London close: Stocks slide after non-farm payrolls as traders eye US election

London stocks retreated on Friday as the US non-farm payrolls report was seen to put the Federal Reserve on course for a December interest rate hike and amid US election uncertainty.

The FTSE 100 fell 1.43% to 6,693.26 points at the close.

The non-farm payroll rose by a seasonally adjusted 161,000 in October, the Labor Department revealed. While it was less than the 175,000 increase expected by analysts, September’s figures were revised to 191,000 from a preliminary estimate of 156,000.

The unemployment rate also fell to 4.9% from 5.0%, as expected, while average hourly earnings grew at the strongest rate since June 2009. Earnings jumped 2.8% in October compared to a year earlier following a 2.7% increase in September and compared to estimates for a 2.6% increase.

“US non-farm payrolls missed headline forecasts, but a good rise in wages means that a December Fed move looks even more likely,” said Chris Beauchamp, chief market analyst at IG.

However, the analyst said “nothing is certain” and a win by Republican presidential candidate Donald Trump at next week’s US election might derail the hike.

Support for Democratic party contender Hillary Clinton is at 44.4% compared to 43.9% for Trump, according to the latest IDB/TIPP poll.

A RealClearPolitics average of polls showed Clinton’s lead at 1.5 points early on Friday, up a touch from 1.3 points late on Thursday, but still lower than her seven point lead in mid-October.

Paul Sirani, chief market analyst at Xtrade, said: “Judging by the polls, Donald Trump has battled his way back into contention, and while a Hillary Clinton remains the most likely victor, a shock result on Tuesday could trigger another set of Brexit-style shudders through markets across the globe.”

In other US news, the trade deficit dropped 10% in September to a 19-month low of $36.4bn from a revised $40.5bn in August, government data showed. Economists had expected the trade gap to total $36.9bn.

Among corporate stocks, Hikma Pharmaceuticals was under the cosh as Numis upgraded the stock to ‘buy’ from ‘hold’ but cut its target price to 2,350p from 2,660p.

Dixons Carphone was on the back foot, giving back some of the gains from the previous session, when it was boosted by an upgrade to ‘equalweight’ by Morgan Stanley.

Housebuilders Taylor Wimpey, Persimmon and Crest Nicolson retreated. Mike van Dulken, head of research at Accendo Markets, attributed the decline to several factors including a weak pound sending the Bank of England’s inflation expectations on Thursday through the roof.

“The potential for pressure on household financing could well hold back not only already very stretched first-time buyers but existing homeowners hoping to try and climb another rung on the UK’s fabled win-win property ladder.”

British Airways and Iberia parent International Consolidated Airlines Group flew lower after it cut its target for average annual earnings before interest, taxes depreciation, amortisation and rental costs to around €5.3bn from 5.6bn previously.

On the upside, Paddy Power Betfair was the standout gainer as it upped its guidance for underlying earnings this year to between £390m and £405m from £365m to £385m. The group also said on Friday that third-quarter sales were up 25% to £404m.

Tullett Prebon rose after reporting a 15% jump in third-quarter revenue as it got a boost from the weaker pound, as 60% of group revenues are denominated in US dollars.

Temporary power provider Aggreko advanced as Morgan Stanley upped the stock to ‘equalweight’ from ‘underweight’ and lifted the price target to 900p from 850p.

DFS shares slid as US private equity firm Advent International cut its stake in the furniture retailer by half.

Market Movers

FTSE 100 (UKX) 6,693.26 -1.43%
FTSE 250 (MCX) 17,271.24 -1.77%
techMARK (TASX) 3,268.18 -1.20%

FTSE 100 - Risers

Paddy Power Betfair (PPB) 8,935.00p 4.14%
BAE Systems (BA.) 539.00p 0.84%
Rolls-Royce Holdings (RR.) 712.50p 0.71%
SSE (SSE) 1,574.00p 0.70%
United Utilities Group (UU.) 923.50p 0.16%
CRH (CRH) 2,552.00p 0.04%
Sky (SKY) 811.00p 0.00%
Informa (INF) 677.50p -0.22%
National Grid (NG.) 1,017.00p -0.34%
Burberry Group (BRBY) 1,415.00p -0.35%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,626.00p -6.82%
Dixons Carphone (DC.) 323.70p -5.21%
Persimmon (PSN) 1,677.00p -4.61%
Royal Bank of Scotland Group (RBS) 185.00p -4.59%
Fresnillo (FRES) 1,625.00p -4.58%
Randgold Resources Ltd. (RRS) 6,790.00p -4.50%
Old Mutual (OML) 187.50p -3.85%
International Consolidated Airlines Group SA (CDI) (IAG) 434.70p -3.57%
Tesco (TSCO) 202.50p -3.57%
Taylor Wimpey (TW.) 141.90p -3.54%

FTSE 250 - Risers

Tullett Prebon (TLPR) 383.50p 4.33%
CYBG (CYBG) 282.40p 2.73%
Aldermore Group (ALD) 177.50p 2.48%
Aggreko (AGK) 807.00p 2.35%
Electra Private Equity (ELTA) 4,422.00p 1.84%
Entertainment One Limited (ETO) 239.60p 1.65%
F&C Commercial Property Trust Ltd. (FCPT) 129.90p 1.33%
Kennedy Wilson Europe Real Estate (KWE) 1,027.00p 1.18%
Shawbrook Group (SHAW) 245.00p 1.16%
Berendsen (BRSN) 949.50p 0.96%

FTSE 250 - Fallers

DFS Furniture (DFS) 238.50p -9.56%
Tate & Lyle (TATE) 757.00p -6.20%
Mitchells & Butlers (MAB) 266.20p -5.67%
Centamin (DI) (CEY) 156.90p -5.08%
Indivior (INDV) 350.50p -5.01%
Lancashire Holdings Limited (LRE) 720.00p -5.01%
Regus (RGU) 233.80p -5.00%
Just Eat (JE.) 553.00p -4.98%
Inmarsat (ISAT) 767.50p -4.72%
Carillion (CLLN) 242.80p -4.56%