FTSE ends up as Trump moves towards Dodd-Frank scale-back
Banks among main gainers
Pound falls 0.3% against the US dollar to $1.2494
Pound falls 0.1% against the euro to 1.1637 euros
FTSE 100 stocks closed higher on Friday, offered a leg up by surprisingly strong US non-farm payrolls number and financial stocks confident burdensome US regulation was about to get scaled back.
The gainers eclipsed the losers on the London bourse by a wide margin, which is rare.
The FTSE 100 closed up 0.7% at 7188 and led by Barclays (LON:BARC) up 3.4% to 228.85p and insurer Prudential (LON:PRU) up 3.1% to 1600.5p. Other top gainers were RBS (LON:RBS), Aviva (LON:AV.) and Admiral Group (LON:ADM).
US President Donald Trump was making tracks on his promise to cut business regulation, as reports suggested he was to sign an executive order on Friday which strips back the Dodd-Frank regulatory framework put in place following the 2008 financial crisis.
Shares in ITV increased by 2% to 205.6p after analysts at Investec lifted their rating on the broadcaster to "buy" from "hold".
Mining stocks were trading lower as metal prices fell. Glencore (LON:GLEN) led the losers, down 4.8% to 309.5p while Rio Tinto (LON:RIO) was second, down 3.5% to 3390.5p.
The midcap FTSE 250 index closed up 0.8% at 18,411 and was led by Beazley plc (LON:BEZ) up 6.4% at 436.6p.
Insurer Beazley was in the green as it reported a 3% jump in full-year profit as premiums written increased and the company lifted its dividend. In the year to the end of December, pre-tax profit rose to $293.2mln from $284mln in 2015 as gross premiums written increased 6% to $2.2bn. Fellow insurer Hiscox also gained as a read across from Beazley.
But it too benefit from the US Dodd-Frank news.
The FTSE AIM 100 Index ended up 0.5% at 4287 and the FTSE AIM All-Share Index up 0.4% at 893.
Gainers in London were 43% and losers just 21%.
1515 GMT - FTSE 100 extends gains as US stocks advance on strong US jobs data
FTSE 100 jumps 50 points
US stocks leaps over 100 points after US jobs beat
But sterling stays weak after dull services PMI
Miners down after China cuts short-term rates
3.00pm ... US jobs boost ...
The Footsie pushed up to session highs in late afternoon trading as US stocks put in a strong start after the latest US non-farm payrolls data proved much stronger than forecast, illustrating the robust health of the world's biggest economy.
Around 3 pm, the FTSE 100 index was up around 50 points at 7,190, just below the day's best levels.
After half an hour of trading in New York, the Dow Jones was up almost 115 points, fractionally below the pyschologically-important 20,000 level surrendered earlier this week.
The gains came after data showing that 227,000 new US jobs were created in January, the biggest increase in four months and well above the 197,000 rise forecast.
However, slightly denting the rosy picture was news the US unemployment rate rose to 4.8%, up from 4.7% in December, and wage growth was an anaemic 0.1%.
Naeem Aslan, chief market analyst at Think Markets UK Ltd., said: "The US NFP data has confirmed that the lavish party in the employment sector is still somewhat solid, especially if you look at the headline number. You can say that it was a super solid number because it was well ahead of expectations."
But, he added: "It is not all good news when it comes to the US jobs number because if you peel the layers, it shows that the downside surprise is in the wage report and a lot of disappointment there.
"We still need to see more readings before we can see that there is a trend because this number is full with noise." Aside from the jobs report, the market was also excited after US president Donald Trump indicated he may scale back laws enacted in the wake of the financial crisis, which boosted banking stocks. In London, Barclays PLC (LON:BARC) and Royal Bank of Scotland PLC (LON:RBS) were among the top FTSE 100 gainers, up 3.3% at 228.7p and 2.6% to 228.3p respectively.
Elsewhere, a broker upgrade helped blue chip commercial broadcaster ITV PLC (LON:ITV) to gain 2.5% at 206.6p as Investec upped its rating on the stock to 'buy' from 'hold'.
On the second line, FTSE 250-listed Beazley PLC (LON:BEZ) jumped 8.6% to 433.9p, a record high after the Lloyd's of London insurer's profit beat expectations.
11.00am … Stocks up, sterling down …
The FTSE 100 index held its gains as the morning session progressed, but the pound came under pressure after some weak data for the UK’s dominant services sector.
Around 11am, the UK blue chip was up nearly 30 points at 7,170, although it had eased off the session peak of 7,178.
But on currency markets, sterling fell 0.2% against the US dollar to US$1.2491 after a fall in a closely-watched services sector indicator reawakened concerns over the impact of last year's Brexit vote on a previously resilient UK economy.
The Markit/CIPS services purchasing managers' index dropped to a three-month low of 54.5 last month, down from December's 15-month high of 56.2, and at the bottom-end of economists’ forecasts.
The fall in the services PMI was the first since October and followed small drops in the construction and manufacturing equivalents earlier this week.
Martin Beck, senior economic advisor to the EY ITEM Club, said: “All three of the PMIs dropped back in January, but in each case the strength of the December outturn looks like something of an anomaly and the January results are in line with the average seen in the August to December period.
“As with the other surveys, inflationary pressures are becoming increasingly concerning. Input cost inflation was at its strongest for nearly six years and firms appear to be having no trouble passing these higher costs on, with output price inflation remaining at December’s 68-month high.”
The pound was also extending the falls it made yesterday after the Bank of England’s latest quarterly inflation report upped growth forecasts but declined to do the same on inflation and pointed to interest rates staying on hold long into next year.
8.30am … Gloom defied …
The Footsie pushed higher in early deals, defying expectations for modest falls despite miners declining following overnight weakness in Asia on a surprise Chinese rate cut.
After half an hour of trading, the FTSE 100 index was up around 19 points at 7,159, adding to yesterday’s 33 point advance.
There was very little corporate news around for direction, but broker comment provided some focus, with blue chip real estate group British Land PLC(LON:BLND) higher, up 0.7% at 584.5p after Liberum raised its rating to ‘hold’ from ‘sell’.
FTSE 250-listed bookmaker William Hill PLC (LON:WMH) was also in demand, up 1.8% at 273.3p, as Morgan Stanley raised its rating to ‘equal-weight' from ‘underweight’.
But mining stocks dominated on the downside, weighed by rate cut moves in China, which signalled further weakness in the economy of the country, which is the world’s biggest consumer of metals.
Anglo American PLC (LON:AAL) was the top FTSE 100 faller, down 4% at 1,323.5p, while Glencore PLC (LON:GLEN) shed 3% at 315.05p.
The sector was also cautious ahead of today’s big US data, with the January jobs report due at 1.30pm London time.
David Morrison, senior market strategist at SpreadCo., said: “The consensus expectation is for an increase of around 170,000 which would be a solid improvement on December’s 156,000.
“If the number comes in as expected it would keep the 6-month average above 160k which is fine as far as most analysts, investors and traders are concerned.”
6.45am ... FTSE seen slipping ...
The Footsie is seen edging lower in early trading today following overnight falls by US and Asian markets at the end of a volatile week following a surprise Chinese rate cut and with some key US data to come today.
The FTSE 100 index was indicated opening around 3 points lower, consolidating after yesterday’s 33 point rally.
On Wall Street, the Dow Jones closed 6 points lower, while the broader S&P 500 added just over 1 point.
But Asian markets posted their biggest losses in two weeks today after China unexpectedly raised short-term interest rates, adding to growing concerns about US President Donald Trump's aggressive policies.
On the first day of trading after a week-long break for the Lunar New Year, Chinese equities tumbled and the currency weakened after the People's Bank of China raised the interest rates on open market operations by 10 basis points.
In the absence of almost anything on the corporate diary, all eyes will be on the release of the latest always-influential US payrolls report, particularly given the increased political focus on jobs since new Donald Trump took office.
US non-farm employment in January is expected to have climbed by 175,000, after a disappointing growth slow-down to 156,000 in December, although that would still be below November’s revised increase of 204,000.
The US unemployment rate is forecast to hold steady at 4.7% for last month, having edged up from 4.6% in November.
There is some possibility the January numbers could beat forecasts, with this week’s ADP US private employers report showing 246,000 jobs were added last month, well above consensus expectations for a gain of 165,000.
Michael Hewson, chief market analyst at CMC Markets UK, said: ‘Recent economic data from both the UK and the US in the past few months hasn’t really shown any warning signs that either economy is likely to slow down markedly so expectations surrounding both central bank meetings this week weren’t unsurprisingly too dovish.
“It was therefore rather surprising that both central banks came out as neutral as they were with respect to interest rate expectations.
“In the case of the US it probably isn’t as surprising given how many waves President Trump and his officials are making with respect to the strength of the US dollar, and as such caution is probably warranted, however this week’s blow out ADP employment number as well as strong manufacturing prices data suggests that the US economy may well be picking up speed.”
Friday’s agenda:
AGMs: Cerillion PLC (LON:CER), Scottish investment Trust (LON:SCIN)
Around the markets
- Sterling: US$1.219, down 0.01%
- Gold: US$1,212.20 an ounce, down 0.4%
- Brent crude: US$53.90 a barrel, up 32 0.7%
City Headlines
- Brexit will create opportunities for U.K., AstraZeneca Chief says – Daily Telegraph
- HomeServe seeks digital future with Checkatrade investment – Daily Telegraph
- London Metal Exchange rapped over suspicious trade monitoring – Financial Times
- Ferrari to launch more special editions in bid to boost profits by 8% this year – Daily Mail
- Immigration ban will cripple us, Silicon Valley Chiefs warn Trump – The Times
- Snapchat unveils New York stock market filing – Daily Telegraph
- Amazon quadruples profits but sales miss Wall Street hopes:
- Supermarkets ration lettuces after poor weather hits growers – The Guardian