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FTSE 100 finishes near flat on Friday but Wall Street stocks higher after jobs report

Britain's blue chip benchmark closed down nearly two points, or 0.03%, at 7,123

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  • FTSE 100  closes at 7,123
  • US jobs numbers bit stronger than expected
  • Wall Street indices higher

5pm: FTSE finishes flat

FTSE 100 index closed near flat on Friday, having been higher earlier in the day, with banking stocks feeling the pain.

Britain's blue chip benchmark closed down nearly two points, or 0.03%, at 7,123.

Meanwhile, on Wall Street, stocks travelled higher after a strong jobs report and ahead of the long US holiday weekend across the Pond.

"Today’s NFP number is certainly moving in the right direction, gaining by yet another solid amount, but with earnings still only rising by a small amount and the headline unemployment rate actually ticking up there was no rush away from stocks and towards assets likely to benefit from an earlier than expected tightening of policy," noted Chris Beauchamp, chief market analyst at IG.

"Indeed, so far this afternoon small caps have been firmly out of favour while tech stocks are once again making great strides, a sign that the rotation back to growth from value still has some room to play out."

Top loser on Footsie was Standard Chartered PLC (LON:STAN), which shed 2.37%, at 456.50p, while Natwest Group (LON:NWG) lost 2.17% at 202.40p.

4pm: London IPO pipeline remains full

The FTSE 100 has dipped into the red but is back to flat now at 7125 as investors digest the US data and the dollar drops, boosting the pound and putting a dent in the blue chips that make their money overseas.

Over on the FTSE 250 things have remained positive, with the more domestically focused index up 0.55% at 22,757.

Also remaining positive is London's initial public offers pipeline, where online building materials retailer CMO Group PLC today unveiled fundraising plans for its coming flotation. 

It's been a pretty busy first half, with 76 new issues in London up to the end of June, with 41 on the main market and 35 on the AIM junior market.

Some £3.6bn of new money has been raised, led by the £1bn for Deliveroo (LON:ROO), Cordiant Digital Infrastructure’s (LON:CORD) £370mln and the £360mln for Alphawave IP (LON:AWE).

On AIM, the biggest fundraisings were the £64mln for Kitwave, £52.5mln for Kistos, £36mln for TinyBuild (LON:TBLD) and £28.5mln for Trellus Health (LON:TRLS).

All four of these AIM names have seen their shares gain since listing, led by Trellus, an Anglo-US telehealth specialist, which is up 80% from its 40p issue price. Of the 10 largest AIM IPOs fundraisings, seven have seen their shares move in a positive direction.

Of the main market names, only five of the top 10 are in the green, led by Deliveroo and Alphawave, though Auction Technology Group (LON:ATG) and Darktrace (LON:DARK) are both up at least 90%.

As for CMO, it says it is seeking to raise £27.3mln as well as selling existing shares, with the online building materials retailer expecting a debut market cap of £95mln.

The IPOs continues to bulge, with Future Biogas, Longboat Energy and Saietta Group, which are all looking to raise around £35mln as part of their planned flotations this month, as well as a host of others, including LendInvest PLC, LungLife AI, Northcoders, Orcadian Energy, Poolbeg Pharma, Revolution Beauty, and Sportech.

3pm: US markets start higher

Markets in New York started Friday’s session in the green after the latest non-farm payrolls data came in ahead of market expectations.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.11% at 34,673 while the S&P 500 climbed 0.23% to 4,329 and the Nasdaq rose 0.42% to 14,583.

Back in London, the FTSE 100 has lost some ground despite the positive start on Wall Street, up just 4 points at 7,129 at around 2.40pm.

2.00pm: US jobs numbers beat forecasts

June saw a 850,000 rise in non-farm payrolls, which was more jobs than the average economist estimate, but the unemployment rate rose to 5.9% compared to an expected fall to 5.7%.

Average hourly earnings printed +0.3%, which was as predicted, slowing from +0.5% last month.

Immediately after the release, US stock futures rose further while the dollar provided a mixed reaction, with GBP/USD bouncing back up to 1.3782 after briefly slipping to a fresh low on the session. 

The stronger NFP number may be a sign that some of the temporary labour shortages holding back the employment recovery are starting to ease, said Capital Economics.

"But with the labour force rising by just 151,000 and still more than three million below its pre-pandemic peak, we aren’t entirely convinced that this is the start of a much stronger trend."

Fawad Razaqzada, market analyst at ThinkMarkets, said: "Today’s jobs report was overall stronger but not strong enough to raise inflation and tightening concerns. It keeps the goldilocks scenario intact for stocks and encourages dollar longs to ease off the gas ahead of the long weekend break."

The Footsie meanwhile is not entirely sure what to make of it, up 13 points or 0.2% at 7138.

12.47pm: Markets in wait-and-see mode 

London and European stocks have driven higher in the morning session but traders are really keeping their powder dry ahead of the US open and big jobs report.

Wall Street is expected to open mostly higher, led by the tech stocks on the Nasdaq, with the S&P 500 seen making modest gains at the open and futures markets suggesting the Dow Jones will be flat.

At IG markets they are calling the Dow 21 points lower, however.

Markets are firmly focused on the US jobs picture today, says IG's market analyst Chris Beauchamp, with the NFP data expected to bring greater clarity over the economic recovery.

“With the Federal Reserve looking out for improved economic data and rising inflation as a gauge of when to tighten policy, continued improvements to the jobs picture are going to provide a key element of FOMC thinking.

“However, while markets are looking for a healthy 700k payrolls figure, a declining ADP payrolls figure (albeit less than expected), and weakening employment elements from both the services and ISM manufacturing PMI do raise questions around whether this figure will be hit.” 

He said the mood in European markets was cautiously optimistic.

“The dollar has remained one of the big performers over the course of the week, with Andrew Bailey doing little to reverse the view that the BoE and Fed are taking an increasingly divergent view on inflation. Bailey reiterated that the Bank of England remains steadfast in their belief that above-target inflation will ultimately subside without intervention, something the Fed are increasingly losing faith in. With the dollar reaching a three-month high, we are seeing increased confidence that the greenback can outperform despite the common perception that it should lag at times of economic outperformance.”

The FTSE is up 10 points at 7135.22, with the 250 up 120 points or 0.5% to 22,743.

11:11am: Airlines get some encouragement

The Footsie is off its best levels from earlier but remains positive and in wait-and-see mode ahead of the market's big data moment of the month in the US around lunchtime. 

“It's been a testing week for investors, with markets experiencing a couple of nasty days. Fortunately, UK stocks are on track to have recovered all the week’s losses, showing that it can pay to hold your nerve when it comes to investing. Patience is paramount,” says Russ Mould, investment director at AJ Bell.

Top of the tree this morning is Informa (LON:INF), the events and exhibitions group, which was among the 10 worst FTSE 100 performers in the first half of the year. An upgrade from Berenberg is helping Informa's shares on their comeback trail.

Airline stocks are doing their best to fly higher following encouraging traffic numbers from the sector this morning, with Wizz Air (LON:WIZZ) saying it filled nearly two thirds of its seats during June flights, while Ryanair (LON:RYA) flew nearly three times as many people that month versus May.

“Under the circumstances, these are positive numbers," said Mould. "However, the airline business model is built on filling planes near or at capacity and then scooping up extra fees on top for everything from early boarding to storing bags.

“The sector needs a continuous flow of people through airports and ongoing Covid restrictions imposed by various governments around the world mean the industry is still some way off from operating smoothly."

The FTSE 100 is almost 12 points higher, or 0.2%, at just under 7137.

Looking at the often more interesting FTSE 250 index, it's up 117 points or 0.5% at 22,740, with notable gains from property related stocks including housebuilders Bellway (LON:BWY) and Crest Nicholson (LON:CRST), and builders’ merchant Travis Perkins.

Mould also has something to say on this, of course: “The housebuilding sector remains a firm favourite with investors despite the stamp duty holiday in England and Northern Ireland starting to be tapered.

“Fundamentally there is still a major shortage of homes in the UK, so perhaps investors are taking the view that housebuilders will be able to easily sell every property they construct and that we aren’t going to see a major property crash once the stamp duty holiday ends completely.”

9.35am: Footsie hits 2-week high

London's blue-chip share index has climbed to a two-week high, up 0.5% to above 7160, close to the post-pandemic peak, led by a mix of recovering travel and leisure stocks and miners.

Major indices across Europe are all in green, following the mixed Asian session.

“It appears that fears about the virus disrupting the economy are fading again," said market analyst Marshall Gittler at BDSwiss, noting the outperformance from the Eurostoxx 600 travel & leisure index, while in the US, airlines and hotels, restaurants & leisure both outperformed too.

But major banks, led by HSBC (LON:HSBA), Standard Chartered (LON:STAN) and Lloyds Banking Group (LON:LLOY), have dragged the FTSE 100 back, to 7140 after an hour and a half's trading. 

Oil giants Shell (LON:RDSB) and BP (LON:BP.) are also a weight on the Footsie, despite oil spurting to fresh two-year highs after OPEC+ talks broke down overnight as the UAE blocked a preliminary deal that Saudi Arabia had worked out with Russia to increase production from August to December. 

“Failure to reach an agreement would result in the current agreement remaining in place,” said Gittler, “which would continue the undersupply to the market and probably push oil prices [...] higher. I expect though that they will reach an agreement – the UAE has been disruptive before but stuck in there. Maybe the Saudis will agree to give up a bit of production to the UAE.”

Looking at the NFP later, Gittler said it was hard to say exactly how the NFP affects stock markets and currencies.

“That’s because when you look at the movement of EUR/USD around NFP, on average there’s almost no movement at all. It does seem that with positive surprises, the dollar tends to appreciate at least for a day or two vs EUR.

“With negative surprises however there’s no discernable trend. That is, sometimes the dollar weakens but sometimes it strengthens, leaving us with no reliable pattern at all.”  

8.40am: Positive but quiet start

The FTSE 100 made a slow start to proceeding with traders keeping their powder dry ahead of the latest American employment data.

World markets made a strong start to the new quarter, with the S&P 500, for example, hitting a sixth consecutive record high overnight.

Whether stocks maintain their run will largely depend on the nonfarm payrolls read-out later. The consensus is the world’s largest economy will have added a shade under 700,000 new jobs when the monthly figures are tallied.

An overshoot on that number will probably stoke inflation fears.

That said, the last time around we saw a below consensus read-out as Americans clung to whatever financial support they were receiving and eschewed the world of work.

“The fact remains that for the moment the Fed is retaining its accommodative stance, with the likelihood of tapering and particularly interest rate rises not on the immediate horizon,” said Richard Hunter, head of markets at Interactive Investor.

“Complemented by the multi-trillion-dollar stimulus packages being introduced by the White House, conditions are set fair for further economic recovery.”

Back here in the UK, buyers came in for the building stocks with Barratt Developments (LON:BDEV) leading the blue-chip risers with a 2.7% advance.

Not far behind were Persimmon (LON:PSN) and Taylor Wimpey (LON:TW.).

Barratt was further helped by a recommendation upgrade by Jefferies, which now rates the stock ‘buy’.

6.50am: Footsie set open a tad higher 

UK equities look set to get off to their traditional quiet start ahead of the release of the US jobs data.

Quiet the start maybe but at least it looks like being a positive one with the FTSE 100 expected to open 15 points higher at 7,140.

US markets put in a strong showing yesterday with the Dow Jones advancing 131 points to 34,634 and the S&P 500 climbing 22 points to 4,320.

In Asia this morning, the Nikkei 225 in Tokyo is marching 61 points higher to 22,768 but Hong Kong’ Hang Seng index is off 468 points at 28,360.

And so to speculation about the June non-farm payrolls (NFP) number for the US.

“Our economist expects June’s headline payrolls to come at 550-600k, below market consensus. In 2021, NFP releases have generally generated an asymmetrically negative USD reaction when data missed expectations and a positive response in equities,” ING said.

“While arguably a fairly solid read, consensus is centred for a stronger headline figure (around 710k): should our estimates prove correct, the data miss should provide enough reasons to the market to a) believe the Fed’s hawkishness has reached a peak for now, and b) settle for a “quiet”/low-volatility summer,” ING added.

Around the markets

  • Sterling: US$1.3774, up 0.12 cents
  • Gilt: 0.732%, up 1.28 basis points
  • Gold: US$1,777 an ounce, up 90 cents
  • Oil: US$75.69 a barrel, down 15 cents
  • Bitcoin: US$33,058, down US$353

6.50am: Early Markets - Asia / Australia

Stocks in the Asia-Pacific region were mostly lower on Friday as US crude futures on Thursday hit their highest level since October 2018, while Brent crude prices jumped 2%.

Oil prices were little changed in the afternoon of Asia trading hours on Friday, with international benchmark Brent crude futures below the flatline at US$75.82 per barrel.

The Shanghai Composite in China slumped 1.82% and Hong Kong’s Hang Seng index dived 1.71%

In Japan, the Nikkei 225 gained 0.24% while South Korea’s Kospi declined 0.04%.

Shares in Australia gained, with the S&P/ASX 200 trading 0.48% higher.

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