FTSE 100 closed around 23 points ahead on Friday, joining global equities higher as political tensions eased.
The UK blue-chip index finished at 7,701 - up 0.31%, but was down on the week, off around 0.46%.
Meanwhile, FTSE 250 closed over 138 points higher at 20,984, while Brent crude added 0.12% to US$77.59 a barrel and gold gained 0.36% or US$4.65 an ounce.
It came as the Italian political deadlock was broken as the Five Star Movement and the League Party agreed to form a coalition.
Meanwhile, in Spain, prime minister Mariano Rajoy was ousted out of office by a no-confidence vote, to be replaced by Pedro Sanchez.
On Footsie, the top riser was specialty chemicals group Johnson Matthey (LON:JMAT), which added over 4% to 3,655p. Top loser was NMC Health (LON:NMC), which shed 3.18% to 3,412p.
4pm: FTSE 100 up 28 points
Heading into the final half hour of trading, the FTSE 100 was up 28 at 7,706 and the FTSE 250 was up 134 at 20,981.
Bus and trains operator FirstGroup PLC (LON:FGP) made a late surge in the afternoon after announcing the terms of the termination agreement for Tim O’Toole, the former chief executive.
READ FirstGroup drops as it replaces its chief executive after profits fall; puts Greyhound bus unit under review
3.00pm: The Footsie surrendering gains
UK blue-chips looks set to end the week on a firm note albeit below their best levels.
The FTSE 100 was up 40 at 7,718, ebbing a little in the wake of the US jobs numbers, despite the figures topping expectations.
"Very few observers thought this jobs report could push the steel tariffs into second place this week but these numbers have, for now at least, diverted some of the attention,” suggested David Lamb, the head of dealing at FEXCO Corporate Payments.
“After President Trump showed the world his mettle with a return to protectionist policies, all eyes were on a trade war and economists were already beginning to question the US’s ability to weather one.
“There is still cause for concern in the jobs report and that is weak wage growth. Unemployment is the fertile soil in which that grows and, although average earnings did hit expectations, patience is wearing thin among those who would have expected greater uplift at this point,” he added.
“This elusive potential pent up in the US economy just refuses to deliver a payday for workers and it will still be giving the Fed pause for thought over rate rises this year, which will only be exacerbated by the zero-sum game of a global trade war,” Lamb concluded.
US yields jump and Dollar rises on strong US jobs data. The US added 223k jobs in May, with wages picking up and the unemployment rate matching the lowest in almost five decades https://t.co/md2hCm0B59 pic.twitter.com/EDghrNsvaa
— Holger Zschaepitz (@Schuldensuehner) June 1, 2018
“For the Fed,” commented James Smith, the economist covering developed markets at Dutch banking giant, ING, “the key positive in this month’s report is that wage growth beat estimates, taking the year-on-year rate back up to 2.7%. This comes as firms appear to be finding it harder to fill positions.”
“The proportion of small businesses finding it hard to fill job openings continues to flirt with all-time highs, while it’s taking around twice as long to fill vacancies than it did during the depths of the financial crisis. We think wage growth could test 3% again this year as these skill shortages gradually filter through to the official numbers,” Smith revealed.
It has been a good debut on Aim for computer games developer Codemasters Group Holdings PLC (LON:CDM).
The shares floated at 200p and were changing hands at around 262.5p towards the close.
The folks at @Codemasters and @EdenGames_ are teaming up for a free-to-play @F1 game, coming later this year: https://t.co/hPIQggp9ql
— GTPlanet (@GTPlanetNews) May 31, 2018
2.00pm: UK blue-chips little moved by strong US employment data
The US economy added 223,000 jobs in May, while the unemployment rate eased to an 18-year low of 3.8%.
The number was bigger than the 200,000 economists had predicted, although many suspected it would be after president Trump broke protocol by tweeting in advance of the release of the figures that he was looking forward to seeing the employment numbers.
NFP Whisper Number on the rise following the President's Tweet {@TheTerminal Chart Link: https://t.co/j62Omv7TgA } pic.twitter.com/kvW8MLmu0N
— Michael McDonough (@M_McDonough) June 1, 2018
On this side of the pond, the FTSE 100 was pretty much unmoved by the news, up 52 at 7,730.
Shares in funeral services firm Dignity PLC (LON:DTY) fell further after the company released a brief statement on today's announcements from the Treasury and the Competition and Markets Authority (CMA) regarding potentially increased regulation of the funeral plan sector.
Mike McCollum, the chief executive officer of Dignity, said the company welcomed today’s announcements.
“As part of our support for these reviews, we expect to share the work we have already collated to support the calls for regulation we have been making for some time," he said.
The shares were down 18.1% at 995p, 16p above their intra-day low.
US Labor Dept. announces employers extend streak of solid hiring in May, adding 223,000 jobs and pushing unemployment to 18-year low at 3.8% - @AP
— Breaking News (@BreakingNews) June 1, 2018
1.15pm: FTSE 100 holding station as the countdown to US jobs report begins
The FTSE 100’s early charge was fading in mid-morning, with traders waiting for this afternoon’s release of US jobs figures for May.
The FTSE 100 was up 50 at 7,728, some seven points off its intra-day high.
In the UK, the latest manufacturing purchasing manager’s index (PMI) was a tad higher than expectations at 54.4; any value above 50 indicates an expansion in activity.
A positive economic surprise out of the UK: Markit manufacturing PMI recovers to 54.4 points (vs. expected 53.5); first increase after five straight months with falling numbers. Note: Readings above 50 consistent with expansion in particular sector pic.twitter.com/cAU9puyIov
— Marc Brütsch (@MarcBruetsch) June 1, 2018
“Whilst Markit/CIPS noted the weakness partly reflected a slower pace of domestic orders, we also wonder whether the steadier global growth over the past few months is starting to weigh,” said Dutch finance house, ING.
“We suspect it is too early to see any tariff impact in these figures but the slowdown in the Eurozone that we saw through the first quarter may be playing a role. The gradual strengthening in the trade-weighted pound since last summer could also be beginning to hit demand at the margin,” it added.
As is often the case on a Friday, corporate news flow from the blue-chips was virtually non-existent.
Speciality chemicals group Johnson Matthey PLC (LON:JMAT), touted as a break-up candidate in some circles, was given a boost by UBS raising its price target from 2,900p to 3,000p, although the Swiss bank’s recommendation remains to sell the stock; the shares were up 143p at 3,656p.
“Pressure on revenues in autocatalysts and PGM [platinum group metals] recycling operations (25%%+ of group EBIT) will intensify over the m-term; investors therefore require a high degree of faith in the Health pipeline and JMAT's eLNO battery materials project in order to defend the current EV/IC [enterprise value/invested capital – an alternative to the price-to-book ratio] of 2.4x,” UBS said.
Among the mid-caps, sweeteners outfit Tate & Lyle PLC (LON:TATE) was getting some love from JP Morgan. The broker reiterated its ‘buy’ recommendation and cranked up the price target to 900p from 850p, prompting a 2p rise in the share price to 690.4p.
9.15am: FTSE off to a fast start as Italian government appears to coalesce
Having rediscovered forward gear over the last two days, the FTSE 100 was motoring ahead following welcome news on the formation of an Italian government.
The FTSE 100 was up 50 points at 7,728, with mining companies to the fore.
“Avoiding a new election, Italy’s two major radical parties are forming an anti-establishment government approved by President Sergio Mattarella. Although the radicals could put Italy on a dangerous trajectory, the resolution of the political impasse is still modestly good news,” said Holger Schmieding, at Berenberg Bank.
“Since the 4 March election resulted in major gains for the radicals, it has been clear that they would have to be part of the next Italian government. As in Greece in 2015, the Italian radicals will need to learn some hard lessons in power. If they want to borrow more, as they are apparently planning, they need to find willing lenders,” Schmieding observed.
“The more they spook domestic and international investors with a eurosceptic attitude, the more it will cost to borrow. In retrospect, the market turmoil can be seen as a stern warning that they are playing with fire. Their key problem is not a potential noisy confrontation with the EU but their ability to finance their spending plans,” Schmieding added.
News that the Competition and Markets Authority is to investigate the funeral services sector has hit Dignity PLC (LON:DTY) hard; the funeral homes and crematoria operator was the top faller in early dealings, tumbling 14.4% to 1,040p.
South America-focused power group Rurelec (LON:RUR) fell almost as hard, sliding 13.3% to 0.65p on the release of its results for 2017.
The group posted a loss before tax of £5.8mln but this was, at least, an improvement on 2016’s loss of £9.3mln.
The losses reflect further write-downs on a number of the group's assets and also include £2.5mln of foreign exchange losses (2016: £1.2mln gain).
8.35am: FTSE 100 set to end the week on a high; Barratt receives a bump
The FTSE 100 kicked off the week's final trading session very much on the front foot as political fears ignited by the Italian elections began to recede.
The index of blue-chip shares rose 44 points to 7,722.51 with the focus on the US and in particular jobs data later.
"Nonfarm payrolls later should point to a very robust US labour market but it’s wages that really count to see if inflation is about to pick up," said Neil Wilson of Markets.com.
Analysts are forecasting wage inflation will be around 2.7%.
But as Wilson pointed out: "Whatever the print, it doesn’t look like moving expectations on where the Fed is going in June with a hike already priced in."
Back here in the UK, the market's big riser was Barratt Developments (LON:BDEV) after JP Morgan Cazenove upgraded stock in the housebuilder to 'overweight' from 'neutral'.
The miners, led by Anglo American (LON:AAL) and Glencore (LON:GLEN), were also in demand.
Proactive news headlines:
Hurricane Energy PLC (LON:HUR) has now begun well operations at the Lancaster oil field as it continues to develop the early production system (EPS). The offshore oiler, in a statement, told investors that well re-entry and completion work is now being undertaken by contractor Petrofac, utilising the Transocean Paul B. Loyd Jr. harsh environment semisubmersible rig.
Landore Resources Limited (LON:LND) believes recent exploration work at BAM on its Junior Lake licence in Ontario has confirmed a sUBStantial gold resource. “The fact that BAM gold mineralisation delineated to date remains open both to the East and West and down dip/plunge clearly demonstrates this discovery's huge potential,” said Bill Humphries, chief executive.
i3 Energy PLC (LON:I3E) looked forward to advancing the Liberator field as it reported on a year that saw the offshore oiler lay foundations for future growth. The company listed its shares on London’s AIM market during the 12-month period, ended December 31, and various pre-development programmes were worked on to progress Liberator.
W Resources PLC (LON:WRES), the tungsten, copper and gold exploration and development company, said the development of its La Parrilla asset is well-timed. During the course of 2017, European ammonium paratungstate (APT) rose by more than 60% to current price levels, creating very solid market conditions to bring W Resources' tungsten mines on stream, the company noted in its full-year results statement.
Feedback PLC (LON:FDBK) has appointed Professor Rory Shaw as medical director of its sUBSidiary company, Feedback Medical Limited.
NetScientific PLC (LON:NSCI) has announced its portfolio company ProAxsis has been awarded a grant by Invest North Ireland to support the development of its proprietary ProteaseTag technology to identify and quantify active protease biomarkers.
Learning Technologies Group PLC (LON:LTG) said it is currently trading in-line with expectations as it completed its acquisition of US digital human resources group PeopleFluent.
Midatech PLC (LON:MTPH) (NASDAQ:MTP), the international speciality pharmaceutical company focused on developing and commercialising products in oncology, today confirmed the appointment of Dr Craig Cook as its chief executive officer, and the resignation of Dr Jim Phillips, further to its announcement on 15 March 2018.
Rambler Metals and Mining PLC (LON:RMM, CVE:RAB) has received £3.25mln through the exercise of warrants by CE Mining II Rambler Limited. In all, CE Mining II Rambler will receive 65mln new Rambler shares, lifting its stake in Rambler from 68.96% to 72.12%.
Indaco Venture Partners is now the holder of a 10.3% stake in graphene specialist Directa Plus PLC (LON:DCTA) following its appointment as manager of the TT Venture Fund. Quadrivio Capital, which used to manage TT Venture, no longer has a stake.
Kore Potash PLC (LON:KP2) the potash development company whose flagship asset is the 97%-owned Sintoukola Potash Project, will be holding its first Annual General Meeting at 09:30 a.m. (UK) on 27 June 2018 at The Shard, Level 8, 32 London Bridge Street, London SE1 9SG.
6.45am: FTSE 100 set for a positive start
The Footsie is expected to open higher this morning as political fears on the continent recede, while the initial response to newly announced US trade tariffs appeared to be less severe than expected. although all eyes today will be on the latest US jobs data.
Spread betting firm IG expects the FTSE 100 index to open 15 points higher at 7,693, having closed 11.37 points lower on Thursday, as the Italian political crisis nears its end, with a new populist government comprised of members from the 5 Star Movement and The League expected to be sworn in, ending months of gridlock.
US markets ended lower rattled by the newly announced US tariffs on steel and aluminium, which has reignited fears of a trade war as the EU, Canada and Mexico are all expected to reveal tit for tat responses.
The Dow Jones industrial average closed down 1.02% at 24,415, with the S&P 500 down 0.69% at 2,705, while the Nasdaq was also pulled lower, closing down 0.27% at 7,442.
But Asia markets were more mixed today, the Japanese Nikkei 225 was up 0.1% at 22,224, while Hong Kong’s Hang Seng was down 0.19% at 30,407.
Jasper Lawler, head of research at London Capital Group, said: “Whilst political fears receded in Italy with the formation and approval of a populist coalition government, these were quickly replaced by ramped up trade war fears.
He added: “The expected tit for tat response from the EU, Mexico and Canada is setting the scene for a trade war, which is not conducive to global growth. However, the losses have not been as large as we would have expected just a few months ago. The market is becoming more familiar with this administrations’ negotiating tactics and as a result, rather than seeing a move straight into risk off trading, we are seeing some investors take a wait and see approach.”
On currency markets, the pound was down 0.09% against the euro at €1.1362, and down 0.05% against the dollar at US$1.3291.
On the corporate front, today looks set to be a fairly quiet affair, with just AIM-listed media firm System1 Group PLC (LON:SYS1) scheduled to report its final results.
Most eyes will be on the economic data instead, with the latest US jobs report due for release alongside the UK May manufacturing PMI index and US consumer spending numbers.
US jobs in focus again
As always, the first Friday of the new month – and in this case, the first day of June – will see the release of the latest US payrolls report, the main economic focus for the week.
In April, US jobs growth was slower than expected, with non-farm payrolls up 164,000, against forecasts for 190,000, although the unemployment rate still fell to 3.9%, the first time it has dipped below 4% since 2000.
The US has added an average of roughly 190,000 jobs per month over the past year and about 208,000 per month in the past three months, and economists are expecting that rate to have continued in May.
However, whatever the number, it is unlikely to put the Federal Reserve off from hiking US interest rates once again, with a June move expected following the recent publication of minutes from the central bank policy committee’s last meeting.
Significant events expected on Friday, June 1:
Finals: System1 Group PLC (LON:SYS1)
Economic data: UK manufacturing PMI index; US non-farm payrolls, US consumer spending; US manufacturing index
Around the markets:
- Sterling: US$1.3291, down 0.05%
- Gold: US$1,298 an ounce, down 0.27%
- Brent crude: US$77.59 a barrel, up 0.12%
City headlines:
- Samsonite replaces CEO after short-seller attack, shares surge - Reuters
- Toshiba completes US$18bn sale of chip unit to Bain consortium – Reuters
- Qantas and Air NZ sign alliance as down-under tourism booms - Reuters
- China to slash import tariffs on many consumer products by 60% from July 1 - Reuters