London close: Stocks rise after US non-farm payrolls miss forecasts

London stocks jumped at the close on Friday after a weaker-than-forecast US non-farm payrolls report was seen to scupper chances of a September interest rate hike by the Federal Reserve.

US employers added 151,000 jobs in August, compared to expectations of 180,000, the Labor Department revealed.

However, July's reading was revised to show a gain of 275,000 jobs, up from a previous estimate of 255,000.

The unemployment rate held at 4.9%, missing forecasts for a drop to 4.8%.

“Today’s US jobs report chewed up and spat out the idea of a September rate rise, in the process throwing away the increasingly hawkish market expectations that Fed members have nurtured over the past two weeks,” said IG market analyst Joshua Mahony.

“The post-Brexit period has been characterised by a degree of glee that monetary policy will be easy for the time, with only the increasingly hawkish backdrop cast by the FOMC undermining the outlook. That shadow cast by the threat of a US rate hike has been pushed aside for now, giving stock markets the ability to push onwards in response to an easy global monetary policy framework.”

Elsewhere, data from the Commerce Department showed the US trade deficit narrowed in July by 11.6% from a month earlier to a seasonally adjusted $39.47bn, compared to expectations of $43.5bn. Imports dropped 0.8% while exports increased 1.9%.

US factory orders rose 1.9% in July, less than the 2% increase expected and following a downwardly revised 1.8% drop in June, the Commerce Department revealed separately

On this side of the pond, the Markit/CIPS UK construction purchasing managers’ index rose to 49.2 from July’s 85-month low of 45.9, beating economists’ expectations for a reading of 46.1.

The latest reading signalled the slowest pace of decline since the downturn began in June, but the index remained below the 50.0 mark that separates contraction from expansion.

Tim Moore, senior economist at Markit, said: “The downturn in UK construction activity has eased considerably since July, primarily helped by a much slower decline in commercial building. Construction firms cited a nascent recovery in client confidence since the EU referendum result and a relatively steady flow of invitations to tender in August.

“However, the latest survey indicates only a partial move towards stabilisation, rather than a return to business as usual across the construction sector. There were still widespread reports that Brexit uncertainty had dampened demand and slowed progress on planned developments, especially in relation to large projects.”

Among corporate stocks, pharmaceutical shares rallied with Hikma Pharmaceuticals, Smith & Nephew and GlaxoSmithKline in the black.

"They're good defensive, good dividend payers ... people are positioning themselves into less volatile stocks just ahead of what could be a pretty volatile month in the markets," said Augustin Eden, research analyst at Accendo Markets.

Go-Ahead Group also advanced after the passenger transport operator reported full year results that beat management expectations.

On the downside, Carnival was on the back foot after Morgan Stanley downgraded the stock to ‘underweight’ from ‘equalweight’.

Housebuilders were under the cosh, led lower after retirement housebuilder McCarthy & Stone said that it had seen evidence of some weakness in the secondary housing market since its trading update on 29 June.

Taylor Wimpey, Persimmon, Berkeley Group and Barratt Developments declined.

Market Movers

FTSE 100 (UKX) 6,894.60 2.20%
FTSE 250 (MCX) 18,103.12 1.42%
techMARK (TASX) 3,470.07 1.47%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,188.00p 5.29%
Old Mutual (OML) 200.80p 4.47%
Imperial Brands (IMB) 4,130.00p 4.23%
Unilever (ULVR) 3,663.00p 3.84%
Babcock International Group (BAB) 1,094.00p 3.60%
Mediclinic International (MDC) 1,035.00p 3.50%
GlaxoSmithKline (GSK) 1,655.00p 3.47%
Glencore (GLEN) 183.05p 3.36%
Royal Dutch Shell 'A' (RDSA) 1,881.00p 3.32%
Standard Chartered (STAN) 664.10p 3.30%

FTSE 100 - Fallers

Carnival (CCL) 3,515.00p -4.12%
Berkeley Group Holdings (The) (BKG) 2,749.00p -0.94%
Land Securities Group (LAND) 1,098.00p -0.90%
Intu Properties (INTU) 312.40p -0.79%
Taylor Wimpey (TW.) 164.40p -0.72%
British Land Company (BLND) 669.50p -0.59%
Persimmon (PSN) 1,866.00p -0.21%
TUI AG Reg Shs (DI) (TUI) 1,046.00p -0.19%
ARM Holdings (ARM) 1,700.00p -0.06%
Paddy Power Betfair (PPB) 9,065.00p -0.06%

FTSE 250 - Risers

Go-Ahead Group (GOG) 2,206.00p 10.41%
Amec Foster Wheeler (AMFW) 582.50p 6.98%
Greencore Group (GNC) 369.20p 5.28%
Acacia Mining (ACA) 483.30p 4.43%
Tullow Oil (TLW) 227.00p 4.37%
Hochschild Mining (HOC) 261.60p 4.35%
Atkins (WS) (ATK) 1,571.00p 4.32%
Genus (GNS) 1,958.00p 4.20%
Centamin (DI) (CEY) 154.20p 4.19%
Spire Healthcare Group (SPI) 372.20p 4.17%

FTSE 250 - Fallers

McCarthy & Stone (MCS) 185.00p -11.69%
Ibstock (IBST) 173.50p -6.82%
Riverstone Energy Limited (RSE) 1,084.00p -4.24%
TalkTalk Telecom Group (TALK) 203.10p -3.29%
Allied Minds (ALM) 330.10p -2.91%
SEGRO (SGRO) 446.50p -1.91%
Safestore Holdings (SAFE) 383.50p -1.67%
Rank Group (RNK) 215.00p -1.47%
Worldwide Healthcare Trust (WWH) 1,991.00p -1.39%
Circassia Pharmaceuticals (CIR) 94.25p -1.31%