the demand for advertising tailored to consumer interests.
  • A research paper from the European Commission has said that the US technology giants should be subject to stricter merger controls to block them from snapping up promising European start-ups and stifling competition.
  • The Guardian

  • Euan Sutherland, the Superdry chief executive who quit after a boardroom coup led by its co-founder Julian Dunkerton, is to be handed a £730,000 pay-off.
  • The Tesla billionaire Elon Musk inaccurately claimed last year that he had a buyer for the company, in “clear violation” of a restraint issued by the US’s top financial watchdog.
  • Daily Mail

  • Tesla lost more than £3.2 billion of its market value after the company revealed its biggest ever drop in deliveries.
  • Serco’s boss Rupert Soames received £4.5 million overall in 2018, including a £255,000 cash pension contribution.

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