FTSE 100 back in the black
Non-farm payrolls rose by 313,000 in February, which was the biggest monthly gain since July 2016.
GKN surges after agreeing to combine its Driveline business with Dana Incorporated
The US economy rode like the cavalry to the rescue of UK equities today.
The FTSE 100 index closed at 7,225, up 21 points, having fallen as low as 7,190 at one point.
“The US continues to create jobs at a striking rate, as shown in an exceptional US jobs report for February. The number of jobs created in the US in February completely smashed expectations at 313k compared to 205k forecast. The fact that the unemployment level remained constant at 4.1% despite another solid month of job creation is a little surprising; we would have expected to have seen this tick down,” said Fiona Cincotta at City Index.
Engineer GKN PLC (LON:GKN) was among the top blue-chip risers after it announced it had reached an agreement with Dana Incorporated on the proposed combination of the GKN Driveline business with Dana to create Dana PLC.
The proposed transaction values GKN Driveline at a total enterprise value of US$6.1 billion (£4.4 billion); the news sent GKN 3.3% higher to 435.1p, valuing the entire company at £7.5bn.
3.15pm: A robust set of US jobs numbers provided a tonic for the UK
With less than two hours to go, FTSE 100 was back in positive territory, up over 12 points at 7,215.
It comes after a robust set of stats from the US Labor department regarding last month's job creation figure.
German bank Berenberg said the report showed "robust job gains, rapid labour force growth, and a moderation in average hourly earnings growth that should quell concerns about accelerating inflationary pressures".
It provides further evidence of improving US economic momentum that the bank expects will lead the Fed raising its policy rate each quarter this year.
It comes as gambling company GVC Holdings PLC (LON:GVC) saw shares go the other way, after it reported a 17% increase in full-year net gaming revenue, boosted by a strong performance in the bwin.party businesses it acquired in 2016.
In small cap companies, Oracle Power plc (LON:ORCP) continued to ratchet up the gears, with shares up over 24% to 1.65p as it Chinese partners ratified a memorandum of understanding to proceed with the development of the Thar power station project in Pakistan.
2.35pm: US March hike all but “nailed on”..
Broker MB capital says the US jobs report shows that an interest rate hike in March is virtually a sure thing and it brings the thorny issue of inflation back to the fore
James Ingram, investment manager, said: "With the US economy at virtually full employment, the fear is higher wages will continue to drive inflation, forcing the US Fed to hike interest rates faster and higher than Wall Street would like.
“February’s fall in average wage rise data takes some of the pressure off. But the creation of more than 300,000 jobs in February suggests it will return in the months to come.
“Throw in a potential trade war between the US and the EU and the US economy could be headed for a perfect inflationary storm later this year.
“An interest rate hike in March from the US Fed must now be all but nailed on," says Ingram.
1.45pm: US non-farms report better than expected
FTSE 100 remained in the red at mid-session as the US job creation number came in better than expected.
The US economy added 313,000 positions last month (February) against 200,000, which had been expected.
It was the biggest monthly gain since the middle of last year and commentators said it reflected the US's current strong labor market.
However, the 12-month increase in worker pay slipped to 2.6% from 2.8%, while hourly pay rose 4 US cents
The unemployment rate was unchanged at 4.1%.
Dennis de Jong at UFX.com said the latest set of data for US jobs had shattered expectations but this time the real focus centres around wages.
"Indeed, after Fed Chairman Jerome Powell raised fears of elevated interest rate forecasts only last week, any accompanying uptick in wages would make a persuasive case for higher rates over the coming year.
"However, with sustained wage growth yet to manifest itself, the Fed remains on track for Powell to persevere with his plan for gradual, incremental hikes. For now at least."
FTSE 100 shed 10.23 points to stand at 7,192.
On Wall Street, US futures shot higher , with the Dow Jones up 158 points, and the S&P 500 500 futures up over 13 points.
12.20pm: UK water stocks boosted
European utilities analyst Christopher Laybutt upgraded both stocks.
Laybutt said that London’s UK water utilities are “oversold” and their valuations are at “multiples not seen since the credit crisis”.
Both firms were upgraded to ‘overweight’, though JP Morgan’s price targets were retained at 2,250p and 830p respectively.
11.50am: Treading water ...
The FTSE 100 was holding its nose above water on Friday, as investors await the Wall Street restart.
The blue-chip benchmark is at 7,207 - up 3.85.
US futures are pointing higher - just - as tentative traders sit on the sidelines ahead of the key jobs report and more reaction on President Trump's tariff plan.
The Dow closed 93 points higher on Thursday at 24,895 and futures are 24 points ahead at the time of writing. The S&P 500 closed flat and futures are pointing 1.5 points higher. The Nasdaq closed 31 points up at 7,427 and futures are today up five points.
US stocks reacted violently last month after the jobs report showed the fastest US wage growth since 2009, causing a share rout.
Traders suggesting we are now on hold till the Non-farm payrolls now.. a bit of book squaring to come from day traders but quietening down now.— Lakha Capital Group (@LakhaCapital) 9 March 2018
Today, estimates are for 200,000 jobs to have been added last month, a performance that would match gains made in January.
Also on the cards is talk from Chicago Federal Reserve Chairman Charles Evans.
Back to UK soil, and the country's trade deficit (the gap between its imports and exports) was £3.1bn in January, which was smaller than the consensus of £3.4bn.
December’s deficit was revised smaller to £2.5bn, from £4.9bn.
Samuel Tombs, at Pantheon Macroeconomics, noted the latest trade figures showed that the UK economy still hasn’t benefited from the fall in the pound.
"December’s deficit is smaller than previously estimated only because the large deficit in erratics trade has been revised away.
"In addition, January’s total deficit excluding erratics was the largest since March 2017. Most of this underlying deterioration over the last six months reflects the rise in the oil prices. Britain’s demand for oil is price insensitive, so the rise in prices, if sustained, will permanently boost the trade deficit."
10.40am: US jobs coming into focus
The US job creation number is wheeling into view, with anticipation building as economists expect US employers to have added 205,000 jobs in February after adding 200,000 in January.
A strong jobs report is likely to fuel bets that the US Federal Reserve may increase interest rates at a much-faster pace than previously expected.
Miles Eakers, chief market analyst at Centtrip, notes the report will be the last one before the Federal Reserve meets later this month when it is likely to raise interest rates.
"We expect the US labour market would have remained robust, with 205,000 new employees added in February.
“There are concerns that the US economy is starting to overheat, with market participants taking excessive risks to make returns. A strong employment reading will only increase expectations that inflation could speed up. We anticipate stock markets would fall and the US Dollar would rally as a result.”
10.10am: FTSE 100 flat as UK construction lags
It's not looking good for UK construction.
Output saw the biggest monthly drop in six years in January, confirming that the sector’s recession drags on.
UK builders’ work volume fell by 3.4% in the first month of the year, the largest month-on-month decline since June 2012, said the ONS (Office for National Statistics). Analysts had expected a fall of only 0.3%.
The fall was driven largely by a drop in housebuilding, while commercial construction output also fell sharply.
"After ending 2017 weakly, the construction industry has got off on the wrong foot in 2018 – posting its ninth consecutive quarter of falling output," said Blane Perrotton, managing director of the national property consultancy Naismiths.
“Such a sustained slowdown can no longer be dismissed as a blip. Housebuilders continue to buck the downward trend, but are powerless to reverse it.
“While the decline is far less acute outside London, the fall in new orders is a stark reminder of how Brexit uncertainty is eroding investor appetite."
FTSE 100 is hovering in positive territory - up just 0.01% at 7,202.
9.30am: Footsie turns positive
FTSE 100 is in positive territory as the latest UK manufacturing data showed that output was up 2.7% year-on-year, against 2.8% expected.
Month-on-month, it was up 0.3% - the ninth consecutive increase.
“Though today’s figures show that output has eased slightly, we’re coming off the back of an unprecedented period of growth and the only real worry is whether the UK’s manufacturing sector can up the demand," said Dennis de Jong, at UFX.com.
He noted that although only accountable for around 10% of the UK economy, manufacturing looked set to play a key role as Britain navigates itself through Brexit and capitalises on booming global demand for exports.
"The big worry for Theresa May and her cabinet will be whether this slight slowdown represents the tip of the iceberg of an economy that is struggling to satisfy demand," he suggests.
FTSE 100 is up around four points at 7,207.
Inmarsat management "capitulates".
Satellite giant Inmarsat PLC (LON:ISAT) shares slumped over 7% to 430.9p as it cut the full year dividend due to uncertainty over future payments from Ligado Networks and its plans to invest in the aviation market.
The company proposed a final dividend of 12 US cents per share for the 2017 fiscal year, bringing the total for the year to 33.62 US cents, down from the 53.96 US cents paid the previous year.
Mike van Dulken , at Accendo Markets, said management had "capitulated" and done the "last thing you want to when trying to keep investors from jumping ship" - slashing the divi.
8.30am: Weak start
The FTSE 100 started in lacklustre fashion, shedding around 5 points at 7,198 as traders mull various macro issues, including the key monthly US jobs report later from across the pond.
It also comes as US stock futures point to a lower open over fears surrounding President Trump's tariff plans for steel and aluminium.
Analysts fear it could ramp up tensions with some of its biggest trade partners and could spark a trade war.
California steel makers say they'll be hurt by Trump's tariffs https://t.co/BpqpCtMBUa— Fox News (@FoxNews) 8 March 2018
The sports division also delivered a 19% increase in net gaming revenue to €331.2mln with amounts wagered up 2% despite a tough comparative with the Euro 2016 football tournament.
Elsewhere, insurance giant Aviva PLC (LON:AV.) shares added nearly 1% to 513.60p, as it gets a market boost after unveiling double-digit dividend growth for the fourth year running and promised to use £2bn excess cash to cut its debt by £900mln, return £500mln to shareholders and use around £600mln for acquisitions.
Its Chinese partners have ratified a memorandum of understanding to proceed with the development of its Thar power station project in Pakistan.
The MoU was originally signed in November between Oracle, SCIG and PowerChina, its two co-developers, and the next step will be the completion of due diligence early in the next quarter.
Tanzania-focused miner Katoro Gold PLC (|LON:KAT) saw shares add near 29% to 1.45p as it said it was doing additional work on the pre-feasibility study at its Imweru gold project to include recent changes to the mining laws in the country.
Proactive news headlines:
Seeing Machines Limited (LON:SEE) has confirmed that it is in negotiations to deliver its FOVIO Driver Monitoring Systems to an additional new automotive original equipment manufacturer (OEM). In a statement noting recent press rumour and speculation, the AIM-listed firm said, if secured, this programme design win would be a significant win for Seeing Machines – which would be working with one or more Tier 1 automotive suppliers for a new third OEM.
Oracle Power PLC’s (LON:ORCP) Chinese partners have ratified a memorandum of understanding to proceed with the development of the Thar power station project in Pakistan. The MoU was originally signed in November between Oracle and SCIG and PowerChina, its two co-developers. The next step will be the completion of due diligence early in the next quarter.
Eurasia Mining PLC (LON:EUA) has announced the commencement of site works for the 2018 field season at its West Kytlim Project in the Ural Mountains. The AIM-listed firm said terms have now been finalised with OOO Techstroy of Nizhny Tagil, an alluvial mining contractor, and machinery and equipment have been mobilised to the site with stripping works to start immediately.
Tanzania-focused miner Katoro Gold PLC (|LON:KAT) is doing additional work on the pre-feasibility study at its Imweru gold project to include recent changes to the mining laws in the country. All of the technical aspects of the PFS are now finished, said Katoro, but the economic feasibility of Imweru is being re-modelled to assess the potential impact of the new legislation and mining regulations.
Vast Resources PLC (LON:VAST) has given Mercuria Energy Group another two weeks to finalise its pre-payment offtake. Discussions are also underway with Sub-Sahara Goldia Investments (SSGI) over a similar extension to the repayment date of a US$1.68mln bridging loan due for repayment today.
Solo Oil PLC (LON:SOLO) has confirmed the completion of its deal to acquire an additional stake in the Horse Hill project, onshore UK. All conditions to the transactions have been fulfilled, and it will now pay £650,000 and issue consideration shares to the seller Primorus Investments PLC.
SDX Energy Inc (LON:SDX) has confirmed a new gas discovery in SAH-2, its latest well at the Sebou project onshore Morocco. SAH-2 was drilled down to 1,304 metres and has encountered some 5.2 metres of net conventional gas pay, across two zones (Guebbas and Hoot).
Multi-commodity explorer IronRidge Resources Limited (LON:IRR), outlined a busy spell in Africa and Australia, as it posted its latest half year results. The group has been encouraged by the results generated from the recent aeromagnetics survey on its extensive gold portfolio in Chad, the firm said in the statement covering the six months to end December.
Connemara Mining PLC (LON:CON) says it's pleased that joint venture partner Group Eleven Resources Corp (CVE:ZNG) is to re-start drilling at the Stonepark Zinc project, Limerick, Ireland in the next few weeks - a key asset.
Coinsilium Group Ltd (AQSE:COIN) said it has completed a share buyback using a combination of both its own cash reserves and cryptocurrency. The NEX-listed blockchain tech company purchased 2mln of its own shares using the mixture of cash and digital currency assets for a price of 9p per share.
6.30am: FTSE 100 set to open a shade higher
FTSE 100 is called to open a shade higher after Asian markets firmed overnight as traders had much to digest, including news that North Korea has invited US President Trump for a meeting to discuss the country's nuclear weapons.
North Korea has defied international laws to pursue its nuclear aims but the meeting, which could take place in May has been seen by some as a key game-changer moment.
South Korea's President Moon Jae-in said it was "a milestone for peace".
The Shanghai Composite Index gained 13 points at 3,302, while the Nikkei 225 added over 84 at 21,452.
In London, FTSE 100 closed around 45 points to the good, but is today called by financial spreadbetters at IG Index to start around four points higher.
All three US benchmarks closed higher on Thursday, with the Dow Jones ahead by almost 94 points at 24,895.
Other big news late on yesterday was also from across the Pond, where Trump finally signed the order on tariffs, although they won't take effect for 15 days.
"It’s a very strange world indeed when the long anticipated confirmation of a 25% tariff on steel and 10% on aluminium prompts stock markets to close higher, but that is precisely what transpired last night when US President Trump finally signed the order, confirming what we knew was probably inevitable with the departure of Gary Cohn earlier this week," said Michael Hewson, at CMC Markets.
US jobs report awaited
In focus today will be the US non-farm payroll numbers, which will throw the spotlight again on interest rate rises.
New Fed boss Jerome Powell has already hinted that more US rate hikes than currently anticipated could be on the cards.
The January figure saw 200,000 new jobs added and a similar number is expected in the February payrolls, with 205,000 jobs expected.
On the corporate front, GVC Holdings PLC’s (LON:GVC) planned acquisition of Ladbrokes Coral PLC (LON:GVC) will be a key focus when the sports betting company reports its full year earnings. The takeover is expected to deliver cost synergies of at least £100mln a year
For its 2017 full year earnings, GVC has already said it expects net gaming revenue to top the £1bn mark for the first time and predicts underlying earnings will reach the top end of its guidance following a strong fourth quarter.
However, the results will include a €200mln provision after its Greek division was slapped with a tax bill from a local authority.
Significant announcements expected on Friday March 9:
Economic data: UK trade; UK industrial, manufacturing production; UK construction output; US non-farm payrolls; US wholesale trade
Around the markets:
- Sterling: US$1.3805, down 0.04%
- Gold: US$1,316.80 an ounce, down 0.23%
- Brent crude: US$60.26 a barrel, up 0.23%
- BMW profits rise by 26% on record sales, U.S. tax reforms - FT
- Melrose shareholders vote in favour of £7.4 billion GKN bid - FT
- Channel 4 set to move from London - FT
- Domino’s 2017 profits slip despite soaring sales - FT
- Toymaker shares take a hit on Toys R Us report - FT
- Saudi oil giant renews hope of London listing - The Times
- Shell in bid for BHP’s U.S. shale assets - The Times
- EU rejects Philip Hammond’s bid to include financial services in Brexit trade deal - The Independent
- BBC no longer a dominant force in television, says deputy Director-general - The Daily Telegraph
- KFC returns to original supplier after chicken shortage fiasco - The Guardian
- Profit at Grenfell Tower contractor Rydon rises 50% - The Guardian
- Next Employees plan £30 million equal pay claim against High Street retailer - Daily Mail