- FTSE 100 closes117 points higher
- US non-farm payrolls smash expectations, up 339,000
- Dechra Pharmaceuticals soars after agreeing £4.5bn bid
4.45pm: FTSE 100 recovers losses
At the close, London's biggest index was on strong footing, gaining 1.7% on the day to finish the week at 7,607 points.
After a few days of losses, that puts the index back in positive territory and 0.5% stronger than the beginning of the week.
Global stock markets ended the week on a more positive note as the US government agreed to a raised debt ceiling, IG's Axel Rudolph, Senior Market Analyst noted.
"Much stronger-than-expected US job creation data points to a robust economy even if the unemployment rate rose to a higher-than-expected 3.7%," he said.
3.56pm: FTSE 100 soars as US markets jump after strong jobs report
The Footsie has brought up a century of gains ending the week with a flourish as strong US payrolls figures, cooling average wage growth and news the debt ceiling bill has passed a vote in the US Senate sent US stocks motoring higher.
As the runs flow at Lords, London's lead index is up 108 points, at 7,599.
The May US jobs report showed the economy added 339,000 jobs in May, well above the 190,000 consensus expectation while upward revisions to the past two months totalled 93,000, underscoring the strength of job creation.
The unemployment did rise to 3.7% from 3.4% while average hourly wage growth moderated, as expected, to 0.3% month-on-month from last month's 0.5%, leaving the annual rate of hourly earnings wage growth at 4.3%
The Dow Jones Industrial Average was over 400 points to the good in early exchanges although commentators noted the US jobs report was not all good news.
Ian Shepherdson Chief Economist at Pantheon Macroeconomics described the payrolls data as a "nightmare report," for the Federal Reserve.
Do they stick to incoming VC Jefferson’s clear signal of a June pause, just a couple days ago, or do they rewrite the script, he asked?
"With no more voting speakers scheduled before the meeting, we’re assuming no change in rates is still the most likely outcome, but if Chair Powell and his colleagues want to change the signal, they can do so via their usual channel - the WSJ - over the next few days," he reckoned.
Shepherdson said it was the "strangest employment report for some time," adding the payroll surge "is impossible to square with leading indicators."
ING Economics noted companies are reporting a jobs surge in May, yet households are telling us employment plunged. Who to believe, they asked.
“With wage growth continuing to soften and hours worked edging lower the market is thinking the June FOMC meeting "skip" narrative still holds,” it felt.
However, ING said a “hot core CPI print on 13 June could yet tip the balance.”
3.35pm: HSBC to raise savings rates, FTSE brings up century
Just like a couple of England cricketers are Lords, the FTSE 100 has brought up its own century, now up 103 points.
Good news for investors and are things looking up for savers? HSBC Holdings PLC is boosting rates on a number of its savings accounts just as two smaller players make their plays for customer's hard-earned cash.
HSBC said it is increasing the interest rates on some savings accounts by up to 0.75 percentage points raising hopes that the big players on the high street may be finally be set to reward savers.
The rises by HSBC will come into effect next week, on June 8, and include a 0.75 percentage point increase on the bank’s mysavings and premier savings youth accounts, taking rates to 5.00%.
Saver instant access account, for balances up to £10,000, will rise by 0.50 percentage points to 4.00% with the ISA rates also on the up.
Pella Frost, HSBC UK’s head of everyday banking, said: “We know that having a savings habit helps build financial resilience and means that you’re better placed to handle any disruption.”
The increases come as Saffron Building Society launched a ‘market-leading’ savings account shortly after Skipton Building Society announced a bumper savings rate of 7.5% on its regular saver account.
Saffron’s 9% rate is only available to people who have been members of the Essex-based institution for a year or more but is significant, being above the current rate of inflation.
Twelve interest rate rises by the Bank of England have spelled pain for millions of people with existing mortgages and those looking to take one out, and the criticism has been that on the flipside savers haven’t seen any of the benefit.
Earlier this year, MPs criticised bank bosses over their low savings rates, particularly on instant access accounts, saying that they seemed to be “taking advantage” of loyal customers.
Perhaps the big high street lenders are starting to play ball.
2.50pm: Wall Street posts strong gains, Nasdaq lags
A strong start across the pond after the non-farm payrolls.
Shortly after the opening bell, the Dow was up 223 points, 0.7%, to 33,326, the Nasdaq Composite improved 139 points, 1.1%, to 13,240 and the S&P 500 added 40 points, 0.1%, to 4,261.
Investors were pleased to see the May jobs report come in much hotter than expected. The US economy added 339,000 jobs in May compared to expectations of just 190,000. Unemployment rose to 3.7% from 3.4% in April.
“We knew people would burn through Covid-related savings and eventually return to the workforce. The effect is naturally a higher unemployment rate and increased supply of labor also slows wage growth,” said Bryce Doty, senior portfolio manager at Sit Fixed Income Advisors. “Today’s job data is a welcome sign that the labor force is finally beginning to normalize.”
Also helping sentiment is the debt ceiling deal that passed through both chambers of Congress this week, successfully averting a US default.
Back in London and the FTSE 100 has extended its gains, now up 95 points.
2.29pm: Payrolls a "nightmare report" for the Fed
Ian Shepherdson Chief Economist at Pantheon Macroeconomics thinks today's payrolls report is a "nightmare report," for the Federal Reserve.
Do they stick to incoming VC Jefferson’s clear signal of a June pause, just a couple days ago, or do they rewrite the script, he asked?
"With no more voting speakers scheduled before the meeting, we’re assuming no change in rates is still the most likely outcome, but if Chair Powell and his colleagues want to change the signal, they can do so via their usual channel - the WSJ - over the next few days," he reckoned.
Shepherdson said it was the "strangest employment report for some time," adding the payroll surge "is impossible to square with leading indicators."
Ahead of the open in New York, the FTSE 100 is holding near its best levels for the day, up 85 points.
2.10pm: Pound edges lower as payrolls increase chance of US rate rise
The pound edged lower after the blowout US non-farm figures which showed a jump in payrolls, well above expectations, although the unemployment rate increased.
Sterling fell as future markets priced in a higher chance of a rate rise at the next Federal Reserve meeting on June 14.
John Leiper, chief investment officer at Titan Asset Management pointed out markets ahead of the figures had "whipsawed from pricing in a 70% probability of a quarter point rate hike later this month to just 25%."
He said on the face of it the strong payrolls figure "increases the odds of a rate increase."
"However, the unemployment rate rose 0.3% to 3.7% which can be a strong leading indicator for recession and ties in with the decline in the manufacturing payroll, a sector that is in recession."
Leiper felt it was "an interesting and somewhat mixed data set that likely reflects notable churn in the underlying data."
"As a result, market reaction thus far is actually quite muted as investors attempt to digest the information," he added.
1.35pm: Non-farm payrolls smash expectations
US non-farm payrolls smashed expectations increasing by 339,000 in May, although the unemployment rate rose by 0.3 percentage points to 3.7%, the US Bureau of Labor Statistics reported.
Job gains occurred in professional and business services, government, health care, construction, transportation and warehousing, and social assistance.
Payrolls figures for March and April were also revised up - March by 52,000, from 165,000 to 217,000 and April by 41,000, from 253,000 to 294,000.
⚠️BREAKING:
*U.S. MAY NONFARM PAYROLLS RISE BY 339,000; EST. 180,000; PREV. 253,000
*MOST SINCE JANUARY 2023https://t.co/zcxgLSF0aV
???????????????? pic.twitter.com/agbKGgJrQq
— Investing.com (@Investingcom) June 2, 2023
Consensus forecasts were for an increase of 190,000.
Average hourly earnings for all employees on private nonfarm payrolls rose or 0.3% giving annual growth of 4.3%.
1.00pm: US seen higher ahead of non-farm payrolls
US stocks are likely to open higher ahead of a key employment report after the US Senate passed a bill to raise the debt ceiling above the current $31.4 trillion.
Futures for the Dow Jones Industrial Average rose 0.5% in Friday pre-market trading, while those for the broader S&P 500 index and contracts for the Nasdaq-100 were also 0.5% higher.
After passing through the House of Representatives on Wednesday, the Senate approved a debt deal negotiated by President Joe Biden and House Speaker Kevin McCarthy last weekend, averting a US default.
Ahead of that, the S&P 500 closed nearly 1% higher on Thursday at 4,221, the Dow finished around 0.5% firmer at 33,062 and the Nasdaq had the biggest lead of the three major indices, up 1.3% at 13,101.
“Investor optimism ahead of the Senate vote proved to be well-founded as the debt ceiling issue was resolved, with just days to go, after the closing bell,” commented Richard Hunter, head of markets at interactive investor.
“While the issue was expected ultimately to reach a satisfactory conclusion, there was nonetheless relief as the legislation avoids what would have been a disastrous US default. Attention will now revert to the other pressing issues of the day, most notably the next move on interest rates from the Federal Reserve.”
Hunter noted that recent comments from Fed members have also lifted market sentiment, suggesting that the time for a pause in the rate hiking cycle might now be appropriate.
“The consensus has swung again to a reported 75% chance that there will be no hike at the upcoming June meeting,” he added.
“However, a strong non-farm payrolls report later today could upset that particular applecart. The current forecast is for 190,000 jobs to have been added in May, as compared to a figure of 253,000 the previous month.”
12.40pm: Paypoint (LSE:PAY) shares jump as sees top-end profits
Paypoint (LSE:PAY) PLC shares jumped more than 6% after the firm said it expects top-end profits in the year to March 31.
The company also reiterated guidance issued in the post-close trading update in April that net revenue for the financial year, excluding Appreciate Group, is expected to be around £125mln, up from £115.1mln the yaer before with accelerated revenue growth across all three business divisions.
Analysts at Jefferies reckon the update should drive low-single-digit upgrades to consensus EPS forecasts.
The broker noted the statement also hints at further positive momentum into new financial year and consequently an upbeat narrative ahead of the 6 July results announcement.
Shares jumped 6.4% to 403p but remain 21% lower year-to-date.
The FTSE 100 is now up 70 points with attention now shifting to the US with non-farm payrolls figures due within the hour.
12.05pm: Global food commodity prices at two year low
Global food commodity prices have hit their lowest level in over two years, according to fresh data from the United Nations food agency.
The Food and Agriculture Organization’s (FAO) price index, which tracks the most globally-traded food commodities, has hit its lowest level since March 2021.
The price index fell to 124.3 points in May, down from 127.7 in April. It is now 22% lower than the all-time high of March 2022, after the invasion of Ukraine sparked a surge in food costs.
There were “significant drops” in the price indices for vegetable oils, cereals and dairy, which were partly counterbalanced by increases in the sugar and meat indices, the FAO reports.
International wheat prices declined by 3.5% month-on-month, the Vegetable Oil Price Index fell 8.7% in May and the Dairy Price Index fell 3.9%, led by a steep drop in international cheese prices.
Meanwhile, the FTSE 100 continues to romp along, up 68 points at 7,558.
11.20am: CBI to axe staff as it fights for survival
The UK’s most prominent business lobby group, the Confederation of British Industry, is to lay off a swathe of its workers as it fights for survival amid a crisis prompted by multiple sexual misconduct allegations.
The CBI needs to cut its wage bill by a third within months, staff were told at an all-hands meeting on Thursday, according to sources with knowledge of the discussion, reported by The Guardian.
Management is aiming to initially use voluntary redundancies to trim costs, the report said.
A spokesperson for the lobby group, which employs 300 people, confirmed it had to make “difficult decisions” including cutting its salary base by a third, along with other “cost-saving measures”. “It will be a smaller and refocussed organisation in the future,” they said.
The CBI, which represents the interests of around 190,000 businesses, has lost high profile members since the misconduct claims became public in April.
10.35am: Boeing delays first crewed flight of Starliner
Boeing has once again delayed the first crewed flight of its Starliner space capsule after discovering new technical issues, officials said.
The troubled CST-100 Starliner program has experienced numerous postponements but was finally meant to send humans on a test flight to the International Space Station on July 21.
During testing, Boeing engineers identified new issues relating to a faulty parachute system and wire harness tape used extensively through the capsule that was found to be flammable under some conditions.
After internal deliberations, they decided to abandon the test flight and report the new issues to the US space agency, which has contracted Boeing to provide a taxi service to the ISS.
"We've decided to stand down the preparation for the CFT (Crewed Flight Mission) mission in order to correct these problems," Mark Nappi, vice president and program manager of Boeing told reporters on a press call. No new date has been proposed.
Boeing had hoped to make its first manned flight of the CST-100 Starliner in 2022.
The company finally succeeded in May 2022 in reaching the ISS for the first time – without a crew on board.
9.58am: Revolution Beauty working towards lifting of share suspension
Revolution Beauty Group PLC said its half year loss narrowed in 2022, accompanied by a considerable revenue decrease, and that publishing these results was "an important step” towards its share suspension being lifted.
Trading in the beauty products retailer has been suspended since September 1 after it failed to deliver its first audit by August 31.
For the six months ended August 31, 2022, the company reported a pre-tax loss of £13.3mln, narrowed from a £28.8mln loss a year prior. Total revenue decreased 4.2% to £75.2 million from £78.6 million.
“The publication of these H1 figures...represents an important step as we work towards lifting the suspension of Revolution Beauty shares," Chief Executive Bob Holt commented.
9.36am: Fiat calls on government to do more to boost EV sales
Fiat has urged the government to do more to boost sales of electric vehicles warning sales are tailing off.
The Italian car manufacturer wants more help for people to switch from fossil fuel vehicles voicing concerns that EV sales are not accelerating as quickly as it or other manufacturers expected.
In a letter to the government, it warns that the market share of EV’s in the UK has plateaued in the year since the Plug-in Car Grant (PiCG), which subsidied the cost, was abolished.
Fiat are also offering a £3,000 discount to its electric cars, dubbed the Fiat ‘E-Grant’, which is larger than the phased-out government subsidy.
Damien Dally, Fiat UK’s managing director, told Radio 4’s Today Programme that the EV market has grown from less than 1% in 2019 to 15% today.
Dally said: “That means 85% of people are not buying electric vehicles today. And it’s really halted since the removal of the grant.”
Fiat believes that demand for EV cars will start to tail off in six month’s time, Dally added.
9.03am: JP Morgan positive on Prudential, shares jump
Prudential PLC (LSE:PRU) received a boost from JP Morgan which has put the insurer – which it rates overweight - on Positive Catalyst Watch.
The investment bank said thinks in spite of the IFRS17 ‘fog’ the recent quarterly trends “suggest to us that Prudential is still on track to beat new business sales and profit consensus under its embedded value framework.”
The bank also likes the look of French insurer, AXA, which has also placed on Positive Catalyst Watch.
“We also remain positive on reinsurers and Beazley, but would look for better timing to buy at the end of the quarter,” JPM said.
Prudential shares rose 3.4%, AXA shares 1.0% and Beazley shares 1.0%.
8.52am: FTSE 100 remains in the green, oil price rallies
The FTSE 100 remains in positive territory, up 35 points, after the good news from the US debt ceiling.
Richard Hunter at interactive investor, commented “Investor optimism ahead of the Senate vote proved to be well-founded as the debt ceiling issue was resolved, with just days to go, after the closing bell.”
“While the issue was expected ultimately to reach a satisfactory conclusion, there was nonetheless relief as the legislation avoids what would have been a disastrous US default.”
The oil price rallied on the news with Brent crude up 1.4% to $75.28/barrel and West Texas Intermediate up 1.2% to $70.92.
The rise supported shares in BP PLC (LSE:BP.) which gained 1.5% and Shell PLC (LSE:SHEL, NYSE:SHEL), up 1.0%.
Asia focused stocks advanced after gains in Asian markets with Prudential PLC (LSE:PRU) up 2.5% and Standard Chartered PLC (LSE:STAN) up 1.7%.
The Pru was given a further boost by JPMorgan which placed the insurer – which it rates overweight - on Positive Catalyst Watch.
But Wizz Air Holdings PLC fell 1.5% despite carrying 22% more passengers in May compared to a year ago, while the total number of travellers using the carrier rose by 59% year-on-year.
The central Europe-focused airline said it carried just over five million passengers (5.03mln) during the month, at a load factor (seats filled per flight) of 90.2%, up from 84.2% in the 2022 comparison.
8.15am: FTSE bounces as US debt ceiling deal passes Senate
The FTSE 100 pushed higher in early exchanges after the US Senate passed the debt ceiling bill while the broader market was lifted by news of a bid for Dechra Pharmaceuticals PLC (LSE:DPH).
At 8.15am, London's lead index was up 30.11 points, 0.40%, at 7,520.38 while the FTSE 250 jumped to 18,934.40, up 106.64 points, or 0.57%.
Shares in Dechra led the FTSE 250 risers soaring 8.1% to 3,646p after the veterinary pharmaceutical company said it had agreed a £4.5bn bid from Swedish private equity firm EQT.
The offer, worth 3,875p, is below the terms of an indicative proposal from EQT of 4,070p per share made in April. That was before Dechra warned, in May, that full-year operating profit would be below current guidance after de-stocking by a number of wholesalers.
Markets took heart from news that the US Senate has approved a fiscal deal between the White House and congressional Republicans, ending a weeks-long political stand-off over the debt ceiling.
Lawmakers in the upper chamber passed the bill on Thursday evening, with 63 senators backing the legislation and 36 opposed.
The bill now heads to President Joe Biden for his signature, just four days before the US Treasury projected it would run out of cash to pay all its bills.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said: "The deal clears the path to more normal business to resume, but the reason there hasn’t been more of a substantial bounce is because markets were very much betting that officials would indeed sort out the issue before default occurred."
Back in London, and NatWest Group PLC (LSE:NWG) was little changed after it confirmed it had reduced its stake in Ireland’s Permanent TSB.
The high street lender netted €55.2mln from its part of the deal.
But Diageo failed to join in the brighter mood with shares down 0.6% at 3,340p.
Deutsche Bank reiterated its sell rating. "We believe consensus estimates remain too optimistic for Diageo and we note US alcohol inventories are currently at a 30yr high vs shipments," the bank said.
The investment bank has a 2650.00p price target.
7.45am: NatWest nets €55mln from sale of stake in Ireland's PTSB
NatWest Group PLC (LSE:NWG) has netted €55.2mln after completing the sale of part of its stake in Permanent TSB Group Holdings PLC (PTSB).
The Minister for Finance of Ireland and NatWest have sold 10% of PTSB representing 54.6mln shares.
As part of this, NatWest sold 27.3mln shares representing 5.0% of the share capital of PTSB.
The sale was effected by way of a placing of shares in an accelerated book building process.
NatWest’s now holds 11.7% of PTSB and received proceeds €55.2mln from the deal.
The high street lender said the disposal will have an immaterial impact on NatWest's CET1 ratio and its TNAV per share.
NatWest CEO Alison Rose said: “This transaction represents further positive progress on our phased withdrawal from the Republic of Ireland."
7.36am: Dechra Pharmaceuticlas agrees £4.46bn bid from EQT
Dechra Pharmaceuticals PLC (LSE:DPH) has agreed a £4.46bn bid from Swedish private equity firm EQT.
The offer for veterinary pharmaceutical company, worth 3,875p, is below the terms of an indicative proposal from EQT of 4,070p made in April.
In a statement, Dechra said the deal implied an enterprise value of £4.88bn and a multiple of around 25.9 times Dechra's EBITDA for the twelve months ended 31 December 2022 of £188mln.
Dechra said it considered the terms “fair and reasonable” and “intend to recommend unanimously” the proposal to shareholders.
Shares in Dechra plunged in May after it warned full-year operating profit will be below current guidance after de-stocking by a number of wholesalers.
The said the trading environment during the period January to April has been more volatile and challenging than in February when the firm reported its interim results.
Shares in Dechra closed at 3,374p on Thursday.
7.00am: FTSE 100 seen higher after US Senate approves debt ceiling bill
The FTSE 100 is predicted to open higher on Friday after the Senate passed legislation allowing the US to avoid an unprecedented debt default, sparking strong gains in Asian markets.
Spread betting companies are calling London’s lead index up by around 30 points.
In Tokyo on Friday, the Nikkei 225 index was up 1.1%. The Shanghai Composite was up 0.8%, while the Hang Seng index in Hong Kong was up 3.7%.
On Thursday, US stocks had also closed higher. The Dow Jones Industrial Average rose 153.30 points, or 0.5%, to 33,061.57. The S&P 500 gained 41.19 points, 1.0%, at 4,221.02 and the Nasdaq Composite jumped 165.70 points, 1.3%, at 13,100.98.
Attention now switches to the US non-farm payrolls figures due this afternoon.