London close: Stocks finish higher after US non-farm payrolls exceed forecasts

London stocks ended the week on the front foot after a much better-than-expected US non-farm payrolls report.

The US non-farm payrolls report provided a boost to markets as it smashed expectations in June. The Labor Department said the US economy added 287,000 jobs in June, well above the 180,000 that economists had forecast. May’s figures were revised down to 11,000 jobs from an already-low 38,000, which had been affected by 35,000 Verizon workers on strike.

However, the unemployment rate rose to 4.9% in June from 4.7% in May, more than the expected rate of 4.8%.

Wage growth was weaker-than-anticipated, with average hourly earnings rising 2.6% in June from a year ago compared to estimates for a 2.7% increase. Earnings climbed 2.5% year-on-year in May.

“US employment growth rebounded with a vengeance in June, but the underlying trend remains one of a slowdown in hiring, and it’s far from clear whether June’s bumper non-farm payroll increase reflects a renewed appetite for companies to hire staff,” said Chris Williamson, chief economist at Markit.

“For sure, today’s data add to scope for interest rates to be nudged higher before the year is out. But the bigger picture remains one in which the Fed is likely to err on the side of caution, with policymakers viewing the better than expected hiring in the perspective of a more uncertain longer-term outlook.”

Earlier in the session, weak UK data had sent stocks lower.

The GfK’s post-Brexit consumer confidence index contracted further to -9 from -1 in June, marking the sharpest drop since December 1994 and the lowest level since December 2013.

“The post Brexit vote plunge in consumer confidence reported by GfK reinforces concern that consumers are likely to markedly rein in their spending over the coming months,” said Howard Archer, chief UK and European economist at IHS Global Insight.

“This would be especially damaging to growth UK prospects given the key role that the consumer has played.”

Separately, official data showed the UK's total trade deficit in goods and services widened to £2.3bn in May but was not as bad as the £3.6bn feared by economists, as exports fell 4.4% month-on-month and imports were down 3.5%.

In the eurozone, Germany’s trade surplus shrank in May as exports declined unexpectedly, the Federal Statistical Office revealed The seasonally-adjusted trade surplus narrowed to €22.2bn in May from €24.1bn in April, according to Destatis, slightly below forecasts of €23bn. Exports fell 1.8% in May while imports rose 0.1%.

Meanwhile, the International Monetary Fund cut its growth forecast for the eurozone following the UK’s vote to leave the European Union. In its annual report on the currency union’s economy, the IMF said it now expects gross domestic product to rise 1.6% this year, compared its estimate of 1.7% growth before the EU referendum.

In 2017 the fund sees GDP growth of 1.4%, down from 1.7% forecast previously. In 2018 GDP will grow at 1.6% rather than 1.7%, the fund said.

On the company front, housebuilders and real estate stocks rebounded from lower levels seen throughout the week including Berkeley Homes, Barratt Developments, Persimmon and Taylor Wimpey.

Marks & Spencer also bounced back after Credit Suisse raised its rating on the stock to ‘neutral’ from ‘underperform’.

Aveva Group was a strong riser as it said it could benefit from a potentially sizeable currency gain for the full year due to weakness of sterling since the EU referendum.

On the downside, miners were sitting lower as gold prices dropped. Randgold Resources and Antofagasta were among the fallers.

Sports Direct was on the back foot after on Thursday reporting on a “disappointing” year, with retail revenue excluding Heatons improving by just 0.6%.

Market Movers

FTSE 100 (UKX) 6,599.49 1.01%
FTSE 250 (MCX) 16,177.75 1.75%
techMARK (TASX) 3,265.95 0.88%

FTSE 100 - Risers

Taylor Wimpey (TW.) 131.50p 7.70%
Berkeley Group Holdings (The) (BKG) 2,498.00p 7.49%
Barratt Developments (BDEV) 373.20p 6.90%
Royal Bank of Scotland Group (RBS) 168.80p 6.43%
Persimmon (PSN) 1,420.00p 6.21%
Marks & Spencer Group (MKS) 317.30p 6.16%
Lloyds Banking Group (LLOY) 52.63p 5.90%
Dixons Carphone (DC.) 315.30p 5.81%
Hargreaves Lansdown (HL.) 1,199.00p 5.55%
Hammerson (HMSO) 517.50p 5.08%

FTSE 100 - Fallers

Fresnillo (FRES) 1,875.00p -2.14%
Antofagasta (ANTO) 456.70p -1.72%
Imperial Brands (IMB) 4,034.00p -1.31%
Coca-Cola HBC AG (CDI) (CCH) 1,538.00p -1.03%
British American Tobacco (BATS) 4,902.00p -0.92%
Shire Plc (SHP) 4,841.00p -0.68%
Diageo (DGE) 2,147.00p -0.65%
AstraZeneca (AZN) 4,574.00p -0.42%
Pearson (PSON) 944.50p -0.37%
Unilever (ULVR) 3,651.50p -0.23%

FTSE 250 - Risers

Bovis Homes Group (BVS) 737.00p 11.67%
Aldermore Group (ALD) 125.90p 11.51%
OneSavings Bank (OSB) 199.70p 11.50%
Ibstock (IBST) 126.70p 10.46%
Entertainment One Limited (ETO) 187.00p 9.23%
Bellway (BWY) 1,880.00p 9.05%
Crest Nicholson Holdings (CRST) 380.60p 7.97%
Marshalls (MSLH) 222.00p 7.51%
Countryside Properties (CSP) 211.90p 7.35%
CYBG (CYBG) 229.60p 7.29%

FTSE 250 - Fallers

Sports Direct International (SPD) 268.20p -3.91%
CLS Holdings (CLI) 1,163.00p -3.08%
AO World (AO.) 138.90p -2.18%
Card Factory (CARD) 305.00p -2.18%
Ascential (ASCL) 233.60p -1.85%
GCP Infrastructure Investments Ltd (GCP) 117.00p -1.10%
DFS Furniture (DFS) 185.00p -0.96%
Millennium & Copthorne Hotels (MLC) 400.60p -0.84%
NB Global Floating Rate Income Fund Ltd GBP (NBLS) 90.50p -0.77%
Dechra Pharmaceuticals (DPH) 1,175.00p -0.76%