London close: FTSE slips as US job openings miss forecasts

4th Sep 2024 15:00

(Sharecast News) - London stock markets ended Wednesday flat to lower as investors processed fresh economic signals from the US, particularly a lower-than-expected job openings report.

The FTSE 100 index fell by 0.35% to close at 8,269.60 points, while the more domestically-focussed FTSE 250 remained nearly unchanged, edging up just 0.002% to 20,808.61 points.

In currency markets, sterling was last up 0.24% on the dollar, trading at $1.3145, while it slipped 0.12% against the euro to change hands at €1.1861.

"US markets have managed to eke out some small gains in early trading, but in London the risk-off mood persists," said IG chief market analyst Chris Ceauchamp.

"Growth fears continue to be the big driver of losses, with the small US rebound merely a period of calm before another leg lower, potentially around Friday's payroll report."

"If today's JOLTS are any guide, then Friday's payroll data is unlikely to provide much comfort for investors."

Beauchamp noted that the Bank of Canada had joined the rate cutting party, but said what was remarkable was that the pricing of a 50 basis point cut from the US Federal Reserve was continuing to eke higher.

"If this persists into the meeting itself, it will mean that markets are setting themselves up for disappointment.

"Today's data shows that the market is cooling, not that a recession is round the corner."

US job openings fall in July, UK business activity expansion hastens

In economic news, job openings in the US fell in July as fewer positions were available than anticipated.

According to the Department of Labor, job openings declined by 3% to 7.67 million, below economists' forecast of 8.1 million.

Revised figures showed 7.91 million openings in June, down from the initially-reported 8.184 million.

However, hiring increased 5.2% to 5.521 million, while the "quits" rate, which tracks voluntary job changes, edged up to 2.1%, signalling some worker confidence in switching jobs.

Meanwhile, the US trade deficit widened by 7.9% to $78.8bn in July as imports surged.

The increase was in line with expectations, as economists had predicted a $79bn deficit.

On home shores, business activity in the UK saw its fastest expansion since April.

The S&P Global composite purchasing managers' index (PMI) rose to 53.8 in August, up from 52.8 in July, driven by growth in the services sector.

The services PMI climbed to 53.7, continuing a 10-month streak of expansion.

"August data highlighted a recovery in UK service sector performance as improving economic conditions and domestic political stability helped to bolster customer demand," said Tim Moore, economics director at S&P Global Market Intelligence.

"New business again increased at a robust pace after a lull in decision-making earlier this summer.

"This fuelled the fastest upturn in service sector activity since April and extended the current period of growth to 10 months."

The eurozone also experienced growth in August, with the HCOB eurozone composite PMI rising to 51.0 from 50.2 in July.

The growth was led by the services sector, as manufacturing continued to shrink for the 17th consecutive month.

Spain and France led the region's expansion, while Germany's private sector declined, falling to a five-month low of 48.4.

"The Olympic Games in Paris brought plenty of victories, and the French service sector was certainly among the winners," said Hamburg Commercial Bank chief economist Dr Cyrus de la Rubia.

"The latter helped drive accelerated growth in the eurozone's service sector for August. But the big question is whether this boost is sustainable.

"The positive vibes from the Games and the ongoing Paralympics might carry through into September in part, but we expect the slowdown in growth, which started in May, to likely resume in the coming months."

Elsewhere, the Bank of Canada reduced its benchmark interest rate to 4.25% from 4.5%, its third cut since June, as inflationary pressures eased.

Finally on date, services sector growth in China slowed in August, with the Caixin/S&P Global services PMI dipping to 51.6 from 52.1 in July.

Rising costs prompted firms to reduce staffing despite the continued expansion.

Barratt Developments in the red, BCPT jumps on takeover deal

On London's equity markets, housebuilder Barratt Developments dropped 1.65% after reporting a sharp decline in annual profit.

The company attributed the fall to cost-of-living pressures, higher mortgage rates, and weak consumer confidence.

Pre-tax profit plunged to £170.5m from £705m, as home completions fell by 18.6% to 14,000 units.

Segro slipped 1.29% after announcing plans to acquire rival Tritax EuroBox, in a deal valued at around £1.1bn, including debt.

Meanwhile, Hilton Food Group declined 2.36%, despite reporting higher interim adjusted operating profits.

Airtel Africa tumbled 5.17%, following a downgrade to 'neutral' by JPMorgan, while Centrica, the owner of British Gas, fell 1.98% after being downgraded to 'hold' by HSBC.

DS Smith was down 1.73%, impacted by a downgrade to 'hold' by Stifel, while Wizz Air Holdings lost 2.8%, despite confirming its first Airbus A321XLR route between Milan and Abu Dhabi.

On the upside, Balanced Commercial Property Trust surged 9.63% after agreeing to be acquired by Starwood Capital in a £673.5m deal.

Caterer Compass Group rose 0.96%, benefitting from an upgrade to 'outperform' by BNP Paribas Exane.

Direct Line Insurance Group edged up 0.48% after overcoming earlier losses, despite posting disappointing half-year operating profits.

Industrial thread maker Coats Group gained 2.07%, after completing a major pension de-risking initiative with a £1.3bn bulk annuity policy purchase.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,269.60 -0.35%

FTSE 250 (MCX) 20,808.61 0.00%

techMARK (TASX) 4,882.79 -0.39%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 480.70p 1.78%

Imperial Brands (IMB) 2,229.00p 1.64%

Vodafone Group (VOD) 76.78p 1.48%

Compass Group (CPG) 2,435.00p 1.25%

British American Tobacco (BATS) 2,901.00p 1.19%

Bunzl (BNZL) 3,618.00p 1.17%

Melrose Industries (MRO) 465.70p 1.10%

Reckitt Benckiser Group (RKT) 4,480.00p 0.83%

Marks & Spencer Group (MKS) 344.70p 0.82%

Hikma Pharmaceuticals (HIK) 1,977.00p 0.82%

FTSE 100 - Fallers

Airtel Africa (AAF) 110.00p -5.17%

Barratt Developments (BDEV) 495.80p -4.56%

Burberry Group (BRBY) 623.20p -4.53%

CRH (CDI) (CRH) 6,512.00p -4.01%

Ashtead Group (AHT) 5,226.00p -3.40%

Persimmon (PSN) 1,581.00p -3.27%

Convatec Group (CTEC) 230.00p -3.20%

Entain (ENT) 616.00p -2.87%

Sage Group (SGE) 986.40p -2.67%

Taylor Wimpey (TW.) 156.85p -2.61%

FTSE 250 - Risers

Balanced Commercial Property Trust Limited (BCPT) 95.10p 10.32%

FirstGroup (FGP) 164.20p 4.52%

IP Group (IPO) 43.90p 4.38%

XPS Pensions Group (XPS) 301.00p 3.77%

Tritax Eurobox (GBP) (EBOX) 69.00p 3.76%

W.A.G Payment Solutions (WPS) 73.00p 3.69%

Aston Martin Lagonda Global Holdings (AML) 151.30p 3.35%

NB Private Equity Partners Ltd. (NBPE) 1,614.00p 2.53%

Target Healthcare Reit Ltd (THRL) 83.40p 2.21%

OSB Group (OSB) 376.00p 2.17%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 1,209.00p -3.36%

Watches of Switzerland Group (WOSG) 385.60p -3.35%

Kainos Group (KNOS) 922.00p -2.85%

TBC Bank Group (TBCG) 2,850.00p -2.73%

Trustpilot Group (TRST) 203.50p -2.63%

Dr. Martens (DOCS) 67.60p -2.45%

Direct Line Insurance Group (DLG) 188.50p -2.38%

Hilton Food Group (HFG) 950.00p -2.36%

Grafton Group Ut (CDI) (GFTU) 1,054.20p -2.30%

Carnival (CCL) 1,122.50p -2.26%