London close: Stocks end lower as investors look ahead to US non-farm payrolls

UK equities finished Thursday’s session in the red as investors erred on the side of caution ahead of the US non-farm payrolls report and as Brexit worries continued to weigh on sentiment.

Traders are eagerly awaiting Friday’s non-farm payrolls report for the month of September, which is expected to show employers added 170,000 jobs in September.

Ahead of the report, the Labor Department revealed the number of Americans filing for unemployment benefits unexpectedly fell last week.

US initial jobless claims fell by 5,000 from the previous week’s unrevised level to 249,000, marking the 83rd consecutive week of initial claims below 300,000.

“The low level of initial claims indicates that, from the separations side, the labour market remains healthy,” said Barclays Research.

“With continuing claims also declining at a rapid rate, these data imply that workers who are losing their jobs are likely finding new ones. We expect this resumption in strength to manifest in improvement in employment growth over the remainder of this year at least relative to the doldrums we saw in the first half of 2016.”

Closer to home, the pound hit another 31-year low as Chancellor Phillip Hammond tried to soothe concerns about Brexit during a visit to the US to meet Wall Street bosses.

In an interview with Bloomberg, Hammond said the UK will use Brexit to build on historic trading relationships outside of the EU. He dismissed speculation that the British government is turning anti-business and denied claims that it is pursuing a so-called hard Brexit.

The pound dropped 0.79% to $12.648 at 1656 BST.

His remarks came after UK Prime Minister Theresa May said formal Brexit negotiations would begin by March 2017. German Chancellor Angela Merkel on Wednesday stressed that if Britain wants access to the single market in the EU it must comply with the rules for free movement.

Meanwhile, oil prices surged past $50 a barrel after data from the Energy Information Administration on Wednesday showed another drop in US weekly crude inventories. West Texas Intermediate crude jumped 1.03% to $50.35 per barrel and Brent crude gained 1.16% to $52.47 per barrel at 1659 BST.

In company news, GKN got a lift as HSBC initiated coverage of the aerospace and automotive engineer at ‘buy’ with a 395p price target.

On the downside, budget airline easyJet flew lower after warning that profits for the year would be hit by the weakening of the pound.

Smith & Nephew was under the cosh as Berenberg downgraded the stock to ‘hold’ from ‘buy’ saying it has become more cautious about the organic revenue growth outlook, margins and earnings growth.

Smith & Nephew was also weighed by the fact that its stock went ex-dividend on Thursday, along with Travis Perkins and Aviva.

Homeware retailer Dunelm was down as its first quarter update painted a gloomy picture of recent trading.

Market Movers

FTSE 100 (UKX) 7,013.29 -0.28%
FTSE 250 (MCX) 18,141.33 -0.33%
techMARK (TASX) 3,544.28 -0.29%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 1,130.00p 1.44%
Carnival (CCL) 3,831.00p 1.22%
Royal Bank of Scotland Group (RBS) 185.90p 1.14%
Barclays (BARC) 174.25p 1.04%
Experian (EXPN) 1,588.00p 1.02%
Shire Plc (SHP) 5,114.00p 0.95%
Mondi (MNDI) 1,676.00p 0.90%
GKN (GKN) 333.90p 0.82%
Rolls-Royce Holdings (RR.) 760.00p 0.73%
Wolseley (WOS) 4,494.00p 0.56%

FTSE 100 - Fallers

easyJet (EZJ) 936.00p -6.68%
International Consolidated Airlines Group SA (CDI) (IAG) 381.30p -3.91%
Fresnillo (FRES) 1,614.00p -3.64%
Capita (CPI) 632.50p -3.51%
Smith & Nephew (SN.) 1,224.00p -3.24%
British Land Company (BLND) 597.50p -2.92%
Centrica (CNA) 219.20p -2.71%
Travis Perkins (TPK) 1,527.00p -2.55%
Tesco (TSCO) 201.85p -2.54%
Polymetal International (POLY) 854.00p -2.40%

FTSE 250 - Risers

BTG (BTG) 685.00p 5.87%
Tullow Oil (TLW) 274.30p 4.77%
Aldermore Group (ALD) 192.50p 2.23%
AO World (AO.) 173.90p 2.11%
Smith (DS) (SMDS) 398.20p 1.66%
Victrex plc (VCT) 1,660.00p 1.47%
Croda International (CRDA) 3,610.00p 1.46%
Drax Group (DRX) 307.50p 1.35%
Fidelity China Special Situations (FCSS) 185.30p 1.26%
Tate & Lyle (TATE) 771.50p 1.25%

FTSE 250 - Fallers

Dunelm Group (DNLM) 819.00p -4.49%
Hochschild Mining (HOC) 250.30p -3.73%
Entertainment One Limited (ETO) 224.50p -3.48%
Ted Baker (TED) 2,461.00p -3.19%
Wizz Air Holdings (WIZZ) 1,625.00p -3.10%
Countrywide (CWD) 209.90p -3.00%
Unite Group (UTG) 617.00p -2.91%
Countryside Properties (CSP) 245.90p -2.88%
Aberdeen Asset Management (ADN) 338.90p -2.78%
Capital & Counties Properties (CAPC) 274.20p -2.77%