London close: Stocks rise as US jobs report lowers chance of June rate hike

The FTSE 100 finished slightly higher on Friday as analysts wrote off a June rate hike after a disappointing US non-farm payrolls report.

The US non-farm payrolls increased 160,000 last month, compared to forecasts of 200,000 and 215,000 in March, the Labor Department revealed.

The unemployment rate was unchanged at 5.0%, as anticipated by analysts.

Average hourly earnings rose 2.5% year-on-year in April, beating forecasts for a 2.4% increase and following a 2.3% gain in March. On the month, however, hourly earnings growth remained at 0.3%, in line with estimates.

Many analysts said they believe an interest rate hike by the Federal Reserve at the next policy meeting in June is unlikely after the worse-than-expected data on the labour market.

“Today’s US job numbers, which were worse than expected, have wiped expectations for a June rate hike off the map,” said IG’s senior market analyst Chris Beauchamp.

“June seemed to be something of a long shot, especially given that other central banks continue to ease, but with unemployment stuck at 5% and little sign of enthusiastic job creation, it has become a non-starter.”

Meanwhile, oil prices rebounded from falls earlier in the session with Brent crude up 0.35% to $45.17 per barrel and West Texas Intermediate up 0.35% to $45.17 per barrel at 1625 BST.

The pound dropped 0.40% against the US dollar to end the session at 1.4427, leaving it nursing a 1.3% decline for the week as a whole, as purchasing managers indices for construction, manufacturing and services in April pointed to stalling growth in the second quarter, according to economists at Barclays and Pantheon Macroeconomics.

Over the weekend, analysts at Bank of America-Merrill Lynch would break ranks with most observers, reportedly telling clients that at least one - if not two - UK rate-setters might vote for a cut in Bank Rate as soon as next Thursday. Their opposite numbers at Barclays also believed MPC member Gertjan Vlieghe might be itching to vote a for cut, but they believed it unlikely that he would do so before the 23 June vote on whether Britain should remain inside the European Union.

Yields on benchmark 10-year Gilts slumped on Friday even as those on similarly-dated US Treasuries rose after the jobs report, for a weekly fall of 18 basis points - their largest weekly drop since January.

Gold also advanced, with the spot and Comex prices rising 0.72% and 1.36, respectively.

The increase in gold prices gave producers a boost, including Randgold Resources and Fresnillo.

BAE Systems was also sitting higher a day after telling shareholders that it expected earnings to rise by as much as 10% this year.

Gong the other way, Glencore declined despite reports it is in talks to sell a further 9.9% stake in its agricultural unit, valued at around $625m.

Interserve was in the red after saying expectations for its UK construction division have taken a significant hit due to a further deterioration in its Glasgow energy from waste contract.

Market Movers

FTSE 100 (UKX) 6,125.70 0.14%
FTSE 250 (MCX) 16,648.76 -0.08%
techMARK (TASX) 3,032.26 -0.29%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 6,165.00p 6.57%
Fresnillo (FRES) 1,103.00p 6.16%
Rolls-Royce Holdings (RR.) 646.50p 2.62%
Pearson (PSON) 820.00p 1.86%
BAE Systems (BA.) 489.00p 1.75%
BHP Billiton (BLT) 844.70p 1.64%
SSE (SSE) 1,500.00p 1.63%
Compass Group (CPG) 1,241.00p 1.55%
Land Securities Group (LAND) 1,159.00p 1.49%
British Land Company (BLND) 729.50p 1.46%

FTSE 100 - Fallers

Inmarsat (ISAT) 812.50p -5.85%
ITV (ITV) 216.70p -2.87%
Standard Chartered (STAN) 498.45p -1.69%
BT Group (BT.A) 443.50p -1.67%
easyJet (EZJ) 1,416.00p -1.67%
Dixons Carphone (DC.) 411.40p -1.60%
Hargreaves Lansdown (HL.) 1,246.00p -1.58%
Experian (EXPN) 1,251.00p -1.26%
Provident Financial (PFG) 2,838.00p -1.25%
ARM Holdings (ARM) 931.00p -1.22%

FTSE 250 - Risers

Centamin (DI) (CEY) 121.50p 9.26%
IMI (IMI) 988.50p 4.77%
Ophir Energy (OPHR) 68.20p 4.68%
McCarthy & Stone (MCS) 227.60p 4.36%
Cobham (COB) 164.10p 4.12%
Capital & Counties Properties (CAPC) 345.70p 3.78%
Rotork (ROR) 186.40p 3.56%
Drax Group (DRX) 319.20p 3.47%
Polymetal International (POLY) 692.00p 3.21%
Acacia Mining (ACA) 328.00p 3.02%

FTSE 250 - Fallers

Interserve (IRV) 326.40p -17.20%
Man Group (EMG) 130.80p -8.15%
CLS Holdings (CLI) 1,509.00p -6.04%
Ocado Group (OCDO) 272.80p -4.75%
Tullow Oil (TLW) 244.90p -4.71%
BBA Aviation (BBA) 189.20p -4.30%
Lookers (LOOK) 135.70p -3.96%
Ibstock (IBST) 190.00p -3.46%
Euromoney Institutional Investor (ERM) 940.00p -2.99%
Greggs (GRG) 1,065.00p -2.65%