London close: Stocks manage solid finish after US payrolls surge

London stocks managed an uplifting performance on Friday, buoyed by optimistic economic data from the United States and a wave of speculative trading focussed on Aviva.

The FTSE 100 ended the day with a gain of 0.58%, landing at 7,494.58, as the FTSE 250 ticked ahead 0.75% to close at 17,732.32.

Currency markets were also buoyant, with sterling last up 0.49% on the dollar to trade at $1.2252, as it gained 0.11% against the euro to change hands at €1.1569.

“European stock indices were initially dragged lower by their US counterparts as the country’s economy added nearly twice as many jobs as expected in September, the most in eight months,” said IG senior market analyst Axel Rudolph.

“They recovered towards the end of the session on short-covering ahead of the weekend, though.

“Next week traders will focus on German industrial production, US inflation and UK GDP.”

Surprising job gains in US but dipping UK house prices

In economic news, US non-farm payrolls in September soared to 336,000, handily exceeding the anticipated growth of 170,000, as per the Department of Labor.

The resurgence was also accompanied by upward adjustments to the prior two months’ data, adding another 119,000 to the payroll figures.

The private sector was a significant contributor, producing 263,000 jobs, outshining the predicted 160,000, while the public sector chipped in an additional 73,000 positions.

Despite those gains, the unemployment rate held steady at 3.8%, marginally above the forecasted 3.7%, and the labour force participation was unmoved at 62.8%.

A slight shadow was cast by average hourly earnings, which saw a modest month-on-month increase of 0.2%, just below consensus.

Looking ahead, Ian Shepherdson, chief economist at Pantheon Macroeconomics, noted how the National Federation of Independent Businesses’ hiring intentions index continued to point towards private sector payroll growth of 175,000 to 200,000 over the next few months.

The economist also said all of the net revisions to the July and August numbers were in the state and local education numbers, partly due to seasonal adjustment factors, adding that seasonal anomalies were now corrected and would not repeat.

“The NFIB points to a continued 175,000 to 200,000 private payrolls over the next few months,” Shepherdson explained.

“That’s still pretty strong, but the labour force has expanded by an average of 276,000 over the past year - mostly thanks to faster population growth - and if that continues, the unemployment rate will trend gradually upwards.

“That in turn will depress the quits rate - which already is back to its pre-Covid level - and wage growth will slow further, easing the pressure on inflation, especially core services.”

On home shores, UK homeowners endured another month of falling house prices, with a year-on-year dip of 4.7% in September, slightly steeper than August’s 4.5% descent, according to lender Halifax.

Monthly figures showed a 0.4% reduction in September - less drastic than the 1.8% decrease in August.

Current average home prices had regressed to £278,601, echoing figures seen in early 2022, as elevated borrowing costs persistently impeded market vitality.

“Activity levels continue to look subdued compared to recent years, with industry data showing lower levels of new instructions to sell homes and agreed sales,” said Kim Kinnaird, director of Halifax Mortgages.

“Borrowing costs are the primary factor, given the impact of higher interest rates on mortgage affordability.

“Against this backdrop, homeowners inevitably become more realistic about their target selling price, reflecting what has increasingly become a buyer’s market.”

On the continent, Germany’s industrial sector signalled a potential, albeit tentative, rebound, with factory orders in August rising by 3.9%, according to Destatis.

The surprising uplift, which surpassed the 1.8% consensus estimate, counteracted the revised 11.3% plunge in July, partly propelled by a surge in tech orders.

Aviva bounces on takeover chatter while JD Wetherspoon struggles despite profits

On London’s equity markets, Aviva leapt 5.33% after an ‘uncooked’ alert from market blog Betaville sparked speculations of potential takeover talks surrounding the insurance behemoth.

Although the prospective buyer’s identity remained shrouded, historical reports had oscillated between various potential suitors, including German insurer Allianz, France’s Axa, Intact Financial Group from Canada, and Scandinavian entity Tryg.

Peers Legal & General Group and Prudential were also on the riser’s board, appreciating by 3.16% and 1.45%, respectively.

Oil giant Shell enjoyed a 2.09% boost after reporting a robust recovery in gas trading earnings in the third quarter.

Elsewhere, shares of Man Group surged 5.69% following an upgrade to ‘outperform’ by analysts at Exane BNP.

On the downside, pub operator JD Wetherspoon saw its shares fall by 5.96% despite announcing a swing to full-year profit and a sales uplift of over a tenth.

The dip could reflect concerns over easing underlying growth in the initial quarter of the new financial year.

Rentokil Initial was off 2.62% after Societe Generale initiated the stock with a ‘sell’ rating, while Spirent Communications lost 1.49%, prolonging its rough patch from earlier in the week when it reduced its near-term outlook.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,494.58 0.58%
FTSE 250 (MCX) 17,732.32 0.75%
techMARK (TASX) 4,096.96 0.47%

FTSE 100 - Risers

Aviva (AV.) 409.00p 5.33%
CRH (CDI) (CRH) 4,624.00p 3.31%
Legal & General Group (LGEN) 217.10p 3.18%
B&M European Value Retail S.A. (DI) (BME) 577.40p 3.00%
Entain (ENT) 927.60p 2.50%
Ashtead Group (AHT) 4,897.00p 2.47%
Next (NXT) 7,214.00p 2.44%
Halma (HLMA) 1,983.50p 2.35%
Auto Trader Group (AUTO) 636.80p 2.35%
Antofagasta (ANTO) 1,385.50p 2.25%

FTSE 100 - Fallers

Rentokil Initial (RTO) 587.40p -2.62%
Unilever (ULVR) 3,925.50p -2.61%
Coca-Cola HBC AG (CDI) (CCH) 2,128.00p -2.52%
Vodafone Group (VOD) 74.80p -1.71%
Reckitt Benckiser Group (RKT) 5,728.00p -1.58%
Compass Group (CPG) 2,016.00p -1.32%
National Grid (NG.) 935.60p -1.27%
British American Tobacco (BATS) 2,483.00p -1.02%
Sainsbury (J) (SBRY) 253.90p -0.98%
Convatec Group (CTEC) 214.00p -0.93%

FTSE 250 - Risers

Man Group (EMG) 232.60p 5.92%
Softcat (SCT) 1,478.00p 4.16%
Genuit Group (GEN) 316.50p 4.11%
AJ Bell (AJB) 268.20p 4.03%
Computacenter (CCC) 2,586.00p 3.86%
Renishaw (RSW) 3,450.00p 3.79%
Future (FUTR) 879.00p 3.59%
PureTech Health (PRTC) 183.80p 3.37%
Pets at Home Group (PETS) 327.60p 2.82%
Octopus Renewables Infrastructure Trust (ORIT) 82.60p 2.74%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 652.00p -6.39%
Helios Towers (HTWS) 70.40p -2.63%
CLS Holdings (CLI) 109.20p -2.50%
W.A.G Payment Solutions (WPS) 93.60p -2.50%
Essentra (ESNT) 163.60p -2.27%
Spirent Communications (SPT) 91.70p -2.24%
Marshalls (MSLH) 230.00p -2.13%
Me Group International (MEGP) 146.20p -1.75%
Britvic (BVIC) 820.50p -1.74%
CAB Payments Holdings (CABP) 202.00p -1.70%