London close: Stocks mixed as US payrolls surprise to the upside
Stocks finished in a mixed state in London on Friday, as investors digested the latest nonfarm payrolls report out of the United States, which showed slightly hastier-than-expected job growth in June.
The FTSE 100 ended the session down 0.03% at 7,123.27, while the FTSE 250 rose 0.55% to 22,746.99.
Sterling was in positive territory, last rising 0.19% on the dollar to $1.3793, and strengthening 0.22% against the euro to trade at €1.1643.
“The US jobs figures couldn’t have delivered better news for Wall Street,” said AJ Bell financial analyst Danni Hewson.
“The term ‘Goldilocks’ has been well-used today, but it’s on the money - not too hot, not too cold.
“Enough new jobs to confirm the economy is on a roll, enough jobless to give the Fed’s current strategy a warm hug.”
Hewson said that if investors in the US were after a pre-holiday weekend treat, they were certainly not disappointed.
“In London there was a slightly less celebratory mood, perhaps investors are distracted by the weekend of sport that lies ahead.
“The more domestic-focussed FTSE 250 was the more successful of the two big indices today and those hospitality businesses among their number will take heart that the biggest job creation in the US has come from their sector, and that the US is slightly further along the recovery road.”
The week had been a “rollercoaster”, Hewson quipped, with the rest of the month looking to remain turbulent beginning with the wait for a decision on oil production from OPEC+ still in the balance.
“Recovery is hard, it comes with a great number of changes which will be painful for some and profitable for others.
“Change is going to come, and it’s coming quickly.”
Non-farm payroll growth in the US picked up a tad more quickly than anticipated last month, in part as a result of strong hiring by the government.
According to the US Department of Labor, non-farm payrolls increased by 850,000 in June - better than the 700,000 gain expected by economists.
The prior two months' prints for non-farm payrolls meanwhile were revised up by a combined 15,000.
America’s services sector accounted for the bulk of new job posts with an increase of 642,000 following a rise of 497,000 in May, but hiring by government was unusually robust as well, with the public sector taking on 188,000 more people, up from 67,000 in the month before.
“Looking at the numbers, it is very much clear that the labour market is going from strength to strength which is very positive for overall investment sentiment," said Naeem Aslam, chief market analyst at AvaTrade.
"Although the price of gold moved lower on the back of the data, it is important to keep in mind that a large number of investors have already started to price a hawkish stance and this means that we may not see any significant downside move in the gold prices over the next week.”
The International Monetary Fund, meanwhile, joined those who believed that America's central bank should start hiking interest rates towards the end of 2022 or the start of 2023, amid a rapid rebound in economic growth.
“Managing this transition - from providing reassurance that monetary policy will continue to deliver powerful support to the economy to preparing for an eventual scaling back of asset purchases and a withdrawal of monetary accommodation - will require deft communications under a potentially tight timeline,” the IMF said in its annual Article IV consultations.
The IMF still projected that the recent pick up in inflation would prove transitory, meaning that the central bank could afford to look through it for the moment.
Closer to home, the UK reported 27,989 new Covid-19 cases between 25 June and 1 July, for a 72% jump versus the prior week.
In a research note sent to clients, Kallum Pickering at Berenberg noted that the ninefold rise in recorded infections in the UK since early May had been mostly recorded among people who had not yet been inoculated, primarily the young.
“As long as the vaccines continue to work, we see no serious risk of further lockdowns,” Pickering said.
“This reduces the risk of a major economic set-back.”
On the broker front, analysts at Berenberg upgraded their recommendation for shares of Informa from 'hold' to 'buy', with those shares rising 3.05%.
Over at Jefferies meanwhile, analysts initiated coverage of defence group Chemring at 'buy' with a target price of 370.0p, with that stock ending the day 1.55% firmer.
Among other equities, building materials distributor and retailer Grafton Group rose 1.89% after completing the acquisition of Isojoen Konehalli Oy and Jokapaikka Oy, or ‘IKH’.
It said IKH is one of the largest workwear, personal protective equipment (PPE), tools, spare parts and accessories technical wholesalers and distributors in Finland.
A shareholder revolt at JD Sports Fashion resulted in the head of the company’s remuneration committee being voted off the board over anger at the retailer’s pay policies.
JD Sports said almost 55% of voting shareholders rejected the re-election of Andrew Leslie, who had sat on the fashion group’s board for 11 years, forcing him to step down with immediate effect.
The company said it would elect a temporary chair of its remuneration committee and begin the search for Leslie’s long-term replacement, while its shares ended Friday up 1.65%.
On the downside, QinetiQ Group slipped 0.06% after saying David Smith would be retiring as chief financial officer and stepping down from the board on 30 November, to be replaced by Lightsource CFO Carol Borg.
Smith joined QinetiQ
Market Movers
FTSE 100 (UKX) 7,123.27 -0.03%
FTSE 250 (MCX) 22,746.99 0.55%
techMARK (TASX) 4,477.77 0.23%
FTSE 100 - Risers
Informa (INF) 530.60p 3.51%
Polymetal International (POLY) 1,597.50p 2.24%
Aveva Group (AVV) 3,894.00p 2.23%
British Land Company (BLND) 516.40p 2.10%
Anglo American (AAL) 2,947.00p 1.99%
Rolls-Royce Holdings (RR.) 102.58p 1.71%
Evraz (EVR) 607.60p 1.54%
Land Securities Group (LAND) 700.20p 1.51%
Glencore (GLEN) 315.15p 1.50%
JD Sports Fashion (JD.) 982.60p 1.40%
FTSE 100 - Fallers
Standard Chartered (STAN) 456.50p -2.37%
NATWEST GROUP PLC ORD 100P (NWG) 202.40p -2.17%
HSBC Holdings (HSBA) 416.65p -1.58%
Barclays (BARC) 172.66p -1.51%
Lloyds Banking Group (LLOY) 46.94p -1.42%
Johnson Matthey (JMAT) 3,103.00p -1.40%
Schroders (SDR) 3,477.00p -1.25%
CRH (CDI) (CRH) 3,661.00p -1.08%
Ocado Group (OCDO) 1,975.00p -1.00%
Admiral Group (ADM) 3,109.00p -0.96%
FTSE 250 - Risers
Watches of Switzerland Group (WOSG) 882.00p 6.91%
GCP Student Living (DIGS) 169.20p 3.80%
888 Holdings (888) 405.20p 3.58%
Playtech (PTEC) 443.80p 3.11%
HGCapital Trust (HGT) 367.00p 3.09%
Herald Investment Trust (HRI) 2,340.00p 3.08%
Chrysalis Investments Limited NPV (CHRY) 249.00p 2.89%
Trustpilot Group (TRST) 344.60p 2.68%
Capital & Counties Properties (CAPC) 167.00p 2.52%
Shaftesbury (SHB) 588.00p 2.44%
FTSE 250 - Fallers
AO World (AO.) 228.20p -6.01%
Micro Focus International (MCRO) 441.10p -5.36%
Essentra (ESNT) 289.50p -2.53%
Network International Holdings (NETW) 371.00p -2.24%
FirstGroup (FGP) 85.80p -1.83%
TUI AG Reg Shs (DI) (TUI) 371.20p -1.70%
Tyman (TYMN) 449.00p -1.54%
Mitie Group (MTO) 66.40p -1.48%
National Express Group (NEX) 271.40p -1.45%
Fidelity China Special Situations (FCSS) 414.50p -1.43%
in January 2017.
Borg would start work on 11 October “to enable a smooth transition period”, the company said in a statement.