UK shares took a tumble after early gains following the latest US non-farm number payrolls number.
The U.S. economy created just 142,000 new jobs in September and the number of new hires in August and July was also revised lower.
It suggests the US economy is not as robust as many had first thought, and throws further doubt on the timing of the Federal Reserve’s long-awaited interest rates.#
Christopher Vecchio, Currency Analyst, at DailyFX said: “It might be time to put a pin in hopes for the Federal Reserve to raise rates in 2015.”
Footsie was just 3 points higher at 6,164 despite the continuing revival for Glencore (LON:GLEN)
It’s been an extraordinary week for the mining titan, with a 30% drop on Monday and speculation it might be worthless sparking a revival that has seen those losses nearly clawed back as a number of meetings have reassured investors.
The last of these was yesterday and as an indicator of how seriously the events this week have shaken the Switzerland-based group, it even shed light on the US$17bn of stock it holds in its trading business.
Apparently two –thirds of the assets are oil-related and can be liquidated in little more than a week, while the remainder are metals that are with sold forward or hedged.
If it was designed to convince investors Glencore was in no real danger from falling commodity prices, it seems to have worked with the shares up 1% today to 92p.
Aside from Glencore, financials companies were the stand-outs.
Life insurer Legal & General (LON:LGEN) added almost 1.5% to 240p as it picked up a pension contract with electronics group Philips’ US employees.
Philips will transfer US$900mln of pension obligations split equally between Legal & General and Prudential Insurance of America.
Banks were also on the up as an exit from the seemingly never-ending payment protection insurance black hole is possibly in sight.
Regulator the Financial Conduct Authority (FCA) has suggested a deadline of 2018 for claims for compensation. Some £20bn has been paid out for PPI mis-selling to more than 10m people so far.
Lloyds (LON:LLOY) jumped 1.6% to 76p and Royal Bank of Scotland 0.2% to 320p.
OiI groups Shell,(LON:RDSB) and BP (LON:BP.) also picked as the crude price rallied due to the worsening situation in Syria.
Experian was at the bottom of FTSE 100 after it was hit by a data leak that exposed details of customers for T-Mobile USA.
T-Mobile’s chief executive John Legere was reported to be “incredibly angry” about the breach. Shares fell 5% to 1.021p.
Universe Group (LON:UNG) rose 9% at 10.2p as it bagged booze seller Conviviality Retail (LON:CVR) as a customer.
Electrocomponents (LON:ECM) dropped 2.6% to 175.2p as it issued a downbeat trading statement covering the July-September quarter, with the US in particular weak.
Paragon Diamonds (LON:PRG) rose 1.6% to 4.8p as it agreed a US$15mln package to fund the development of its Lemphane and Mothae mines in Lesotho.
The company has signed a term sheet with Acrux Resources, a private South Africa based finance group, for a combined convertible debt and revenue sharing facility.
Cyber defence specialist Corero Network Security (LON:CNS) rose 8.6% to 14.25p as it inked a deal for its SmartWall Threat Defence System with an unnamed FTSE100 company.
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LONDON OPEN
UK shares rallied further ahead of the publication of the latest US non-farm number payrolls number.
Footsie was 63 points higher at 6,135 after gains in Asia overnight though US blue chips eased a little.
Non-farms payrolls are seen as a key to the ‘will they–won’t they’ debate on whether US interest rates are going up.
Consensus if for about 200,000 jobs to have been created in September compared to 173,000 in August.
A speech on Wednesday from Fed chair Janet Yellen however kept investors guessing as she failed to give any new indication about the first interest rate hike.
Chris Weston, at IG, said: "Today’s US payrolls number has once again been labelled a ‘much watch’ and to be fair, I think traders are getting a bit exhausted of these event risks."
He noted that the single most influential issue that should jump out immediately is that forecasters are expecting wages to grow by 2.4%.
"This would effectively be the strongest pace of wage growth since late 2009 and should increase the implied probability of a December hike closer, if not above 50%," he said.
A lack of big company new will also mean the market’s focus remains on the jobs numbers.
Life insurer Legal & General (LON:LGEN) was the best of the risers, adding almost 4% to 246p as it picked up a pension contract with electronics group Philips’ US employees.
Philips will transfer US$900mln of pension obligations split equally between Legal & General and Prudential Insurance of America.
Banks were also on the up as an exit from the seemingly never-ending payment protection insurance black hole is possibly in sight.
Regulator the Financial Conduct Authority (FCA) has suggested a deadline of 2018 for claims for compensation. Some £20bn has been paid out for PPI mis-selling to more than 10m people so far.
Lloyds (LON:LLOY) jumped 1.8p to 77p and Royal Bank of Scotland 6.4p to 325.6p.
Experian was at the bottom of FTSE 100 after it was hit by a data leak that exposed details of customers for T-Mobile USA.
T-Mobile’s chief executive John Legere was reported to be “incredibly angry” about the breach. Shares fell 5% to 1.027p.
Universe Group (LON:UNG) rose 10.7% at 10.375p as it bagged booze seller Conviviality Retail (LON:CVR) as a customer.
Electrocomponents (LON:ECM) dropped 6% to 169.1p as it issued a downbeat trading statement covering the July-September quarter, with the US in particular weak.
Paragon Diamonds (LON:PRG) rose 4% to 4.95p as it agreed a US$15mln package to fund the development of its Lemphane and Mothae mines in Lesotho. The company has signed a term sheet with Acrux Resources, a private South Africa based finance group, for a combined convertible debt and revenue sharing facility.
Cyber defence specialist Corero Network Security (LON:CNS) rose 9% to 14.25p as it inked a deal for its SmartWall Threat Defence System with an unnamed FTSE100 company.
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LONDON PREVIEW
UK shares are seen opening higher ahead of the closely watched non-farms job creation number later from across the pond.
FTSE100 made gains on Thursday but slipped back throughout the day, notably after disappointing US manufacturing data, closing just 10 points to the good at 6,072.
But today, spreadbetters at IG Index are calling the UK benchmark to open 15 points higher.
Today's monthly non-farms will be yet another indicator of how the US economy is doing and reveal yet more clues on an interest rate rise, though commentators point out that the Fed has already signally it is likely to be this year - which is unlikely to shift.
A speech on Wednesday from Fed chair Janet Yellen however kept investors guessing as she failed to give any new indication about the first interest rate hike.
Chris Weston, at IG, said: "Today’s US payrolls number has once again been labelled a ‘much watch’ and to be fair, I think traders are getting a bit exhausted of these event risks which are supposed to carry so much weight that they can alter the investment landscape."
He noted that the single most influential issue that should jump out immediately is that forecasters are expecting wages to grow by 2.4%.
"This would effectively be the strongest pace of wage growth since late 2009 and should increase the implied probability of a December hike closer, if not above 50%," he said.
The Dow Jones closed Thursday down 13 at 16,272, while in Asia the Nikkei 225 in Japan is down over 51 points and the Shanghai Composite closed over 16 points higher.