London close: Stocks rise as US payrolls come in weaker

3rd May 2024 16:52

(Sharecast News) - London markets closed positively on Friday, as investors digested slower-than-expected payrolls growth in the US, while Anglo American jumped amid anticipation of a potential bidding war for the mining giant.

The FTSE 100 index climbed 0.51% to reach 8,213.49 points, while the FTSE 250 saw gains of 0.56% to 20,164.54 points.

In currency markets, sterling was last up 0.1% on the dollar, trading at $1.2546, while it slipped 0.31% against the euro to change hands at €1.1651.

"European equities are on the rise as we head into the final session of the week, with the now commonplace gains for the FTSE 100 taking place alongside similar upside moves for the CAC and DAX," said Scope Markets chief market analyst Joshua Mahony earlier.

"A surprise decline in French industrial production has served to highlight the ongoing challenge faced by the ECB, coming off the back of yesterday's ongoing manufacturing PMI contraction across the French, German, and eurozone economies."

Mahony said that in the UK, financials were again providing a reliable source of gains, coming off the back of a period that saw the likes of HSBC and Standard Chartered capitalise on elevated interest rates.

"Once again, we have seen Anglo American shares in the spotlight, with the stock trading higher on hopes of a bidding war after Glencore were said to be considering an approach after the initial failed bid from BHP."

US payrolls come in weaker, UK retail footfall declines

In economic news, April saw a notable slowdown in hiring in the US, accompanied by lower-than-anticipated wage growth, according to the Department of Labor.

Non-farm payrolls rose by 175,000 in seasonally adjusted terms, falling short of economists' expectations of a 243,000 increase following March's surge of 315,000.

Hiring in key sectors such as construction, leisure and hospitality, and government experienced significant deceleration compared to the previous month.

Additionally, average hourly earnings increased by 0.2%, below the consensus of 0.3%, while the average workweek shortened from 34.4 hours to 34.3.

Year-on-year, the annual rate of increase in average hourly earnings dipped from 4.1% to 3.9%.

The unemployment rate ticked up by one-tenth of a percentage point to 3.9%, aligning with expectations.

Labour force participation remained unchanged at 62.7%.

"Overall, risk sentiment has been given a boost this week from a less hawkish Fed and payrolls data that is moving in the direction needed for interest rate cuts in the US," said Kathleen Brooks, research director at XTB.

"The combination of payrolls and the Fed have helped to increase rate cut expectations for 2024, with no chance of a rate hike for this year expected.

"What a difference a week makes."

Meanwhile, the services sector in the US unexpectedly contracted at the start of spring, marking the first downturn since December 2022.

The Institute for Supply Management's services purchasing managers' index (PMI) declined from 51.4 in March to 49.4 in April, contrary to economists' forecast of an improvement to 52.0.

On home shores, UK retail footfall saw a sharp decline in April, attributed to adverse weather conditions and the early timing of Easter, according to industry data from the BRC-Sensormatic IQ footfall monitor.

Total UK footfall fell 7.2% year-on-year, exacerbating March's 1.3% decline.

High street footfall decreased by 6.9%, while footfall in retail parks and shopping centres also saw notable drops.

"While UK footfall was impacted by poor weather last month, this was artificially exacerbated by the comparison with 2023, when Easter was in April," said Helen Dickinson, chief executive of the BRC.

"All locations saw declines on the previous months, and nearly all major cities performed similarly poor."

On a more positive note, the UK service sector saw robust growth in April, reaching its fastest pace since May last year.

The S&P Global services PMI business activity index rose to 55.0 from 53.1 in March, marking the sixth consecutive month above the 50.0 mark that separates contraction from expansion.

The composite PMI also increased to 54.1 in April from 52.8 the previous month, making for the fastest expansion of private sector business activity since April 2023.

Anglo American jumps on possible bidding war, IHG in the red

On London's equity markets, Anglo American jumped 2.63% following reports that Glencore was considering a bid for the mining company, subsequent to its rejection of a £31bn proposal from BHP.

Glencore experienced a decline, however, slipping 1.36%.

Diageo saw a marginal increase of 0.02% after announcing the appointment of Nik Jhangiani, former head of finance at Coca-Cola Europacific Partners, as its new chief financial officer.

Trainline leapt 6.58%, driven by better-than-expected revenue and a significant rise in annual sales and profits.

That growth was attributed to increased competition for passengers in Spain and Italy, and a higher adoption of digital tickets in the UK.

Similarly, packaging firm Mondi saw a modest increase of 0.61% following a positive first-quarter trading update.

Aston Martin Lagonda experienced a notable 10.14% rebound, two days after disappointing first-quarter results.

On the downside, InterContinental Hotels Group declined 2.49% after it reported a significant slowdown in revenue per available room (RevPAR) growth in the first quarter, particularly impacted by weakness in the Americas and a slowdown in China.

In broker note action, AJ Bell slipped 0.3% after being downgraded to 'hold' from 'buy' by Jefferies, while Tyman defied the downward trend, rising 0.66% despite receiving the same downgrade from Jefferies.

British Land exhibited strength, rising by 2.54%, despite being downgraded to 'equalweight' from 'overweight' by Barclays.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,213.49 0.51%

FTSE 250 (MCX) 20,164.54 0.56%

techMARK (TASX) 4,667.29 1.44%

FTSE 100 - Risers

Phoenix Group Holdings (PHNX) 519.50p 6.45%

Berkeley Group Holdings (The) (BKG) 5,040.00p 4.96%

Persimmon (PSN) 1,366.50p 4.67%

Taylor Wimpey (TW.) 139.20p 4.11%

Barratt Developments (BDEV) 478.70p 4.00%

Prudential (PRU) 756.20p 3.79%

Convatec Group (CTEC) 259.20p 3.77%

Rightmove (RMV) 543.60p 3.19%

St James's Place (STJ) 447.60p 2.99%

Flutter Entertainment (DI) (FLTR) 15,705.00p 2.88%

FTSE 100 - Fallers

InterContinental Hotels Group (IHG) 7,726.00p -2.05%

Beazley (BEZ) 629.50p -1.56%

Fresnillo (FRES) 549.50p -1.52%

BP (BP.) 510.40p -1.05%

easyJet (EZJ) 541.60p -0.95%

Imperial Brands (IMB) 1,826.00p -0.95%

AstraZeneca (AZN) 12,050.00p -0.87%

Coca-Cola HBC AG (CDI) (CCH) 2,614.00p -0.83%

Glencore (GLEN) 455.00p -0.81%

British American Tobacco (BATS) 2,355.00p -0.67%

FTSE 250 - Risers

Trainline (TRN) 320.80p 6.58%

Tritax Eurobox (GBP) (EBOX) 59.70p 5.66%

Vistry Group (VTY) 1,287.00p 5.06%

Genus (GNS) 1,868.00p 4.71%

Aston Martin Lagonda Global Holdings (AML) 139.00p 4.28%

Redrow (RDW) 677.50p 4.23%

Helios Towers (HTWS) 106.00p 3.72%

Abrdn (ABDN) 155.20p 3.71%

Ithaca Energy (ITH) 116.00p 3.57%

Crest Nicholson Holdings (CRST) 194.50p 3.46%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 3,035.00p -8.55%

Bank of Georgia Group (BGEO) 4,725.00p -7.17%

Hiscox Limited (DI) (HSX) 1,118.00p -5.19%

Watches of Switzerland Group (WOSG) 332.00p -3.77%

RHI Magnesita N.V. (DI) (RHIM) 3,555.00p -3.13%

4Imprint Group (FOUR) 6,120.00p -2.88%

Hammerson (HMSO) 27.90p -2.86%

Playtech (PTEC) 485.00p -2.81%

Domino's Pizza Group (DOM) 313.80p -2.73%

Bakkavor Group (BAKK) 120.00p -2.44%