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FTSE 100 finishes higher on Friday as US jobs report brightens the mood

The UK's premier share index closed up 77.74 points at 7,155.38 on the day, but on the week as a whole dropped around 3.65%

City of London
Around London's close on Wall Street, the Dow Jones Industrial Average zoomed over 229 points higherat 26,428
  • FTSE 100  closed around 77 points higher
  • Wall Street stocks ahead as US unemployment rate falls
  • US non-farm payrolls rose by 136,000 in September, versus expectations for 145,000

5.10pm:  Footsie boosted by US jobs data

The FTSE 100 index closed higher on Friday as investor sentiment was cheered by an upbeat US jobs report despite a week of worry over the global economy.

The UK's premier share index closed up 77.74 points at 7,155.38 for the day, but on the week as a whole it dropped by around 3.65%. The FTSE 250 also climbed higher Friday, up 132.21 points to close at 19,480.37.

Around London's close on Wall Street, the Dow Jones Industrial Average zoomed up over 229 points to 26,428, while the broader S&P 500 index gained 26 points at 2,936, and the tech laden Nasdaq Composite jumped 73 points to 7,945.

"Overall it was a pretty good US jobs report," noted David Madden, market analyst at London-based spreadbetter CMC Markets. "Last month, 136,000 jobs were added, which undershot the 145,000 forecast. The August report was revised higher to 168,000, from 130,000," he noted.

But significantly, the figures showed that the US unemployment rate fell from 3.7% to 3.5% - a 50 year low.

"Average earnings have been typically strong, but they cooled to 2.9% from 3.2%. Overall it was a positive report which should temper expectations about the Fed cutting rates later this month," said Madden.

3.25pm: US jobs data drives Wall Street higher

Wall Street moved into higher territory in early trading in New York on Friday after a surprise fall in US unemployment had some thinking the economic picture may not be as bad as feared.

Shortly after 10am Eastern Time, the Dow Jones Industrial Average was up 0.66% with the S&P 500 rising 0.65% and the Nasdaq up 0.64%.

In a swift note to clients, Ian Shepherdson, chief economist at Pantheon Macroeconomics pointed out: “The surprise drop in the unemployment rate is due to a 391K jump in household employment coupled with a mere 117K rise in the labor force.

"The jump in employment extends the recent run of big gains, after a long period of undershooting relative to payrolls; the numbers ultimately follow similar trends. A sustained further decline in the unemployment rate is very unlikely if payroll growth slows as we expect; indeed, unemployment is likely to rise over the winter.”

He concluded: “Overall, these data offer something for everyone; bulls can point to unemployment, bears will highlight [average hourly earnings], and the unpersuaded can point to the OK payroll number. But this is an evolving situation, and the next clear move in the data will be downshift in job growth.

"We are inclined to think the Fed won’t ease later this month on the back of these data, but Chair Powell could change that in his speech at 2pm eastern time.”

Meanwhile, In London the FTSE 100 was having its own rally, rising just over 1%, or 77 points, to 7,154 in late-afternoon.

1.45pm: US job additions come in a bit light

US non-farm payrolls increased by 136,000 in September, after rising 168,000 in August.

Economists had expected a rise of around 145,000.

Average hourly earnings were 2.9% higher, representing a slow-down in the growth of wages; average earnings had been up 3.2% year-on-year in August.

The consensus forecast for earnings had been for a rise of 3.2%.

The unemployment rate eased to 3.5% from 3.7% the previous month; economists had expected no change in the unemployment rate.

The FTSE 100 was up 44 points (0.6%) at 7,122 in the aftermath of the US jobs figure, as sterling tumbled to US1.23 against the greenback, down three-tenths of a cent.

12.20pm: Footsie resumes its rise

After a mid-morning dip, the Footsie is now on the rise again, despite expectations of a soft start on Wall Street.

London’s index of heavyweight shares has battled its way back above 7,100 again, up 23 points (0.3%) at 7,101.

Across the pond, the Dow Jones was expected to kick off about 68 points lower at 26,133 although the release of US jobless data at 1.30pm will doubtless have an impact on the market.

London Stock Exchange PLC (LON:LSE), up 2.2% at 7,322p, is leading the Footsie’s charge – well, its amble – following reports that major shareholders are exhorting Hong Kong Exchanges and Clearing to up its offer and to include more cash in the proposal.

READ LSE Group rejects HKEX takeover bid citing "fundamental concerns"

The mid-cap FTSE 250 is barely changed despite retailer Marks and Spencer Group PLC (LON:MKS) soiling the bed just a few days after joining the index.

M&S was down 4.1% at 171.75p after HSBC downgraded it to “reduce” from “hold” and slashed the price target to 150p from 239p.

Goldman Sachs, meanwhile, stuck the knife into another retailer, Ted Baker plc (LON:TED), which was one of the biggest fallers, down 15% at 472.8p.

10.30am: Miners refuse to play ball but the Footsie advances anyway

Despite miners refusing to play ball, London’s leading shares index is on the front foot.

The FTSE 100 was up 25 points (0.3%) at 7,102, helped by sterling giving up early gains against the US dollar.

Traders are unlikely to over-commit, however, ahead of this afternoon’s jobs data from the US.

“This week’s US factory data pressed the panic button on US stock markets and Friday’s job figures will be key for the next trade direction,” opined Fiona Cincotta at City Index.

“According to Richard Clarida, the second-in-command at the Federal Reserve, the probability of a recession is not high if the Fed can set the right interest rate policy. The sell-off earlier this week shows how twitchy the markets are over any slowdown in US growth, so that even a relatively small decline is greeted with panicky selling,” she added.

Oil giant BP PLC (LON:BP.) is to be led by a Looney – some would say not for the first time – now that Robert “Bo” Dudley has confirmed he is to retire.

The shares were up 0.6% at 487.95p after BP confirmed Bernard Looney, who is currently the chief executive of its Upstream unit, will succeed Dudley as group chief executive.

The news came on the day that the Institute for Fiscal Studies called for Britain to move to a system of road pricing to make-up for a projected loss in revenue from fuel tax as the country makes the transition to electric vehicles.

The think-tank said the government’s pledge that the UK would reach zero net emissions by 2050 meant the taxman is set to lose £28bn of revenue a year from fuel duty.

Coincidentally, data for new car registrations was released today. Private new car registrations rose by 0.1% in September from a year earlier.

Total registrations, including fleet and business sales, rose by 1.3%.

“September’s marginal rise in car sales likely does not mark the start of a sustained recovery. In fact, on a seasonally-adjusted basis, we estimate that car registrations fell by 25% month-to-month in September, having surged by 20% in August. This volatility has been driven by regulations,” commented Samuel Tombs at Pantheon Macroeconomics.

“Many dealers appear to have registered stock in August, before more stringent regulations—the Real Driving Emissions tests—were introduced on September 1. An even bigger shift in demand occurred between August and September last year, when the more disruptive Worldwide Harmonised Light Vehicle Test Procedure was introduced in September 2018. This explains why the year-over-year growth rate was positive in September 2019, despite the big month-to-month seasonally adjusted fall,” Tombs added.

Shares in car dealer Lookers PLC (LON:LOOK) were down 2.1% at 56.4p but sector peer Pendragon PLC (LON:PDG) was up 3.8%.
 

8.30am: Quiet start 

After the bloodletting of Wednesday and Thursday, the FTSE 100 got off to a positive start - though a 19 point gain to 7,096.72 revealed a lack of conviction behind the rally.

“We are taking heart from the higher close on Wall Street and putting the whipsaw action that got us there to one side,” said Jasper Lawler of CMC Markets.

“Opening gains are being tempered by caution ahead of a key monthly US jobs report.”

Non-farm payrolls could well direct sentiment, particularly with traders sensitive to any data that hints at a global recession.

The world’s largest economy is predicted to have added 145,000 new jobs last month, up from 130,000 in August.

Back in London, the big news was the departure of BP (LON:BP.) chief Bob Dudley to be replaced by Bernard Looney. The stock was little changed early on.

Dudley is following Imperial Brands’ Alison Cooper (LON:IMB), Martin Gilbert of Standard Life Aberdeen (LON:SLA) and Tesco’s (LON:TSCO) Dave Lewis through the exit door.

“It’s almost as if these execs don’t want to run a blue chip firm after Brexit. Investors will be wondering who’s next to drop, be it a jump or a push,” said Neil Wilson, analyst at Markets.com.

“This is turning into a record year for CEO departures – they’re falling like nine-pins like they did in 2007 before the financial crisis. I think we’ve hit the same level as was seen in 2018, when 18 CEO changes were announced.”

Proactive news headlines

Zoetic International plc (LON:ZOE) reported higher revenues in its first half as the company continued its pivot towards the cannabidiol (CBD) markets.

Columbus Energy Resources PLC (LON:CERP) has expanded into new territory, taking up a production sharing contract onshore Suriname with state oil firm Staatsolie.

ANGLE PLC (LON:AGL OTCQX:ANPCY) said Queen Mary University of London has been awarded a European patent over a new and potentially ground-breaking method of cancer prognosis that uses the company’s liquid biopsy.

Gfinity PLC (LON:GFIN) has been reappointed by the Premier League to operate the second season of its ePremier League (ePL) esports football tournament.

Avation PLC (LON:AVAP) has repossessed two Airbus A321 aircraft that it had leased to collapsed travel group Thomas Cook.

6.45am: Rebound on the cards

The FTSE 100 is expected to claw back yesterday’s losses on a glimmer of optimism over Britain securing a Brexit deal.

Having shed 45 points yesterday to close at 7,078, London’s index of leading shares was expected to open 42 points higher at 7,130, despite a small recovery by sterling against the dollar – normally a bad development for London’s blue-chips.

“Sterling enjoyed a broad move higher yesterday and it was as if traders didn’t feel a no-deal Brexit was likely,” said David Madden at CMC Markets.

“There are questions over whether Boris Johnson proposals will be accepted by the EU, but for now dealers seem to think a deal will be managed or at least an extension will be granted. There was a report circulating that the EU have given Mr Johnson one week to revise his proposals as they don’t meet their standards,” he added.

US indices enjoyed a good session yesterday with the S&P 500 advancing 23 points to 2,9111 while the Dow Jones climbed 122 points to close at 26,201.

In Asia, Japan’s Nikkei 225 picked up the baton and was 23 points higher at 21,365 but in Hong Kong, the Hang Seng was trading 124 points in the red at 25,986.

Traders across the world will be looking out for the US jobs report for September, released this afternoon.

The consensus forecast for the non-farm payrolls numbers is for 145,000 new jobs to have been created in September, up from 130,000 the month before.

"Fundamentally, the tightening in the labour market looks nowhere near done," said economists at RBC Capital Markets, noting that job openings have been running above the level of unemployed folks for an unprecedented 14th straight month.

 

Significant announcements expected

Trading statements: Audioboom Group PLC (LON:BOOM)

Economic data: US non-farm payrolls, unemployment, earnings

Around the markets

Sterling: US$1.2346, up 017 cents

  • 10-year gilt: yielding 0.475%, down 2.88 basis points
  • Gold: US$1,513.10 an ounce, down 80 cents
  • Oil: US$57.99 a barrel, up 28 cents
  • Bitcoin: US$8,107, down US$49

Business headlines

Financial Times

EU leaders have alerted Boris Johnson to several concerns they have about his Brexit proposals.

PayPal is teetering on the brink of exiting Facebook’s Libra project; it pulled out of a key meeting in Washington yesterday.

Europe’s top court has ruled that individual countries can force Facebook to take down illegal content, whether the countries are inside the EU or not

The Guardian

Ted Baker dived to its first half-year loss in more than 20 years and issued another warning on its full-year performance.

International investors have placed large bets against troubled office space company WeWork.

Alison Cooper is to stand down as chief executive of tobacco giant Imperial Brands after nine years.

The Daily Telegraph

De Beers has suffered another slump in diamond sales, prompting fears the sector is in the grip of more prolonged slump.

Troubled lender Metro Bank is unlikely to return to profit until 2021, City analysts have warned.

Thomas Cook’s collapse is expected to cost the taxpayer an extra £60 million in unpaid wages, holiday pay and redundancy fees.

Daily Mail

Ineos has launched a consultation on the potential closure of a manufacturing plant which employs more than 220 people.

Neil Woodford has raked in more than £8 million of fees from investors stuck in his toxic fund.

The Times

Britain’s dominant services sector unexpectedly contracted last month, raising risk of the country slipping into recession.

Spain announced measures worth €300 million to prop up its tourism industry yesterday after the collapse of Thomas Cook.

Shares in Constellation Brands plunged $12.53, or 6.1%, at $194.26 in New York last night after it recorded a loss in the second quarter.

Four Seasons, which runs 320 homes with more than 17,000 beds, has withheld rent payments to landlords without warning.

KPMG faces potential legal action after questioning historical reports for three oil and gas companies in Kazakhstan.

Netflix received a corporation tax credit of €57,656 from the British taxman last year despite generating hundreds of millions of pounds in revenue from UK customers.

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