- FTSE 100 index closes 102 pts higher
- US jobs numbers much better than expected
- US stocks head north
5pm: Footsie closes up, but down on week
FTSE 100 index finished firmly higher, boosted by the strong jobs report from across the pond.
US stocks also gained ground, making up for losses earlier on the week on US, China trade deal fears.
The Footsie closed up nearly 102 points higher, at 7,239 on the day. Over the week, the blue-chip index lost around 1.45%.
The mid-cap cousin FTSE 250 also sped higher, adding over 225 points at 20,933.
“Equity markets are showing solid gains thanks to the impressive jobs report in the US. The headline non-farm payrolls update showed that 266,000 jobs were added last month, which smashed the 180,000 that economists were expecting,” noted David Madden, analyst at CMC Markets in London.
In addition, for November, the unemployment rate returned to 3.5% – the lowest figure in 50 years.
On Wall Street, the Dow Jones Industrial Average added over 326 points at 28,004. The S&P 500 gained nearly 32 points at 3,149.
3pm; US indices start higher
US indices opened sharply higher after better-than-expected Us jobs numbers.
The Dow Jones 30-share industrial average was up 275 points (1.0%) at 27,953 and the S&P 500 was 22 points (0.7%) better at 3,140.
In the UK, the FTSE 100 was up 89 points (1.3%) at 7,227, helped somewhat by the strength of the US dollar and the concomitant weakness of sterling, which was down by a quarter of a cent at US$1.3133.
“The US November Employment Report was exceptional, with strong nonfarm payrolls growth and upward revisions to prior months’ payrolls, declining unemployment, growth in aggregate weekly hours worked, and continued moderate gains in average hourly earnings,” reported Mickey Levy at Berenberg Capital Markets.
“The US economy and labour markets have been remarkably resilient to the plethora of headwinds and increased uncertainties (trade), and momentum is improving into 2020,” he asserted.
2.15pm: “Blowout numbers” in November US jobs report
The US jobs report has put a bit of va-va-voom into the London stock market.
The FTSE 100 broke decisively through the 7,200 level after the non-farm payrolls numbers were released (see below) to hit 7,217, up 80 points (1.1%).
“The latest US non-farm payrolls can help to restore some confidence in the US economy. In a week which saw both manufacturing and non-manufacturing PMIs fall short of consensus estimates, these results will come as a bit of a relief – but may also stoke some confusion among investors,” suggested Tom Rosser, an investment research analyst at The Share Centre.
“Although equity futures, USD and government bond yields have ticked upwards on the news, the conflicting signals being given off by the economy means investors are well within their rights in feeling sceptical about deploying capital here; however, this data does validate – to some extent – the decision of the Federal Reserve on their hold stance for monetary policy,” Rosser opined.
James Knightley, the chief international economist at ING Economics, said an upsurge in jobs additions was expected given the return to work of 48,000 formerly striking General Motors staff but noted the 266,000 surge was well beyond expectations.
“With a net 41,000 upward revision to the past two months, we can safely say the Fed will not be cutting rates for the fourth time this year when the committee meets next week.
“The market was expecting a decent figure given the return to work of 48,000 GM workers following a six-week strike over pay and benefits. There will also have been a boost in employment at supply chain companies which had been impacted by the industrial action. Nonetheless, there was broad strength in the report.
“Wage growth has also stayed above 3%, following a sizable upward revision to the October data,” Knightley said.
“Despite today’s blowout number, the US economy is experiencing a slowdown and we expect this to be reflected in weaker payrolls gains in coming months. The weak global growth environment, as underlined by disappointing German industrial numbers, the strong dollar and the ongoing trade tensions with China, has prompted a more cautious attitude from US business and already resulted in two consecutive quarters of falling capital expenditure,” Knightley cautioned.
Largely indifferent to the fluctuations in the US jobs market was Primark-owner Associated British Foods PLC (LON:ABF), which was up 1.7% after a trading statement issued ahead of its annual general meeting today.
Management repeated guidance as indicated in the annual results a month ago almost word for word, with strong profit growth in the grocery and sugar divisions and all businesses ready for Brexit.
The shares were up 1.7% at 2,540p.
1.40pm: US jobs additions exceed expectations
US non-farm payrolls in November swelled by 266,000, well above the 180,000 or so expected by economists and up from a revised 156,000 in October.
The US unemployment rate dipped to 3.5% from 3.6% in October; economists had expected there to be no change from October’s level.
US average hourly earnings were up 0.2% from October, slightly below the consensus forecast of a 0.3% increase, and down from a revised 0.4% increase in October, On a year-on-year basis, earnings were up 3.1%, versus expectations of a 3.0% increase; in October, earnings were up a revised 3.2% year-on-year.
Following the release of the jobs data, the Dow Jones was expected to open at 27,820, up 142 points; prior to the data release the index had been expected to open its account at around 27,746. The S&P 500, which had been expected to open about 8 points higher, is expected to rise 18 points to 3,135.
In the UK, the FTSE 100 perked up on the US jobs numbers, hitting 7,218, up 80 points (1.1%) on the day.
12.15pm: US indices expected to open higher
Spread betting quotes suggest US indices will open higher this afternoon, assuming the US jobs report contains no nasty surprises.
Having risen 28 points to close at 27,678 yesterday, the Dow is tipped to open around 68 points higher at 27,746. The S&P 500 is expected to open around 8 points higher at 3,125.
In the UK, the FTSE 100 contains just 14 stocks on the downward path, with retail investors’ favourites Royal Bank of Scotland Group PLC (LON:RBS) and Lloyds Banking Group PLC (LON:LLOY) – down 0.5% and 0.1% respectively – among the few to lose ground.
The index is up 59 points at 7,197.
British Airways owner International Airlines Group (LON:IAG) was up 1.2% at 555.2p after being upgraded to ‘outperform’ from ‘neutral’ by MainFirst Bank.
IAG traffic in November, measured in revenue passenger kilometres, increased by 4.9% year-on-year, the company has just announced. IAG capacity measured in available seat kilometres increased by 1.0% from a year earlier.
10.50am: Footsie declines to rise above 7,200
The Footsie raised its fist to knock on the door of 7,200 only to turn back.
Nevertheless, the big-caps index is still showing a healthy gain of 49 points (0.7%) at 7,186.
The mining sector was behind much of the early impetus but miners have come off the top while Glencore PLC (LON:GLEN) had no “top” to come off; following yesterday’s announcement that the Serious Fraud Office has opened an investigation into suspicions of bribery in the conduct of the commodities trader’s business.
The shares were down 1.9% at 212.8p.
Short positions in UAE-focused healthcare firm NMC Health PLC (LON:NMC) have been reducing lately but an estimated 5.4% of the company’s stock is still tied up in short positions and it is on the rack again today, down 2.4% at 2,533p.
The shares are evidently cheap enough for Norges Bank to increase its stake above 3% of the voting rights, although 2.15 percentage points of that stake is held through financial instruments.
9.45am: Miners and housebuilders lead the advance
With a bit of a leg-up from miners, the Footsie has got off to a solid start ahead of the US jobs report for November due out this afternoon.
London’s index of leading shares was up 60 points (0.8%) at 7,197, with miner Antofagasta PLC ([email protected]) and steel-maker Evraz PLC (LON:EVR) leading the advance, with gains of 2.2%, as investors react to vaguely positive noises emerging from the US-Sino trade talks.
“With positive commentary yesterday from President Trump on the trade negotiations followed by an announcement from China’s Ministry of Finance that it will waive import tariffs on some US shipments of soybeans and pork, the mood in Asian markets was positive today, with most of the main equity indices higher,” noted Daiwa Capital Markets.
Housebuilder Berkeley Group Holdings PLC (LON:BKG) was higher following its interim results but lagging its blue-chip peers in the wake of the release of the latest house price index from mortgage lender Halifax.
“Berkeley Group has released H119 results to 31 October 2019 with a PBT [profit before tax] of GBP277mln, down 31% yoy [year-on-year] with volumes retrenching by the same quantum; however, the profit drop does not come as a surprise and we do not envisage any material changes to forecasts,” said David O’Brien, an equity analyst at Irish stockbroker Goodbody.
“Berkeley Group is unique among housebuilders as it is predominantly London based and takes on technically challenging, longer-term projects. While building in London comes with challenges, their model gives them good visibility of the market. It is positive that the group reports continued stability in underlying markets, particularly London.
“Equally positive is that the group’s cash due on forward sales came in at GBP1.9bn which marks the first sequential increase in the order book since 2016,” O’Brien noted.
Berkeley’s shares were up 0.2%. Big-name rivals Persimmon PLC (LON:PSN), Barratt Developments PLC (LON:BDEV) and Taylor Wimpey PLC (LON:TW.) were 0.5% to 1.5% better after the Halifax suggested house prices in November were up 2.1% year-on-year and 1.0% higher month-on-month.
“Average house prices rebounded somewhat in November, with annual growth of 2.1% being driven by the biggest monthly rise since February, following two months of modest falls,” reported Russell Galley, Halifax’s managing director.
“Prices are now up by GBP3,904 since the start of the year. While a degree of uncertainty remains evident, it’s also clear that buyers and sellers are responding to factors such as improved mortgage affordability and the limited supply of available properties.
“It is these issues which we believe will continue to underpin the resilience evident in the market for most of 2019. Over the medium term, we expect the emerging trend of modest gains to continue into next year,” Galley revealed.
8.30am: Week-end rally
The FTSE 100 enjoyed a modest bounce back in early trade on Friday as sentiment turned positive again on a possible pre-Christmas settlement of US-China trade hostilities.
The index of blue-chip shares advanced 27 points early on to 7,164.50
The more upbeat mood music came from Beijing and minister of commerce, Gao Feng, in particular.
Commentators expect traded volumes to be thin Friday – not least as we are in the final three weeks of the trading year – with London price-setters expected to keep their powder dry ahead of the American monthly employment print later.
Any undershoot of the 185,000 November new jobs forecast and you might see sentiment turn, analysts said.
Oil prices, meanwhile, failed to really respond to the planned production cut by OPEC, which should have provided a boost to Brent and WTI.
On the market, Associated British Foods (LON:ABF), owner of the Primark fast-fashion chain, led the risers after a solid rather than inspiring trading update. The shares mustered a 1% gain.
Builder Berkeley (LON:BKY) by contrast failed to deliver on the promise that is currently priced into its valuation. The release of its latest performance indicators left the market cold and the shares flat.
Proactive news headlines:
ReNeuron Group PLC (LON:RENE) said it was in ongoing discussions with “commercial third parties” interested out-license deals across all its programmes. The update came alongside the stem cell specialist’s interim results, which showed it made significant operational and financial progress in the six months to September 30.
Metal Tiger Plc (LON:MTR) noted that Kalahari Metals Limited, in which it has a near 60% stake, has provided an encouraging drilling update from its Okavango Copper Project in Botswana. It has completed six holes for a total of 1,656 metres, which successfully proved the existence of the of D’Kar and Ngwako Pan formations that are prospective for both copper and silver. Hole OCP06 intersected two wide zones, totalling 85 metres, with visible copper-sulphide mineralisation.
i3 Energy PLC (LON:I3E), an independent oil and gas company with assets and operations in the UK, announced that further to its announcement of 8 November 2019, it is expecting to complete the subscriptions for 14,285,715 new ordinary shares in the company at 35p each from funds managed by Bybrook Capital LLP shortly.
Kodal Minerals PLC (LON:KOD), which is developing the Bougouni Lithium project in southern Mali, intends to lodge a mining licence application as soon as possible, with a view to having a fully permitted project in the first half of 2020.
Life sciences group OptiBiotix Health PLC (LON:OPTI), has entered into three new exclusive distribution agreements relating to its SlimBiome and GoFigure products, extending its reach in Poland, Malaysia and Singapore.
Base Resources Limited (LON:BSE) (ASX:BSE) confirmed the details of its recently updated ore reserves estimate for the Ranobe deposit, part of the Toliara project in Madagascar. The project now has 586mln tonnes of ore with an average heavy mineral grade of 6.5%, giving some 38mln tonnes of in-situ minerals. This is consistent with the mineral resources assumptions underpinning the pre-feasibility study, the company said in a statement.
Kibo Energy PLC (LON:KIBO) has completed the first stage of the restructuring of its Mabesekwa thermal power station project (MCIPP) in Botswana. Shareholder agreement has been received for a reduction in its holding in Kibo Energy Botswana (KEB) to 35%. KEB is the holding company for the 76mln tonnes (1Mt) coal resource at Mabesekwa. The remaining agreements are scheduled to be completed by 20 March next year.
Providence Resources PLC (LON:PVR) has announced that Tony O’Reilly has resigned from his position as chief executive of the Irish energy firm with immediate effect. Chairman Pat Plunkett will cover the executive function temporarily whilst the company recruits a long-term replacement.
Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) (FRA:W1D) (OTCMKTS:WHELF) has secured A$45.5 million in additional funding to support the rapid development of the Lake Way Sulphate of Potash (SOP) Project in Western Australia. The company has received binding commitments from several new Australian institutional investors and existing institutional shareholders for a placement to raise A$23.5 million.
Thor Mining PLC (LON:ASX) LON:THR) has issued a response to a price query from the Australian Securities Exchange in which it confirmed the company was not aware of any information concerning it that has not been announced to the market which could explain recent trading in its securities.
ADES International Holding PLC (LON:ADES) said it was notified on 5 December 2019 that its CEO, Dr Mohamed Farouk Abdelkhalek purchased a further 700 ordinary shares in the company at an average price of US$ 11.843 each. Following this transaction, the group added, Abdelkhalek has direct and indirect beneficial interests in 2,076,319 shares representing 4.76 % of the company’s issued share capital.
Europa Oil & Gas Holdings PLC, (LON:EOG) the AIM-quoted UK and Ireland-focused oil and gas exploration and production company, said its Annual General Meeting will be held at 9.00 am on Wednesday 11 December 2019 at the Hellenic Centre, 16-18 Paddington Street, London W1U 5AS.
6.30am: Modest bounce predicted
London traders appear happy to venture back into the market today ahead of the release of the US jobs report for November.
The FTSE 100, which closed 51 points lower yesterday at 7,138, was expected to claw back about half of those losses by opening 28 points higher at 7,166 following some encouraging noises from China’s minister of commerce, Gao Feng, about the US-China trade deals.
The minister said that the two parties remain in communication although he did stress that China is still insisting that any deal should include the rolling back of recently imposed US tariffs on China.
Referring to today’s US jobs report, Michael Hewson at CMC Markets said, “Today’s November numbers should see a pickup in seasonal hiring, as well as the adding back in of the GM [General Motors] strike numbers, as the US economy gears up for Thanksgiving and the pre-Christmas period, with expectations of a rise to 185k. In another sign of a robust labour market [weekly] jobless claims yesterday came in at 203k, a seven-month low.”
US markets had a positive session yesterday, with the Dow Jones 28 points firmer at 27,678 and the S&P 500 5 points higher at 3,117 and Asian markets have picked up the baton this morning.
In Tokyo, the Nikkei 225 was 67 points higher at 23,367 and in Hong Kong, the Hang Seng was 146 points to the good at 26,363.
Nearer to home, two subjects close to the hearts (and wallets) of Britons are in focus in the stock market today: houses and shopping.
Berkeley Group Holdings PLC’s (LON:BKG) half-year results follow a recent four-month update that showed house prices stable at GBP748,000 although forward bookings were down to GBP1.8bn from GBP2.2bn a year earlier.
“Considering the timing of results ahead of the UK elections, we don’t [sic] think long-term guidance will likely be unchanged but we think short-term FY20 guidance will be raised from the current level of GBP500mln,” UBS said.
Back then the clothing retailer-to-sugar and food maker said the weakness of the pound meant margins would decline in the first half of the current trading year, despite reductions in the cost of goods and overheads.
Sugar, however, is expected to be a sweet spot, benefiting from recovering prices in the EU, while the grocery arm is expected to see another year of strong profit and margin growth.
Significant announcements expected on Friday:
Economic data: US non-farm payrolls, US Michigan consumer confidence, UK house price index
Around the markets:
- Sterling: US$1.3157, down 0.02 cents
- 10-year gilt: yielding 0.775%, down 325 basis points
- Gold: US$1,480.00 an ounce, down US$3.10
- Brent crude: US$63.18 a barrel, down 2 cents
- Bitcoin: US$7,403, up US$13
Saudi Aramco has raised a record US$25.6bn in its flotation; however, that gives the company a valuation less than the US$2 trillion sought by Crown Prince Mohammed bin Salman.
Commodities trader and mining company Glencore is under investigation for suspected bribery.
In France yesterday, hundreds of thousands of French workers marched to protest against pension reform.
The Daily Telegraph
Production of 737 Max airliners could be temporarily halted or further cut as regulators increase scrutiny of the Boeing‘s bestselling jet, the company has confirmed.
Mark Wiseman, the global head of active equities, who was seen as a frontrunner to succeed boss Larry Fink at BlackRock has quit after admitting relationship with a colleague.
Factory orders in Germany unexpectedly slipped back 0.4% in October compared to the previous month, sparking industrial recession fears.
More than GBP5,000 a second was withdrawn from British property funds in a year because of uncertainty over Brexit and high street woes, analysis by Morningstar shows.
Shares in the homeware retailer Dunelm rose by almost 20% after it issued an unscheduled trading update to tell the City that its website overhaul had gone smoothly and that profits would now be higher than expected.
General Motors has joined hands with a South Korean chemicals company, LG Chem, to build one of the world’s biggest electric vehicle battery factories in a $2.3 billion joint venture.
The US’s trade deficit has contracted to its lowest in 16 months, suggesting that international trade flows are being disrupted by President Trump’s “America First” policy.
DMGT shares rose 5% today as it revealed a jump in revenue at MailOnline, the Daily Mail reported.
AJ Bell has posted record profits this year, a year after the broker and online trader became a publicly-traded company.