FTSE 100 up 15 at 7,523
Sterling under pressure as criticism of Prime Minister Theresa May mounts
easyJet dips despite raising profits guidance
Sterling was under pressure again as doubts grow over Theresa May's survival prospects, and that gave a lift to the Footsie's many big dollar earners.
The FTSE 100 finished the day five points off its intra-day high, at 7,523, up 15 points.
The easyJet PLC (LON:EZJ) trading update started off promisingly, with the no frills airline indicating that profits for the year just ended would be at the upper end of its guidance range.
The shares slid to 1,263p from 1,284p overnight, however, with broker Liberum suggesting that the market is pricing in a better out-turn.
“For 2018E, management expects continued downward pressure on unit revenue from ongoing market capacity growth, although easyJet should still benefit from the unwinding of past expensive fuel hedges. We remain cautious on the trading environment, despite recent airline failures being likely to remove some capacity from the market. easyJet’s negative FCF [free cash flow] and rising leverage are not adequately reflected in the current valuation,” claimed Liberum, which rates the shares a sell.
At the other end of the Footsie leader-board, house-builder Barratt Developments PLC (LON:BDEV) rose 1.5% to 656p, helped by an upgrade by Credit Suisse from 'neutral' to 'outperform'. The price target was lifted to 702p from 578p.
3.30pm: Footsie clinging on to gains
FTSE 100 was up over eight points at 7,516 with about an hour to go into the close, with Wall Street shares mixed, after the US jobs figure missed forecasts for September.
The number of jobs fell by 33,000 last month, against what had been an already low forecast from economists for a gain 88,000.
It was due to the impact of hurricanes Harvey and Irma.
More positively, America's unemployment rate, fell sharply, coming in at 4.2% from 4.4% in the previous month.
Top riser on Footsie is still NMC Health, the UAE based hospital operator, which added over 4% to 2,833p, while flying lower was budget carrier easyJet (LON:EZJ) despite issuing what appeared a postive trading update.
The wage growth figures and the increased likelihood of the Fed rate rise this year strengthened the US dollar and the pound is down 0.61% to 1.3041.
3.15pm: FTSE off highs as US stocks ease back
The FTSE 100 index remained 7 points higher in late afternoon trading, but eased back from earlier highs as Wall Street stocks opened lower after the latest US jobs number which showed a fall of 33,000, impacted by the hurricanes which battered the US last month.
In early trading, the Dow Jones lost 14 points at 22,760, while the S&P 500 shed 3.8 points at 2.548. The tech heavy Nasdaq was down 3.5 points at 6,581.
1.45pm: US data shows jobs fall in September
FTSE 100 held onto gains as the US jobs report came out, which showed a decline in the jobs number, rather than an addition, due to recent hurricanes.
It was the first monthly decline in jobs since 2010.
Shares didn't move much as the affect due to Hurricane Irma and Harvey had largely been priced in.
"The US jobs report has thrown up some very interesting figures, most notably the fact payrolls fell 33,000 versus expectations of an 80,000 gain. However we have to take everything with a note of caution given the likelihood of heavy distortions relating to Hurricanes," said banking group ING.
This figure is likely to be an exception, adds economist James Knightley, and it is thought that payrolls will bounce back strongly given the Bureau for Labour Statistics suggests that 1.47mln people were unable to get to work because of storm disruption.
US non-farm payrolls turn negative for the first time since Sep 2010, as economy is disrupted by hurricanes Harvey and Irma#US #Economy pic.twitter.com/sweOh77JQj
— Magnus Vie Sundal (@MagnusVieSundal) 6 October 2017
The unemployment rate in the US fell to 4.2% from 4.4%, which sent the US dollar higher.
The other big takeaway number was the 0.5%MoM (month-on-month) jump in wages – the biggest increase since November 2008 – which takes the annual wage growth number up to 2.9%. Experts said the number added to the belief that the Fed will raise rates in December this year.
Jacob Deppe, at trading platform Infinox.com, said: "The markets were pricing in an underwhelming print due to Hurricanes Harvey and Irma, therefore this seemingly major shock in the headline will largely be ignored. While this is the first fall for non-farm payrolls since September 2010, it doesn’t really reflect the underlying strength of the US economy.
“As bleak as the headline jobs number appears on the surface, it won’t change the view that the US economy is fundamentally strong."
Marcus Bullus, trading director of MB Capital, added: "In any normal month, this print would have sent tremors across global markets, but September was no normal month."
The dollar rallied after the jobs release to a near two-month high above 94.00, and US 10-year yields have risen to 2.38% - their highest level since July.
"The strength of the reaction to this labour market report, and the willingness of the market to look through today’s weak payrolls figure, suggests that this could usher in a new leg higher for the dollar, with the potential for a return to 98.00, the highest level since June, now on the cards," suggested Kathleen Brooks at City Index.
It comes as the pound continues to slump. Against the US dollar it is heading towards 1.30.
1.00pm: Wage growth figure key
Mike Van Dulken, at Accendo Markets, reckons the real figure to watch out for in the non-farm payrolls will be wage growth.
"With unemployment holding around lows, the real focus will be on wages growth. If this can hold at 2.5% annually, it supports recovering consumer inflation (and stable core), merely bolstering the likelihood of a Fed rate hike in December. Which markets have already priced in a 70% probability of," he said in a note.
12.10pm: FTSE 100 building on gains
FTSE 100 is building on gains going into lunch as UK Prime Minister Theresa May looks to be under increasing pressure over her leadership and as the market awaits with anticipation the US non-farm payroll report.
Footsie is up almost 16 points at the time of writing, at 7,523.
On Wall Street, US futures are mixed, in sharp contracts to yesterday's record close, with the S&P 500 down 1.5 points, the Nasdaq ahead by over four points.
The Dow Jones futures are down 13 points at the time of writing.
After a disastrous conference speech and disappointing snap election result in Tory eyes, the heat is on Mrs May.
Former Conservative party chairman Grant Shapps has weighed in this morning, saying he has the support of about 30 MPs over a leadership contest.
But others have shown support, such as environment secretary Michael Gove and Home Secretary Amber Rudd.
Separately, new figures from the ONS (Office For National Statistics) showed that the UK's productivity sank again in the second quarter of 2017.
UK real output per hour worked fell by 0.3% in the three months to June, it was revealed.
“The further relapse in productivity in Q2 may increase concerns over the UK’s poor overall productivity record since the deep 2008/9 recession," said Howard Archer, the chief economic advisor to the EY ITEM Club in a note.
"This is even allowing for the possibility that there may well have been an appreciable cyclical element in the drop as GDP growth was slow in the first half of 2017, and businesses also remained keen to maintain employment levels."
10.20am: All eyes on US jobs later
US stocks finished at new highs yesterday, and all eyes today will be on the non-farm payrolls report.
It is expected to show some disruption due to the recent severe storms, with a sharp dip in jobs gained.
"August saw a surprisingly disappointing 156k and today’s September number is expected to come in below the 100k level at about 80k, the lowest level this year," noted Michael Hewson, at CMC Markets.
"Anything in line or above expectations should be treated as US dollar positive, however any gains are likely to be fairly limited given the gains seen already this week, while a disappointing number could trigger some profit taking."
As at around 10.57am, FTSE 100 is up over nine points, at 7,517.
It's the first Friday of the month, that can only mean one thing. Non Farm Payrolls data is out today. Want to learn more about NFP? ????????✅
— Mass Market Trading (@MMTradingFloor) 6 October 2017
9.50am: UK retail sales in September showed no signs of consumer weakness
The squeeze on household spending appears not to have hit shoppers yet, according to new figures.
Accountancy firm BDO said on Friday that its High Street Sales Tracker found overall like-for-like store sales rose by an annual 2.9% in Sepetmber - that's the biggest rise in sales for over three years.
9.10am: UK house prices bounce back
New figures from Halifax showed UK house prices bounced back in September, recording the fastest annual rise since February.
It appears buyers are shrugging off fears of higher interest rates and Brexit worries and prices added 0.8%, beating all economists’ forecasts in a Reuters poll, and house prices in the three months to September were 4% higher, against expectations of a 3.6% rise.
Barratt Developments PLC (LON:BDEV) added 0.39% to 649p. Taylor Wimpey (LON:TW.) gained 0.30% to 199.9p. Persimmon PLC (LON:PSN) shed 0.15% to 2,702p.
8.40am: FTSE 100 starts on front foot
FTSE 100, as expected, started on the front foot on Friday, boosted by the weaker pound.
The UK blue-chip benchmark is up over eight points at 7,516, while sterling is down 0.24% against the Euro and down 0.37% against the US dollar.
Jasper Lawler, head of research at London Capital Group, said: "The pound’s weakness is not simply a function of dollar strength, the fact that it is falling against the euro too would suggest the causes are local."
He points to the low-point in confidence in Prime Minister Theresa May after her conference performance, but suggests that having made it through the poor election result, it would seem "daft for her to quit, in effect because she had a cold".
Tory chaos as former party chairman sticks the boot in leadership, meanwhile Tory ministers say nothing to see here???? https://t.co/NbmCkTNcrU
— Angela Rayner MP (@AngelaRayner) 6 October 2017
Among the stock risers were Mediclinic International (LON:MDC), which ticked 0.90% higher at the open to 670p. It comes after Goldman Sachs upgraded the share to 'neutral' from 'sell' previously, after the firm's underperformance.
NMC Health, the UAE based hospital operator, was the biggest gainer, up almost 2% to 2,775p.
Budget carrier EasyJet PLC’s (LON:EZJ) eased back 0.93% to 1,272p despite saying that profits this year would be at the high end of its forecasts as passengers numbers and seats filled hit record levels over the summer.
Building materials company CRH (LON:CRH) was top laggard, down 1.53% to 43p as its bid to buy the US’s fifth-largest cement company Ash Grove for US$3.5bn was buffeted with a last minute proposal from a third party.
In smaller caps, the big winner was Mirada PLC (LON:MIRA), the digital TV services firm, after it unveiled its latest contract win for the Iris multiscreen solution. Shares zipped up almost 14% in early deals to 1.23p.
Proactive news headlines:
Digital TV services specialist Mirada PLC (LON:MIRA) has won its second new contract in as many months for its Iris multiscreen solution. The five year deal is with Bolivian pay TV operator and broadband services provider Digital TV Cable Edmund SRL.
Vast Resources PLC (LON:VAST) told investors that recent successes in Romania has led to possible options for non-dilutionary financing. The company said it has been presented with a number of potential non-dilutionary financing options and it is now in talks with metal traders and debt providers.
InnovaDerma PLC (LON:IPD), maker of the hugely successful Skinny Tan bronzer and sculpting range, has unveiled plans to raise £4.4mln to accelerate its expansion. It is doing so by selling 1.6 mln new shares to existing investors at 276p each, which represents a 14% discount to last night’s closing price.
Motif Bio PLC (LON:MTFB) said new pre-clinical data point to potential efficacy of lead drug to treat cystic fibrosis sufferers who have contracted staphylococcus aureus pneumonia. The update, provided at a conference called IDWeek 2017, follows on from the successful Phase III clinical trial of the drug for those with acute bacterial skin and skin structure infections (ABSSSI).
W Resources PLC (LON:WRES) said it has completed an additional placing of around 26.66 mln ordinary shares at 0.375p each to raise £100,000 - the same terms as the placing announced yesterday – with Symmall Pty Limited, trustee of the Masterman Superannuation Fund of which the group’s executive chairman Michael Masterman is both a beneficiary and trustee. Following the placing, Masterman (and related parties) will have an interest of 20.96% in the total voting rights of the company.
6.50am: FTSE 100 seen higher
FTSE 100 is expected to open higher after US equities continued their record breaking streak last night and ahead of the key jobs figure from across the pond.
All three US benchmarks hit new highs at the close, with the Dow Jones powering up over 113 to 22,775; the S&P 500 finishing 14 higher at 2,552 and the Nasdaq adding over 50 points.
It's that time of the new month again and job creation in the US for September is expected to have risen by just 90,000 due to the effects of the recent devastating hurricanes after climbing by 156,000 for August. The unemployment rate is expected to hold at 4.4%.
But some commentators reckon it may not be such a low figure and it is difficult to predict. City Index reckons the number could be more like 170,000.
The ADP payroll number earlier in the week - always a precursor to the main event - came in at 135,000 - the lowest reading since October 2016.
The UK's premier index closed out around 41 higher at 7,507 and spreadbetters at IG Index are calling it to start 15 points higher than that.
In Asia overnight, the Nikkei 225 in Japan added almost 60 at 20,688 and the Shanghai Composite Index closed up 9.3 at 3,348.7
On a quiet day on the corporate front , the state of the UK property market will also be in the frame as the weekends, with the latest Halifax house prices survey due.
Price growth unexpectedly picked up last month, underpinned by strong employment growth and a shortage of properties on the market, according to Britain’s biggest mortgage lender.
Significant events expected on Friday October 6:
Trading update: Motorpoint Group PLC (LON:MOTR)
Economic data: Halifax UK house prices report; US non-farm payrolls, average earnings data.
Around the markets:
- Sterling: US$1.3080, down 0.28%
- Gold: US$1,267.60 an ounce, down 0.18%
- Brent crude: US$50.73 a barrel, down 0.12%
City Headlines:
- Saudi Aramco signs agreements with Russian hydrocarbon companies - FT
- Glencore’s zinc strategy pays off with prices at a decade high - FT
- Japan’s MS&AD to invest $1bn in Swiss Re U.K. unit - FT
- StanChart faces probes in Guernsey, Singapore over $1.4bn in client transfers -FT
- Regeneron wins legal case over heart drugs - FT
- Disney and Altice U.S.A end stand-off with distribution agreement - FT
- Sofa retailer DFS suffers 22% fall in profits -FT
- Liverpool FC urged to ditch Chinese sponsorship deal -FT
- Amazon to launch pop-up bar in Tokyo - The Independent
- Chancellor expects to unveil ‘nasty’ outlook for U.K. public finances - The Independent
- Europe may keep QE until end of 2018 to put brakes on euro - The Times
- Sports Direct cuts outlets in Debenhams - The Times
- Brexit blow as U.S. attacks agricultural import curbs - The Times