London close: Stocks finish higher after pound's flash crash, US non-farms

The FTSE 100 finished 0.63% higher at 7,044.39 points on Friday as the pound fell against the dollar and as investors shrugged off a worse-than-expected US non-farm payrolls report for September.

The pound suffered a flash crash in the early hours, falling as much as 6% against the dollar to $1.1841. The currency recovered to $1.2433 at 1619 BST

Analysts believe the plunge in the pound was triggered by automated trading systems reacting to a Sky News report about French President Francois Hollande demanding "tough Brexit negotiations".

Meanwhile, the US non-farm payrolls report missed analysts’ expectations, which was seen to weaken the chances of an interest rate hike by the Federal Reserve at the November policy meeting.

US employers added 156,000 jobs in September following 151,000 in August, falling short of forecasts of 170,000. The unemployment rate also unexpectedly rose to 5% from 4.9%.

“At first glance, the non-farm payroll figure looked rather disappointing, given that it missed expectations,” said IG chief market analyst Chris Beauchamp.

“However, for an economy near full employment, a 156,000 print is not at all bad, while the rise in the overall unemployment rate was easily countered by an increase in the labour force participation figure, plus an improvement in earnings.”

Closer to home, UK industrial production unexpectedly declined in August, while manufacturing production rose less than expected, according to the Office for National Statistics.

Industrial production fell 0.4% on the month versus expectations of a 0.1% increase. On the year, it rose 0.7%, which was less than the 1.3% jump forecast.

Manufacturing production was up 0.2% on the month compared to expectations of a 0.4% increase. It rose 0.5% on the year, missing expectations of a 0.8% gain.

Separately, the ONS revealed the total UK trade deficit for goods and services increased in August by £2.5bn from the month before to £4.7bn, as imports rose more than exports.

UK house price growth eased in the three months to September, adding to signs the housing market is slowing after the EU referendum in June, according to Halifax.

Prices rose by an annualised 5.8% in the quarter to an average of £214,024 following a 6.9% year-on-year increase in the three months to August. It marked the slowest pace in more than three years and comes after Britain voted to leave the European Union on 23 June.

Meanwhile, oil prices were a touch lower but kept above the $50 a barrel mark following reports that some OPEC members and Russia will meet next week to talk about Russia’s involvement in the joint production cut. Brent crude fell 0.21% to $52.40 per barrel and West Texas Intermediate dropped 0.19% to $50.34 per barrel at 1632 BST.

Among corporate stocks, Randgold Resources was in the black, bouncing back from recent weakness as gold prices advanced.

Randgold, Anglo American, BHP Billiton and Glencore were also boosted by a note from Bank of America-Merrill Lynch, which said the stocks were among its key ‘buy’ recommendations. Merrill upgraded its price assumptions for the metals and mining sector in zinc, nickel and coal.

EasyJet flew lower for the second day in a row after Bank of America-Merrill Lynch downgraded the low-cost carrier´s shares to ‘neutral’ from ‘buy’ and cut the price target to 1,050p from 1,300p given the increasing lack of visibility on pricing.

Housdebuilders were under pressure after the Halifax data showed a slowdown in the market. Barratt Developments, Taylor Wimpey and Persimmon slumped.

DS Smith racked up healthy gains as Barclays initiated coverage of the corrugated packaging manufacturer at ‘overweight’ with a 465p price target.

Sports Direct shares declined after warning that its full-year 2017 earnings would take a hit from recent currency movements.

Fidessa slid as UBS downgraded the stock to ‘sell’ from ‘neutral’.

Market Movers

FTSE 100 (UKX) 7,044.39 0.63%
FTSE 250 (MCX) 17,995.16 -0.67%
techMARK (TASX) 3,555.31 0.47%

FTSE 100 - Risers

Glencore (GLEN) 223.60p 4.27%
Fresnillo (FRES) 1,665.00p 3.16%
Standard Chartered (STAN) 673.90p 2.87%
HSBC Holdings (HSBA) 619.50p 2.80%
Randgold Resources Ltd. (RRS) 7,075.00p 2.76%
Burberry Group (BRBY) 1,464.00p 2.74%
BP (BP.) 486.30p 2.70%
BHP Billiton (BLT) 1,232.50p 2.54%
Antofagasta (ANTO) 550.00p 2.52%
Anglo American (AAL) 1,021.00p 2.26%

FTSE 100 - Fallers

Dixons Carphone (DC.) 341.10p -5.98%
Sainsbury (J) (SBRY) 232.00p -5.27%
Barratt Developments (BDEV) 480.20p -5.01%
ITV (ITV) 175.10p -4.84%
Next (NXT) 4,520.00p -4.78%
Capita (CPI) 603.50p -4.58%
Lloyds Banking Group (LLOY) 52.50p -4.53%
International Consolidated Airlines Group SA (CDI) (IAG) 364.80p -4.33%
Marks & Spencer Group (MKS) 317.00p -4.11%
easyJet (EZJ) 896.00p -4.02%

FTSE 250 - Risers

Evraz (EVR) 197.90p 6.97%
Allied Minds (ALM) 353.70p 5.57%
Hochschild Mining (HOC) 263.30p 5.40%
Centamin (DI) (CEY) 152.30p 4.82%
Smith (DS) (SMDS) 414.30p 4.04%
AO World (AO.) 180.90p 4.03%
Bodycote (BOY) 625.50p 3.65%
Acacia Mining (ACA) 475.00p 3.28%
Vedanta Resources (VED) 633.00p 3.01%
Kaz Minerals (KAZ) 239.10p 2.93%

FTSE 250 - Fallers

Sports Direct International (SPD) 273.00p -9.12%
Ladbrokes (LAD) 133.80p -5.78%
DFS Furniture (DFS) 258.60p -5.38%
Crest Nicholson Holdings (CRST) 429.80p -5.23%
Pets at Home Group (PETS) 226.70p -5.09%
Fidessa Group (FDSA) 2,331.00p -4.99%
Halfords Group (HFD) 329.90p -4.98%
St. Modwen Properties (SMP) 271.90p -4.91%
Aldermore Group (ALD) 183.20p -4.73%
Thomas Cook Group (TCG) 68.00p -4.56%