London close: Stocks mixed as US payrolls miss forecasts

London markets saw a mixed performance on Friday as investors responded to underwhelming services data and the release of US non-farm payrolls data.

The FTSE 100 index declined 0.39%, closing at 7,417.73 points, while the FTSE 250 recorded a positive move of 1.22% to 17,983.84.

In the currency market, sterling was last up 1.52% on the dollar, trading at $1.2388, while it increased 0.36% against the euro to change hands at €1.1529.

“Having seen such a strong rebound in equity markets this week there was always a chance that a strong US jobs report might undermine the move higher that we’ve seen due to the sharp slide in bond yields, and the less negative geopolitical outlook that has helped to lift sentiment these past few days,” said CMC Markets chief market analyst Michael Hewson.

“Unlike September, when US jobs surged by 297,000, jobs growth slowed in October to 150.000, while the unemployment rate ticked higher to 3.9%, in a sign that the US economy is now starting to slow in a manner that will please the US central bank.

“This sort of goldilocks report, not too hot and not too cold, will be catnip to those who are increasingly of the opinion that the Fed is done when it comes to further rate hikes.”

UK service sector struggles, US payrolls miss expectations

In economic news, the UK service sector struggled in October, as the S&P Global/CIPS UK services PMI business activity index reached 49.5, just above September’s 49.3.

Persistent cost of living pressures and weak consumer confidence were cited as factors affecting customer demand, leading to three consecutive months below the crucial 50-point level that separates expansion from contraction.

Meanwhile, cost inflation eased to its lowest level in 32 months.

The composite PMI for October was 48.7, slightly up from the previous month’s eight-month low of 48.5.

“A shallow downturn in the UK service sector activity persisted in October as businesses struggled to make headway,” said Tim Moore, economics director at S&P Global Market Intelligence.

“Forward-looking survey indicators suggested that service providers will continue to skirt with recession.

“The degree of optimism towards the business outlook was the lowest in 2023 so far, despite relief that interest hikes have taken a pause this autumn.”

Retail footfall in the UK meanwhile declined in October, with total footfall falling by 5.7% year-on-year, influenced by heavy rainfall keeping shoppers away.

High street footfall was down 4.6%, while retail parks and shopping centres saw declines of 4.3% and 7.3%, respectively, according to the BRC-Sensormatic IQ footfall monitor.

“Umbrellas were up as heavy rainfall descended across the UK in October, leading many shoppers to stay at home,” said Helen Dickinson, chief executive of the British Retail Consortium.

“As inflationary pressures on households begin to ease, some people are shopping around slightly less, braving the rain only to make their final purchases.”

Across the Atlantic, the US Bureau of Labor Statistics reported that non-farm payrolls added 150,000 jobs in October, falling short of the expected 180,000 increase.

September’s figure was revised down to 297,000 from 336,000, and the unemployment rate rose to 3.9% from 3.8%.

Manufacturing employment fell by 35,000 in October due to strike activity.

Average hourly earnings rose by 0.2% on the month, slightly below expectations, but grew by 4.1% on the year, exceeding expectations by 0.1 percentage point.

Andrew Hunter, deputy chief US economist at Capital Economics, said the muted gain in non-farm payrolls was another sign that the economy’s strength in the third quarter will likely unwind in the fourth.

He added that the strongest argument for the Fed to abandon its tightening bias is that wage growth was continuing to slow.

“The decline in the job quits rate continues to suggest it will drop below 4% soon.

“Overall, we suspect the softening in labour market conditions has much further to run and still expect the Fed to be cutting interest rates again in the first half of next year.”

In the eurozone, unemployment unexpectedly increased in September, rising to 6.5% from 6.4% in August, with the number of unemployed people reaching 11.02 million.

Analysts had anticipated no change in the jobless rate.

Germany’s trade data for September meanwhile showed a 2.4% month-over-month decline in exports, exceeding economists’ expectations of a 2% drop.

That marked the third consecutive monthly decrease, with exports down by 7.5% compared to the same period in 2022, highlighting the ongoing challenges facing Europe’s largest economy.

Finally on data, China’s Caixin services PMI for October rose to 50.4 from 50.2 in September, falling short of the consensus forecast of 51.0.

That suggested a less robust expansion in the services sector than expected, following an official survey earlier in the week that indicated a decline in the services PMI from 50.9 in September to 50.1 in October.

Currys rises on sale news, Wickes reverses gains

In equity markets, Currys rose 4.13% after agreeing to sell its Greek and Cypriot division, Dixons South East Europe, trading as Kotsovolos, to Public Power Corporation for €200m (£175m).

Ocado Group continued its upward trajectory for the second consecutive day, surging by 6.48%, likely due to short-covering.

BT Group added 5.32%, having already surged on Thursday following the release of half-year results.

Flutter Entertainment also experienced significant gains, climbing by 3.78%.

Analysts cited the positive influence of US sector peer DraftKings, which reported better-than-expected third-quarter revenue and upgraded its full-year guidance for 2023.

Wizz Air Holdings soared 11.14%, with the budget airline set to report its first-half results next Thursday.

UBS was expecting second-quarter revenues of €1.88bn, surpassing consensus expectations and net income of €508m, closely in line with what the market anticipated.

Investors were also monitoring the company’s capacity rollout plans amid concerns about the Pratt & Whitney GTF engine fit to the A320neo aircraft.

Aston Martin Lagonda rebounded with a 4.4% increase in its stock price after a recent slump.

The company faced challenges earlier in the week, reporting a larger-than-expected third-quarter loss and downgrading its volume outlook for the year due to production issues with the DB12 model.

On the downside, Wickes Group declined 0.76%, reversing earlier gains.

The DIY and building supplies retailer expressed confidence in meeting its full-year targets but cautioned about a third-quarter sales decline, with some installation sales expected to be deferred into the following year.

In broker note action, Smith & Nephew rose 1.77% after receiving an upgrade to ‘overweight’ from JPMorgan.

Similarly, Anglo American enjoyed a 1.87% boost following an upgrade to ‘outperform’ at Oddo.

Rightmove faced a setback of 0.93%, however, after Citi reiterated its ‘sell’ rating on the shares, emphasising heightened competition from US group CoStar, which recently announced its acquisition of OnTheMarket.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,417.73 -0.39%
FTSE 250 (MCX) 17,983.84 1.22%
techMARK (TASX) 4,091.58 0.78%

FTSE 100 - Risers

Ocado Group (OCDO) 542.20p 6.48%
BT Group (BT.A) 123.60p 5.70%
Endeavour Mining (EDV) 1,741.00p 5.01%
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Entain (ENT) 919.60p 3.98%
Flutter Entertainment (CDI) (FLTR) 13,865.00p 3.90%
JD Sports Fashion (JD.) 131.35p 3.88%
Rentokil Initial (RTO) 442.10p 3.66%
Kingfisher (KGF) 222.50p 3.54%
Hargreaves Lansdown (HL.) 750.60p 3.25%

FTSE 100 - Fallers

Shell (SHEL) 2,652.50p -4.17%
Centrica (CNA) 153.30p -2.73%
Compass Group (CPG) 2,049.00p -2.38%
Reckitt Benckiser Group (RKT) 5,412.00p -2.35%
Sage Group (SGE) 970.00p -2.16%
BAE Systems (BA.) 1,082.00p -2.13%
InterContinental Hotels Group (IHG) 5,746.00p -2.11%
Relx plc (REL) 2,828.00p -1.87%
Whitbread (WTB) 3,251.00p -1.84%
BP (BP.) 489.85p -1.75%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,826.50p 10.60%
FDM Group (Holdings) (FDM) 471.00p 9.03%
Liontrust Asset Management (LIO) 586.50p 5.68%
IP Group (IPO) 49.10p 5.48%
OSB Group (OSB) 353.00p 5.44%
Ashmore Group (ASHM) 177.20p 5.41%
Ceres Power Holdings (CWR) 230.00p 4.64%
Carnival (CCL) 913.80p 4.60%
Big Yellow Group (BYG) 1,058.00p 4.44%
Aston Martin Lagonda Global Holdings (AML) 211.80p 4.43%

FTSE 250 - Fallers

CAB Payments Holdings (CABP) 68.20p -4.35%
International Distributions Services (IDS) 254.70p -2.37%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 454.50p -2.15%
Genus (GNS) 2,284.00p -2.06%
Hilton Food Group (HFG) 655.00p -1.95%
Baltic Classifieds Group (BCG) 203.50p -1.93%
Helios Towers (HTWS) 64.55p -1.90%
Elementis (ELM) 123.80p -1.75%
North Atlantic Smaller Companies Inv Trust (NAS) 3,540.00p -1.67%
Indivior (INDV) 1,611.00p -1.65%