London close: Stocks higher as US jobs report underwhelms

1st Nov 2024 15:08

(Sharecast News) - London stocks closed higher on Friday, as investors digested an unexpectedly low US payrolls figure, as well as a range of UK economic releases.

The FTSE 100 index gained 0.83%, reaching 8,177.15 points, while the FTSE 250 rose 0.45% to 20,479.74 points.

In currency markets, sterling was last up 0.4% on the dollar to trade at $1.2950, as it rose 0.72% against the euro, changing hands at €1.1937.

"On the first day of the month European and US stock indices regained recently lost ground ahead of the US presidential election," said IG senior technical analyst Axel Rudolph.

"This week's late October rout in stock indices was followed by a positive start to the month as bargain hunters stepped in and the US 10-year yield slumped after an extremely weak non-farm payrolls jobs report.

"Next week's 25-basis point Fed rate cut after the US presidential election is now seen as a foregone conclusion, with the Bank of England also expected to cut by the same amount as the Reserve Bank of Australia is likely to leave rates unchanged."

Rudolph added that the oil price continued to rally, rising by around 2.5% on the day, as it remained on track for its third positive session in a row amid fears of escalation between Iran and Israel disrupting supplies.

"Gold and silver prices were also trading higher, making back some of Thursday's sharp losses."

US job growth comes in well below expectations

In economic news, the US economy saw a sharp deceleration in job growth in October, with only 12,000 new jobs added according to the Bureau of Labor Statistics.

That figure fell significantly short of expectations, and was markedly below the revised 223,000 increase reported for September.

October's job gains were the lowest since December 2020, reflecting the impact of sectoral strikes and severe weather events.

Health care and government sectors continued to expand, while manufacturing employment slipped as labour disputes weighed on the industry.

The unemployment rate, however, remained unchanged at 4.1%, aligning with market forecasts.

On home shores, UK manufacturing activity contracted in October for the first time since April, as the S&P Global purchasing managers' index (PMI) fell to 49.9, down from 51.5 in September.

The index's dip below the 50.0 mark signalled contraction, influenced by sluggish economic growth, stretched supply chains, and concerns over the potential impacts of the forthcoming Budget.

The sector reported a slowdown in new orders and a near halt in output growth as market optimism waned.

"UK manufacturing started the final quarter of the year on an uncertain footing amid speculation on government policies ahead of the Budget, which was widely reported to have led to a wait-and-see approach on investment and spending," said Rob Dobson, director at S&P Global Market Intelligence.

"This domestic headwind, combined with an ongoing loss of export business, led to the first outright contraction in new work intakes since April.

"Output growth came close to stalling as a result."

UK retail footfall meanwhile also saw a downturn in October, reversing the gains made in September.

Data from the British Retail Consortium and Sensormatic showed footfall down 1.1% on the month, with high streets experiencing a 3.6% decline and shopping centres down by 1.6%.

Retail parks continued to see increased activity, albeit at a slower pace, rising 4.8% after September's 7.3% boost.

"While this will be disappointing for many retailers, who may have hoped the positive figures in September would spell the start of a more consistent uptick in store traffic, it perhaps shouldn't come as a surprise," said Andy Sumpter, EMEA retail consultant at Sensormatic.

"We expect to see a bumpy recovery as myriad market conditions - from the cost of living to shaky consumer confidence around the Budget - continue to make footfall performance volatile."

Elsewhere, house price growth in the UK showed signs of easing, with prices inching up just 0.1% month-on-month in October, according to Nationwide.

Annual growth also decelerated to 2.4% from 3.2% in September.

The average house price stood at £265,738, slightly down from the previous month.

"Housing market activity has remained relatively resilient in recent months, with the number of mortgage approvals approaching the levels seen pre-pandemic, despite the significantly higher interest rate environment," said Nationwide chief economist Robert Gardner.

"Solid labour market conditions, with low levels of unemployment and strong income gains, even after taking account of inflation, have helped underpin a steady rise in activity and house prices since the start of the year.

"Providing the economy continues to recover steadily, as we expect, housing market activity is likely to continue to strengthen gradually as affordability constraints ease through a combination of modestly lower interest rates and earnings outpacing house price growth."

Reckitt surges on Mead Johnson court clearance

On London's equity markets, Reckitt Benckiser Group surged 9.64% after its Mead Johnson subsidiary was cleared of liability in a US trial regarding potential health risks in premature-baby formula.

Asset manager Schroders rose 4.3% after BNP Paribas Exane upgraded the stock to 'outperform' from 'neutral.'

With third-quarter results expected next week, the brokerage highlighted improving performance momentum and an appealing valuation.

BNP Paribas Exane noted that strong third-quarter flows and positive fund performance could serve as significant catalysts for further gains.

CMC Markets gained 1.31% on news of a long-term partnership with New Zealand bank ASB.

The agreement would see CMC provide a tailored trading platform for ASB's clients, integrating its technology with ASB's systems.

Shares in Bloomsbury Publishing continued their upward trajectory, advancing 2.65%.

The publisher recently upgraded its full-year outlook after achieving record first-half profits and revenue, maintaining positive sentiment following last week's rally.

TBC Bank Group rose 2%, recovering from early-week losses tied to political uncertainty in Georgia after the ruling Georgian Dream party, known for its pro-Russia alignment, won a disputed election.

Close Brothers Group saw a 1.75% uptick, rebounding after sharp declines last Friday when the Court of Appeal ruled that motor dealers, acting as credit brokers, owe a fiduciary duty to their customers.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,177.15 0.83%

FTSE 250 (MCX) 20,479.74 0.45%

techMARK (TASX) 4,644.56 0.78%

FTSE 100 - Risers

Reckitt Benckiser Group (RKT) 4,994.00p 6.62%

Schroders (SDR) 358.80p 4.30%

Intermediate Capital Group (ICG) 2,130.00p 3.30%

Associated British Foods (ABF) 2,283.00p 2.79%

Melrose Industries (MRO) 487.50p 2.63%

Rolls-Royce Holdings (RR.) 548.80p 2.50%

Beazley (BEZ) 773.50p 2.38%

London Stock Exchange Group (LSEG) 10,750.00p 2.23%

Rightmove (RMV) 601.00p 2.07%

NATWEST GROUP (NWG) 375.30p 2.07%

FTSE 100 - Fallers

Smurfit Westrock (DI) (SWR) 3,930.00p -2.12%

Vistry Group (VTY) 894.50p -1.65%

Entain (ENT) 734.40p -1.42%

Smith (DS) (SMDS) 539.00p -1.19%

Flutter Entertainment (DI) (FLTR) 17,970.00p -0.94%

Fresnillo (FRES) 735.50p -0.54%

Sainsbury (J) (SBRY) 264.80p -0.53%

Persimmon (PSN) 1,459.50p -0.51%

British Land Company (BLND) 396.80p -0.45%

JD Sports Fashion (JD.) 123.60p -0.32%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 314.40p 4.38%

Auction Technology Group (ATG) 469.00p 4.11%

Helios Towers (HTWS) 110.40p 3.76%

Burberry Group (BRBY) 812.00p 3.65%

Indivior (INDV) 709.50p 3.50%

Victrex plc (VCT) 881.00p 3.40%

Hilton Food Group (HFG) 923.00p 2.78%

Watches of Switzerland Group (WOSG) 418.00p 2.70%

Bloomsbury Publishing (BMY) 698.00p 2.65%

Me Group International (MEGP) 218.00p 2.59%

FTSE 250 - Fallers

Energean (ENOG) 974.50p -3.13%

Foresight Environmental Infrastructure Limited (FGEN) 83.70p -3.01%

Ithaca Energy (ITH) 98.70p -2.85%

Empiric Student Property (ESP) 92.50p -2.12%

Harworth Group (HWG) 175.00p -1.96%

AO World (AO.) 106.60p -1.84%

GCP Infrastructure Investments Ltd (GCP) 72.90p -1.75%

Raspberry PI Holdings (RPI) 350.70p -1.66%

Great Portland Estates (GPE) 308.50p -1.59%

Vietnam Enterprise Investments (DI) (VEIL) 570.00p -1.55%