London close: Stocks turn weaker as US tech stocks sell off again
London stocks had turned lower by the close on Friday, as investors digested the latest non-farm payrolls report from the US, and following a tech-led sell off on Wall Street overnight and weakness in the UK housebuilding sector.
The FTSE 100 ended the session down 0.88% at 5,799.08, and the FTSE 250 was off 0.6% at 17,354.28.
Sterling was on the back foot, last falling 0.44% against the dollar to $1.3222, and losing 0.1% on the euro to €1.1195.
“Like yesterday, European equity markets have been pulled into the red by the tech-led declines in the US,” said CMC Markets analyst David Madden.
“Stocks were showing modest gains on the back of the US non-farm payrolls report, but the bearish moves in the US rocked confidence over here.”
The headline reading showed that 1.37 million jobs were added last month, with Madden noting that economists were expecting 1.4 million, meaning it was “basically in line” with forecasts.
The July figure was also revised slightly lower, to 1.73 million from 1.76 million, while the unemployment rate fell from 10.2% to 8.4%, beating the 9.8% forecast.
“Overall, it was a pretty good report,” Madden quipped, saying that the “sizable” fall in unemployment stood out.
“The rate of job creation is cooling, but that is to be expected.”
On home shores, a survey released earlier showed UK construction growth suffered a surprise slowdown in August as the sector continued to cut jobs.
The IHS Markit/CIPS purchasing managers' index fell to 54.6 from 58.1 in July because of a lack of new orders.
On average analysts had expected the reading to improve to 58.5 with 50 marking the difference between contraction and growth.
All three categories of construction weakened in August, which was the worst month for three months.
Housebuilding was the strongest category on 60.7 with commercial building on 52.5 and civil engineering registering a decline on 46.6.
The rate of job cuts eased only slightly from July and was close to the fastest pace over the past decade.
Business expectations improved on hopes of public sector construction spending and infrastructure projects.
“The latest PMI data signalled a setback for the UK construction sector as the speed of recovery lost momentum for the first time since the reopening phase began in May,” said Tim Moore, economics director at IHS Markit.
“The main reason for the slowdown in total construction output growth was a reduced degree of catch-up on delayed projects and subsequent shortages of new work to replace completed contracts in August.”
Market participants were also mulling the latest comments from Bank of England interest rate setter Michael Saunders, who said the Bank is likely to use further stimulus measures to support the economy through the effects of the Covid-19 crisis.
In equity markets, housebuilders were under the cosh, knocked lower by a double-whammy of bad news in the form of the construction PMI and a decision by the UK's competition regulator to take enforcement action against four of the biggest names in the sector over their treatment of leasehold homeowners.
The CMA has opened cases on Barratt, Countryside, Persimmon and Taylor Wimpey, saying the companies may have imposed unfair terms on leaseholders and misled buyers.
Barratt Developments was down 6.97%, Countryside Properties lost 4.48%, Persimmon was off 5.23%, and Taylor Wimpey was 4.96% weaker.
Berkeley Group had also turned negative by the end of trading, falling 3.72%, even after it maintained full-year guidance and reported better-than-expected production levels due to pent-up demand after the easing of lockdown measures.
Market Movers
FTSE 100 (UKX) 5,799.08 -0.88%
FTSE 250 (MCX) 17,354.28 -0.60%
techMARK (TASX) 3,699.88 -1.64%
FTSE 100 - Risers
Anglo American (AAL) 1,832.60p 3.61%
Glencore (GLEN) 171.44p 2.82%
Antofagasta (ANTO) 1,084.50p 2.75%
Imperial Brands (IMB) 1,304.00p 2.68%
NATWEST GROUP PLC ORD 100P (NWG) 107.80p 2.67%
Evraz (EVR) 327.20p 2.57%
Smith (DS) (SMDS) 265.50p 2.19%
Melrose Industries (MRO) 115.55p 2.12%
Kingfisher (KGF) 270.70p 1.96%
Hikma Pharmaceuticals (HIK) 2,457.00p 1.87%
FTSE 100 - Fallers
Barratt Developments (BDEV) 501.80p -6.97%
Scottish Mortgage Inv Trust (SMT) 849.00p -6.45%
Persimmon (PSN) 2,503.00p -5.23%
Taylor Wimpey (TW.) 114.85p -4.96%
Rightmove (RMV) 607.00p -3.80%
Berkeley Group Holdings (The) (BKG) 4,475.00p -3.72%
Ocado Group (OCDO) 2,292.00p -3.37%
Aveva Group (AVV) 4,718.00p -3.36%
Pennon Group (PNN) 1,003.50p -3.09%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,892.00p -2.98%
FTSE 250 - Risers
Rank Group (RNK) 138.80p 4.52%
Marshalls (MSLH) 662.00p 4.42%
Vesuvius (VSVS) 408.40p 4.35%
Ferrexpo (FXPO) 179.90p 3.81%
Carnival (CCL) 1,131.50p 3.48%
Rotork (ROR) 304.80p 3.47%
Provident Financial (PFG) 225.40p 3.39%
CLS Holdings (CLI) 210.00p 3.39%
Grafton Group Ut (GFTU) 744.00p 3.26%
Synthomer (SYNT) 310.20p 3.19%
FTSE 250 - Fallers
Hammerson (HMSO) 265.20p -7.69%
Polar Capital Technology Trust (PCT) 2,010.00p -7.16%
Allianz Technology Trust (ATT) 2,290.00p -6.17%
Edinburgh Worldwide Inv Trust (EWI) 254.50p -6.06%
Oxford Biomedica (OXB) 820.00p -5.20%
Helios Towers (HTWS) 150.40p -4.92%
Hiscox Limited (DI) (HSX) 710.00p -4.57%
Countryside Properties (CSP) 311.00p -4.48%
Dixons Carphone (DC.) 83.75p -4.45%
Herald Investment Trust (HRI) 1,612.00p -4.29%