FTSE 100 up 73 at 7,394
House-builders the cream of the Footsie crop after sparkling interims from Berkeley
Brexit deal allows next phase of negotIations
Pound weakens against Euro and US dollar
The FTSE 100 closed exactly 1% higher on the day, but failed to maintain its position above 7,400.
Just eight FTSE 100 constituents – including defensive favourites such as utilities Centrica PLC (LON:CNA) and SSE plc (LON:SSE) – failed to make progress, as the FTSE 100 rose 73 points to 7,394.
The big news of the day was a Brexit deal over the Northern Ireland border deemed sufficient to move negotiations on to trade discussions.
Sterling lost ground after the deal was announced, which usually helps the FTSE 100 companies, a number of which are big foreign currency earners, but as it happens it was a pounds sterling-only earner, Berkeley Group Holdings PLC (LON:BKG), that topped the leader-board after sparkling half-year results.
Berkeley's shares rose 6.9% and gave a lift to sector peers Barratt Developments PLC (LON:BDEV), up 4.3%; Taylor Wimpey PLC (LON:TW.), up 2.9%; and Persimmon PLC (LON:PSN), up 2.4%.
Mid-afternoon
FTSE 100 is up over 55 points within the last hour of so of trade at 7,376, with builder Berkeley Group Holdings (LON:BKG) still holding the podium spot.
Midcap stocks are also surging in the aftermath of the Brexit deal struck by Prime Minister Theresa May, which will allow the next phase of negotiations over trade to begin.
The FTSE 250 is up over 138 points at 19,948.
In the currency markets, the pound is weaker, always a boon for Footsie's dollar earning constituents, with sterling down 0.33% against the Euro and down 0.52% against the US dollar.
In the US, shares are higher with the Dow Jones up 0.16% and the S&P 500 ahead by 0.64%. The Nasdaq is up 0.82%.
US non-farms beat expectations
FTSE 100 gained ground as the US job creation number came in stronger than expected for November - at 228,000 - versus consensus expectations for 198,000.
Commentators say it fairly ensures that the Fed wil raise interest rates with a 25 basis point rate hike on Wednesday next week.
It underlines the strength of US economy, now running at full pelt. The rate of unemployment was steady at 4.1%.
David Morrison, senior market strategist at GKFX.com, noted that now attention will turn to the Fed's "dot plot” which illustrates committee members’ thinking of the path and pace of future rate hikes.
"Back in September the dot plot indicated that the Fed would raise rates by an additional 75 basis points in 2018. However, some analysts believe that with growth picking up and inflation likely to follow the central bank may favour tightening monetary policy by an additional 25 basis points next year – a potential increase of 100 basis points.
"If that’s the case then it may add to speculation that the yield curve could turn negative – an event which has previously preceded a recession in the US."
"At a time when Donald Trump’s embattled presidency is being shaken by its roots, job creation - a cornerstone of his campaign - remains firmly in place, according to the latest nonfarm payroll figures," said Dennis de Jong, managing director at UFX.com.
The US dollar lost 0.40% to 1.3424 following the news.
FTSE 100 is up almost 59 points at 7,379. FTSE 250 is 127 points ahead.
BREAKING: November Non-Farm Payrolls to rise 228,000 pic.twitter.com/wByrcEssX2
— I'm With Her (@Ikbenmethaar) December 8, 2017
Wage growth disappoints ...
Wage growth was seen as disappointing with month-on-month average hourly earnings rising just 0.2%, which was below consensus.
"Back in September, the job losses from the hurricanes were highly concentrated in low-wage sectors, and taking them temporarily out of the sample, artificially boosted the average level of pay.
"November's disappointment could simply be a further correction to this blip," suggests economist James Smith at ING.
Nevertheless, he says he expects a rate hike next week and three more in 2018.
Wall Street futures higher
US futures are pointing to a positive start on Wall Street after a higher close from all three benchmarks yesterday as the market awaits the jobs report.
The Dow finished at 24,211 - up over 70 points and is today called to start 47 points higher.
The S&P 500 futures are up over five points, while Nasdaq futures are up over 30 points.
The job creation number is expected to be a high one this afternoon, but key to the analysing will, of course, be the potential for an interest rate rise.
James Hughes at AxiTrader said: "So far this week the jobs readings have been pretty strong with the ADP coming in bang in line at the 190K level and yesterday’s weekly readings beating expectations. With those figures still in mind we could well be looking at a stronger non-farm reading later this afternoon."
Craig Erlam at Oanda said: "The jobs report is widely regarded as the most important economic report each month but with tax reform and Brexit stealing the spotlight, not to mention Bitcoin, it’s been a little overshadowed so far this week.
"There’s perhaps also been a little less hype about it this month because a rate hike next week is already baked in and today’s numbers are unlikely to change anything on that front."
FTSE 100 is up around 24 points at 7,344.
UK manufacturing output expands ...
Also today, figures from the ONS showed UK manufacturing output had expanded for the sixth consecutive month in October, aided by record car output.
Manufacturing increased by 0.1% in October compared with the previous month, in line with expectations.
That meant annual growth in factory output hit 3.9% in October, which is the biggest increase since December 2016.
Other figures from the ONS showed the UK's trade deficit in goods and services widened last month by £300mln to £1.4bn.
11.09am: UK construction stats disappoint
There was more bad news for the already under pressure UK construction industry on Friday as latest figures showed the sector unexpectedly fell 1.7% in October compared to the previous month.
"Construction output continued to fall back from its peak at the start of the year, with both new building and repair work faltering once again," said Kate Davies form the ONS.
"However, construction orders for future work received a huge boost in the third quarter as many large HS2 contracts were awarded."
Meanwhile, Blane Perrotton, of property consultancy Naismiths, noted that last night's Brexit deal may have unblocked the negotiations for now, but as long as confidence and clarity are lacking, the construction industry will continue to make "halting progress at best".
FTSE 100 is up over 21 at 7,340 at the time of writing.
Bitcoin bubble ...?
Cryptocurrency Bitcoin continued its record run this morning, briefly crossing the US$17,000 (£12,615) mark.
The curreny has risen 70% on the week amid increasing calls that it is a bubble.
10.15am - Final Brexit bill could be less?
James Hughes at AxiTrader said: "Adding to the news of an agreement was the chatter that the final Brexit bill may actually be considerably less than the numbers we have seen in the press, that information coming from Michael Gove."
In the media today, to get the deal through, the prime minister reportedly made several concessions, including a divorce bill of about £50bn and allowing British courts to refer cases about EU citizens to the European Court of Justice for another eight years.
The figure of around £50bn has been the one most quoted in recent days.
It's not possible to make a precise estimate of the actual Brexit bill, Michel Barnier says https://t.co/z45I9xTBKe pic.twitter.com/08Ql7m1gjo
— Bloomberg Brexit (@Brexit) December 8, 2017
UK shares on the up ...
UK shares romped ahead as market fears were pacified as a Brexit deal was struck, meaning that trade negotiations can begin.
The FTSE 100 gained over 15 points at 7,336, while FTSE 250, the most domestic company focused index, was up almost 70 points at 19,879.
The pound initially surged on news of the breakthrough as the Irish border issue was agreed but is now showing signs of stagnating a tad. It is down 0.04% at 1.3472 against the US dollar but up 0.315 against the Euro.
Investment bank ING said: "While the divorce details will still need to be ratified by respective domestic politicians (EU leaders and the UK government), it looks as though this is now just a formality.
"While agreeing a ‘divorce bill’ has little economic significance for the price of GBP, the political significance of progress in Brexit talks is quite profound – not least as it reduces the tail risk of a 'no deal' scenario and a complete breakdown in negotiations.
"GBP is broadly higher on the news, although we may see some profit-taking as a reassessment of the Brexit political games looks to already be priced in."
The big gainer on Footsie is London focused house builder Berkeley Group Holdings (LON:BKG), which added over 8% to 4,170p after it revealed profits had jumped more than a third and it upped its long-term guidance.
Shares in UK housebuilders jumped following a “breakthrough” on Brexit talks and after Berkeley Group Holdings PLC (LON:BKG) posted well-received first half results despite warning on sales.
Berkeley was up almost 9% to 4,191p, while Barratt Developments (LON:BDEV) added 4.52% at 635.50p. Taylor Wimpey plc (LON:TW.) rose over 3% to stand at 203.10p.
In the junior space, medtech group ANGLE PLC (LON:AGL) added almost 4% on positive research concerning its Parsortix device and breast cancer treatment.
FTSE 250 firm Porvair PLC (LON:PRV) added almost 8% to 485.05p as the tech group also revealed strong results, with revenue growth up 6% on the year.
Another riser was early stage investor Vela Technologies plc (LON:VELA), which surged over 26% to 70p as it announced a deal to invest in a blockchain technology group.
It said it had struck a conditional agreement to put in £200,589 to acquire a minority equity stake in BlockchainK2 Corp - a cryptocurrency and blockchain platform that offers mining exposure and proprietary software as a service (SAAS) blockchain solutions with leading industry partners.
Jobs report of greater significance ...
"Today’s NFP release has greater significance than usual as it comes less than a week before a key monetary policy meeting from the Federal Reserve," said David Morrison, senior Market Strategist at GKFX.com
"Next Wednesday the Fed is expected to raise rates by an additional 25 basis points to take its headline fed funds rate up to a band between 1.25 and 1.50%. If it does, then it takes the fed funds rate to its highest level in over nine years."
He suggests the market is assigning a 90% probability of the Fed hiking next week.
Morrison also looks at the unemployment rate.
"Last month it dropped to 4.1% hitting its lowest level since January 2001. However, this came as a record number of US citizens of working age (95.4 million) have now dropped out of the labour force. If they’re not looking for work, then they don’t count as unemployed. The November Unemployment Rate is expected to be unchanged from the previous month, but a surprise here in either direction is unlikely to be market-moving."
8.30am: Busy day for data ...
Phew. It’s a busy day for data – and we’ve had a breakthrough on the Brexit negotiations.
So, the latter first: overnight the European Commission deemed enough progress had been made to allow a move on to trade negotiations.
The apparent removal of the impasse over the Irish border put a pep in the step of the pound, which was up 0.3% against the dollar at US$1.3514.
The FTSE 100 started in subdued fashion ahead of some big macro-economic announcements, posting a 5 point gain to 7,326.16.
Here in the UK, we have monthly industrial production numbers along with read-outs on trade and construction.
Stateside, analysts will be closely scrutinising official employment data, known as non-farm payrolls (or in the PI dungeon non-ham cheese rolls).
On the market, better-than-expected interim results from London-focused builder Berkeley Homes (LON:BKG) lifted the shares 5.2%.
6.50am: Brexit makes progress ...
Sufficient progress has been made on Brexit talks, said European Commission president Jean-Claude Juncker.
There is reportedly to be no hard border in Ireland and the deal will guarantee the rights of EU citizens living in the UK, and of UK citizens in the EU.
FTSE 100 called to start almost five points higher
Brexit and jobs a focus
FTSE 100 is seen continuing lower after a negative finish on Thursday as Brexit comes into focus again and traders await key US jobs numbers later.
UK Prime Minister Theresa May has made an early morning dash to Brussels wIth reportedly a newly worded offer, which is hoped should get the negotiation talks rolling again, after the stall on the Irish border issue earlier in the week due to the DUP.
The market will be closely watching whether the impasse will be broken and we get a little further down the exit road, or whether uncertainty will prevail.
The UK's top share index closed yesterday down 27 points at 7,320 and is called today by IG Index to open around three points below that.
There was a strong finish on Wall Street as the Dow gained over 70 points at 24,211 and the Nasdaq added 36 to 6,812 as tech stocks rebounded after recent weakness, sending Asian shares strongly firmer overnight.
The Nikkei 225 in Japan is up almost 300 points at the time of writing at 22,793, while the Shanghai Composite gained 13.56 at 3,285.
Firmly in focus for global investors today will be the non-farm payrolls published in the US later and what it all means for the flagged interest rate rise this month across the pond.
Analysts expect the report to reveal employers added 195,000 jobs last month (November) and that the unemployment rate held at 4.1%.
Earlier this week, the ADP report, seen as an indicator, unveiled a 190,000 increase in private sector payrolls during November, as expected, following a 235,000 gain for October, with factory jobs specifically jumping by 40,000.
The October report had disappointed and missed expectations.
In company news, housebuilder Berkeley Group Holdings PLC (LON:BKG) will come to the fore as it reports half year numbers. The group has been hit by a slowdown in the London housing market since the Brexit vote.
In a September trading update for 1 May to 31 August , the firm said that London housing starts remain 30% lower than in 2015. Analysts are looking for a 3% increase in full year pre-tax profits to around £840mln.
Significant announcements due:
Interims: Berkeley Group PLC (LON:BKG)
Economic data: UK trade; UK industrial, manufacturing production; UK construction output; US non-farm payrolls, unemployment rate; University of Michigan consumer confidence
Around the markets:
- Sterling: US$1.3383, down 0.07%
- Gold: US$1,256..60 an ounce, down 0.49%
- Brent crude: US$56.67 a barrel, down 0.04%
City headlines:
- Chevron plans sharp rise in U.S. shale investment - FT
- BASF and DEA agree multi-billion oil and gas merger - FT
- Japan Display jumps 12% on report Apple may use LCD screens - FT
- Rolls-Royce suffers fresh wave of troubles with Dreamliner engines - The Daily Telegraph
- Pret A Manger to open at more service stations following Roadchef deal - Daily Telegraph
- Lidl hired 2,500 U.K. workers in the past year as it keeps pace with rapid expansion in the U.K - Daily Mail
- Cryptocurrency will smash $100,000 mark by 2020, expert predicts - Daily Express
- Brighthouse eyes £220 million survival plan - The Times
- Uber paid 20-year-old Florida man to keep data breach secret - The Independent
- General Electric to cut over 1,000 U.K. jobs - The Independent