FTSE 100 down 58 points at 7,260
Sterling higher versus euro after Barner transcript
US blue chips shed 54 points after strong US jobs report
FTSE 100 closed lower as traders continue to fret about macro issues and miners bore the brunt of selling.
US shares were also lower Friday after the US dollar was boosted on the back of a strong monthly jobs report.
FTSE 100 finished down around 41 points or 0.56%, at 7,277 as its poor run continues. It was down 2.08% on the week as a whole.
The FTSE 250 finished over 73 points lower at 20,209.
On Wall Street, the Dow Jones Industrial Average is down around 146 points at the time of writing; the S&P 500 shed 19 and the tech heavy Nasdaq is down around 14 points at 7,439.
"Stock markets are set to finish firmly in the red as a number of factors are weighing on sentiment. Trade concerns have been hanging over stocks all week and so have the worries about weakening emerging market (EM) economies, and now the spike in the US dollar on the back of the US non-farm payrolls report is compounding the EM issue," noted David Madden, at CMC Markets UK.
Copper titan Antofagasta (LON:ANTO) was top loser on Footsie, down 4.15% to 744.20p.
Top riser was medical device firm Smith & Nephew (LON:SN), up 2.18% to 2,384p.
3.30pm: Brexit boost for sterling
Sterling strength was also a drag on the FTSE 100 index as Friday’s session drew to a close on renewed Brexit talks optimism.
Around 3.30pm, the pound was up 0.7% against the euro at €1.1200 and added 0.3% versus the US dollar at US$1.2966.
Connor Campbell, financial analyst at Spreadex, commented: “Though he was hardly falling over himself with enthusiasm, the fact Monday’s official transcript of a Q&A between Michel Barnier and UK lawmakers showed the EU’s chief negotiator in a more encouraging mood than initially reported was a major boost to an incredibly receptive pound.
“Barnier said there were ‘lots of positive things, lots of useful things’ in the UK’s Brexit White Paper, while going on to state the EU might be prepared to simply checks at the Irish border, one of the key sticking points between both sides.”
With around an hour of trading to go in London, the FTSE 100 index was 58 points lower at 7,260, near a five month low.
3.00pm: Footsie flops
The FTSE 100 index remained under pressure in late morning trading as the Dow Jones industrials started lower following an above-forecast US jobs report, and amid Trump trade war worries.
Around 3pm, the UK benchmark was 59 points lower at 7,259, above the day’s low of 7,227.07 but well below the peak of 7,328.30.
After half an hour's trade on Wall Street, the US blue-chip index was off 70 points at 25,927, with both the broader US indexes also lower.
Economists at Dutch bank ING commented: “The August US jobs report shows payrolls rose 201,000 versus the 190k Bloomberg consensus. July was revised down 10k with a 40k downward revision in June.
“The unemployment rate remained at 3.9%, but the big story is the pick-up in wages. It surged 0.4% month on month to 2.9% year on year versus the consensus 0.2% MoM/2.7% YoY.”
They added: “This report is strong throughout and with the economy likely to grow more than 3% again in 3Q18 it will keep the Fed hiking interest rates with another move in September with a further increase in December.”
The economists concluded: “So despite all of the worries about the impact from protectionism, Fed rate hikes and emerging market woes, the US economy continues to roar ahead.”
Among corporate news in New York, Tesla Inc. (NASDAQ:TSLA,) shares shed 7% on reports the electric car maker's chief accounting officer Dave Morton resigned on September 4, roughly a month after joined the company, according to a regulatory filing published in Friday.
Elon Musk smokes marijuana live on web show https://t.co/xGs6AJJLPz
— BBC News (World) (@BBCWorld) 7 September 2018
Separately, Tesla CEO Elon Musk caused a stir after he appeared to smoke marijuana during an interview on ‘The Joe Rogan Experience’ podcast.
2pm: Jobs, wages up; stocks down
The FTSE 100 index dropped back to its lows for the session as US stock futures tumbled in the wake of stronger than expected August non-farm payrolls and wages data.
Around 2pm, the UK blue chip index was down 84 points at 7,234, having hit a low of 7,227.07 after the US jobs report.
The US created 201,000 new jobs in August, modestly beating forecasts of around 198,000, while the unemployment rate held steady at an 18-year low of 3.9%.
Meanwhile, average hourly earnings rose by or 0.4% to US$27.16, and although previous months, including July, were revised lower the report did little to dent expectations that the Federal Reserve will raise US interest rates again at the conclusion of its two-day policy meeting on September 26.
Craig Erlam , senior market analyst at Oanda commented: “Earnings growth has long eluded the US recovery and has remained in the mid-2% range for much of the last year. This has led to speculation that the labour market may not be as tight as we thought, especially when you consider how strong job creation still is, but today’s data finally offered some good news on that front.
“Earnings grew by 2.9% in August, the highest increase since 2009 and potentially a sign that a tight labour market is starting to be seen in people’s pay.”
He added: “Of course this could be a one-off jump in the data, as we’ve seen in the past, but it does offer further support to the view that the US economy is very strong.
“Combined with another NFP reading above 200,000 and unemployment being below at 3.9% and things are looking very positive.“
12.25pm: Caution prevails
The FTSE 100 index hovered near session lows in lunchtime trading, cautiously awaiting key US August jobs data, with US stock futures currently pointing to an opening drop on Wall Street as trade war escalation fears also dominate.
Around 12.25pm, the UK blue chip index was 64 points lower at 7,254, having reached a day’s low earlier at 7,248.64.
The headline US non-farm payrolls number is expected to show a 198,000 increase, while the unemployment rate could fall further to 3.8%.
Naeem Aslam, senior markets commentator at ThinkMarkets limited, said: “One thing which is on every trader’s mind is if this is going to impact the Fed’s rate decision. Highly unlikely, we do not think that today’s number has actually has that kind of power.
“The Fed is pretty much determined that another rate hike is on the table and they have the economic data fully supporting their thesis.
“Having said this, it doesn’t mean that today’s US NFP number is spineless. There are lot of important details which are embedded in this number and this could help investors to understand the economic picture more closely.”
He added: “The wage story will take the centre stage today. Tightening labour market should produce some meaningful impact here and this has been missing.
We have witnessed an increase in the wage growth but the acceleration rate of this wage growth doesn’t add up with the rest of the components of the labour market.
“US businesses are reluctant to add extra dollar to the wage growth and this should not be the case given if the rest of the component of the wage growth story are accurate.”
Thor Mining PLC (LON:THR) has revealed in the results of a scoping study for its Pilot Mountain project that the Desert Scheelite resource has an open pit mine life of 12 years. The study forecast that the total Desert Scheelite production for open pit would be 7.5mln tonnes, with an annual throughput of 650,000 tonnes which would produce 1,000 tonnes of scheelite concentrate.
11.45am: Shops under pressure
Retailers were weak on Friday after a report released overnight showed UK shops suffered their worst August in three years as inflationary pressures and a record heatwave drove consumers away and the shift to buying online continued.
Accountancy and business advisory firm BDO said its monthly High Street Sales Tracker (HSST) showed like-for-like sales dropped 2.7% in August from a year earlier.
Fashion sales fell 3.6% last month, making it the worst August for the sector since 2015. Read @SophieMBDO's views in @Drapers #retail #fashion #highstreet https://t.co/13muTzf0m9
— BDO LLP (@bdoaccountant) 7 September 2018
That marked the seventh straight month that in-store sales have fallen. A survey published by the British Retail Consortium (BRC) on Tuesday also reported sluggish sales growth for August.
Sophie Michael, BDO’s head of retail and wholesale: “In a climate of rising interest rates, prices rising and subdued real wage growth, there is limited discretionary spend left and that is taking its toll on fashion and homeware sales, especially bigger-ticket items.”
Among the retail fallers, Marks & Spencer PLC (LON:MKS) shed 0.6% at 295.6p, while Next PLC (LON:NXT) lost 0.4% at 5,466p, and department stores operator Debenhams PLC (LON:DEB) dropped 1.2% to 11.99p.
The FTSE 100 index saw its decline pick up speed in late morning trading, shedding over 53 points to 7,265, worried by likely US trade war escalations and cautious ahead of the latest US non-farm payrolls report.
10.15am: House prices up
The FTSE 100 index fell back in mid-morning trading as the pound managed some gains versus the US dollar following a more upbeat report on UK house prices.
Around 10.15am, the UK blue chip index was down 17 points at 7,301, just above the session low of 7,295.98.
On currency markets, sterling edged up 0.1% against the dollar to US$1.2939, but remained lower against the euro at €1.1109.
This morning’s UK data showed house prices rose at their fastest annual rate since November 2017 in the three months to August, according to the latest Halifax survey.
The mortgage lender said house prices in the period were 3.7% higher than a year earlier, up from a 3.3% increase in the three months to July.
The figures contrast with data from rival mortgage lender Nationwide last week, which said prices were up just 2% on the year in August, the joint-smallest increase in five years.
#Halifax reports #UK #house #prices edged up 0.1% m/m in August after increase of 1.2% in July. Annual house price rise up to 3.7% in 3 months to August, highest since 3 months to November 2017. We maintain view #housing market likely to remain lacklustre
— Howard Archer (@HowardArcherUK) 7 September 2018
Howard Archer, chief economic advisor to the EY ITEM Club, commented: “We suspect that any meaningful housing market upturn will remain elusive over the coming months. Consequently, we expect that house price gains over 2018 will be limited to around 2.5%. We expect a similar rise (around 2.5%) in 2019.”
8.45am: Lacklustre start for FTSE 100
The FTSE 100 began the morning session in relatively dull fashion, falling 5 points to 7,313 in early trading.
Trade worries in addition to turmoil in the emerging markets have driven investors away from riskier areas, although there is some positivity in the London equity markets from the recent weakness in sterling as EU leaders warned the UK it would not be allowed to cherry-pick conditions for a future relationship with the bloc.
Neil Wilson, chief market analyst at Markets.com, said while China has been the key focus for the US’s trade spat that has engulfed several nations, “it looks like the net is about to widen further to include Japan”.
Wilson added that reports are suggesting that the traditional US ally could be “next in the firing line”, and therefore there would be “further on-going risk for equities”.
In the blue-chip stocks, the fallers were being led by British Airways owner International Consolidated Airlines Group PLC (LON:IAG), which was down 2.2% at 666.2p in early deals following news that a cyber hack at BA had resulted in the personal and financial details of British Airways customers who made bookings through ba.com or the airline’s mobile app being stolen.
Dropping down into the FTSE 250, pub chain Greene King PLC was topping the markets leaderboard, rising 13.5% to 539.4p after reporting a 2.8% rise in like-for-like sales in the first quarter as customers flocked to its pubs to watch the World Cup and to sit in beer gardens during the UK's heatwave.
The pub operator sold 3.7mln pints of beer during England’s seven World Cup matches and like-for-like sales on the day the team competed in the semi-final jumped 61%.
Proactive news headlines:
Echo Energy PLC (LON:ECHO) has signed up a contractor for a 3D seismic programme across its assets in Argentina, starting with the ‘high impact, frontier scale’ Tapi Aike exploration area. The programme is due to get underway at Tapi Aike in November, to be followed by the Fraccíon C and Fraccíon D areas and it is scheduled to complete in the second quarter of 2019.
Pan African Resources PLC (LON:PAF) has announced that Barberton Mines Proprietary Limited has successfully concluded a three-year wage agreement with the National Union of Mineworker and the United Association of South Africa. The AIM-listed firm said the agreement provides for an average annual wage increase of approximately 6.5% and 5.5% for NUM and UASA members, respectively, over the three years.
Chagala Group Limited (Lon:CGLO) has received a cash offer from Realty Invest Holding which values the Kazakhstan-based accommodation firm at US$46mln. The offer was procured by TIPP Investments as part of its settlement deal in June in relation to its ownership of Chagala shares.
Some lupus patients will soon have access to a potentially “ground-breaking” new treatment after Immupharma PLC (LON:IMM) signed an agreement which will see it press ahead with a managed access programme (MAP).
Galantas Gold Corp (LON:GAL; CVE:GAL) has revealed plans for a private placement to raise funds for the development of its Omagh gold mine in Northern Ireland.
Ethernity Networks Ltd’s (LON:ENET) chief executive David Levi has said the firm is continuing its transition toward becoming a solutions provider for virtual networking and security appliances following a contraction in earnings for the first half.
Argo Blockchain PLC (LON:ARB) is confident over the future of Bitcoin and other cryptocurrencies, even though prices have slumped recently. Jonathan Bixby, Argo's executive chairman, said demand for crypto mining services will grow as the sector becomes more widely accepted.
Kavango Resources PLC (LON:KAV) has received permission to carry out an airborne electromagnetic geophysical survey over its KSZ Project in southwest Botswana. Flying is expected to commence shortly, said Michael Foster, chief executive.
Tekcapital PLC (LON:TEK), the UK intellectual property (IP) investment group focused on creating marketplace value from university technology, announced that Novum Securities has been appointed as joint broker to the company with immediate effect.
6.55am: FTSE 100 to open slightly higher
The FTSE 100 is expected to open slightly higher on Friday morning, ahead of US non-farm payroll data for August which is expected to be higher than a disappointing reading from July.
Spread-betting firm IG expects the blue-chip index to open around 8 points higher at 7,326 following a 64-point plunge to 7,318, a three-month low, on Thursday.
Michael Hewson, chief market analyst at CMC Markets UK, says that the August payroll numbers were expected to show an improvement on the 157,000 figure shown in July, with expectations predicting 198,000 new jobs will be added for August.
However, he added that wage growth numbers will be "of greater importance given the slowing in headline numbers for US jobs", as a move upwards toward 3% could add "further upward pressure on the US dollar" as well as on emerging markets.
In the US yesterday, both the S&P 500 and the Nasdaq finished lower for the third session in a row, closing down 10.5 points at 2,878 and down 72 points at 7,922 respectively, with tech stocks among the heaviest fallers as strong sector momentum appeared to run out.
The Dow Jones Industrial Average fared slightly better, erasing earlier losses to finish slightly up 20 points at 25,995.
Wall Street is also seeing mounting concerns around contagion from the emerging markets, with the Turkish and Argentinian currencies sliding as economic confidence deteriorates.
In Asia today, the Japanese Nikkei 225 slumped 178 points to 22,307, driven by a jump in the value of the yen, while Hong Kong’s Hang Seng was down 109 points at 26,867.
On the currency markets, the pound was relatively steady at US$1.293 against the dollar and flat against the euro at €1.111.
Greene King and Ashmore in focus
As the first week of September draws to a close, a relatively quiet Friday will be dominated by a trading update from FTSE 250-pub chain Greene King as investors look for any good news following a fairly dismal set of full-year results at the end of June.
Shareholders will be hoping for a boost from England's better than expected World Cup performance over the summer, along with the long spell of hot weather which sent customers streaming into pubs and beer gardens. This was reflected in initial trading figures for the new financial year when the chain reported that like-for-like sales were up 2.2% in the Pub Company division, which managed to rack up record drink sales in May.
Meanwhile, there will also be numbers coming from FTSE 250 emerging markets investment firm Ashmore group when it releases its full-year results.
Analysts at City broker Peel Hunt are expecting the firm to report "good growth in underlying profitability" despite weak sentiment in the sector following currency turmoil in Turkey. The broker added that despite a forecast of lower performance fees, they expected higher net management fees due to "strong growth in [assets under management] over the last 12 months".
Significant announcements expected:
Friday September 7:
Trading update: Greene King PLC (LON:GNK)
Finals: Ashmore Group PLC (LON:ASHM)
Interims: Secure Income REIT PLC (LON:SIR)
Economic data: Halifax UK house prices; RICS UK house prices; US non-farm payrolls
Around the markets:
• Sterling: US$1.293, up 0.01%
• Gold: US$1,200.4 an ounce, up 0.05%
• Brent crude: US$76.46 a barrel, down 0.05%
• Bitcoin: US$6,496.6, down 0.03%
City Headlines:
• Financial Times: British households will save an average of £75 a year on their gas and electricity bills under a price cap proposed by industry regulator Ofgem.
• The Daily Telegraph: Melrose has recorded a loss as the cost of its swoop on GKN hit results; it has kicked off a sale process of GKN’s powder metallurgy business.
• The Times: Activist investor Andrew Left, founder of Citron Research and a Tesla short-seller, is suing Elon Musk over allegations that he artificially boosted the electric carmaker's share price to “burn” short-sellers.