London close: Stocks slip as investors digest US jobless claims

5th Sep 2024 18:02

(Sharecast News) - London's stock markets closed in negative territory on Thursday, as investors digested a slightly lower-than-expected jobless claims number out of the United States.

The FTSE 100 index dropped 0.34% to finish at 8,241.71 points, while the FTSE 250 declined 0.22%, closing at 20,762.50 points.

In currency markets, sterling was last up 0.21% on the dollar, trading at $1.3175, while it advanced 0.02% against the euro to change hands at €1.1866.

"What seemed to be the beginning of a fresh slump for global markets has been put on pause, at least for now," said IG chief market analyst Chris Beauchamp.

"US markets have moved higher again this afternoon, having held the lows of the past 48 hours, while the Vix has slumped in afternoon trading.

"The bulls aren't giving up just yet it seems."

Beauchamp said that while the ADP report was worse than expected, investors looked to have "learned their lesson", avoiding putting too much store in the numbers ahead of Friday's non-farm payrolls.

"The prospect of more rate cuts continues to put new life into the utility sector.

"Today's UK leaderboard is populated by a number of the high dividend-paying names, as investors look to bolster their income streams.

"It's a helpful recession defence too, given the strong visibility of revenues in the sector."

US initial jobless claims lower than expected, UK construction sector growth continues

In economic news, unemployment claims in the US fell by 5,000 to 227,000 for the week ended 31 August, according to the Department of Labor.

It marked a seven-week low and was below market expectations of 230,000.

Despite the decline, jobless claims remained higher than earlier in 2024, reflecting a softening labour market, though it remained historically tight.

Meanwhile, continuing claims also fell by 22,000 to 1.83 million, with the four-week moving average for initial claims easing slightly to 230,000.

On home shores, the UK construction sector's growth continued in August, though at a slower pace.

The S&P Global UK construction purchasing managers' index (PMI) dropped to 53.6 from 55.3 in July, missing expectations of 54.9 but staying above the 50.0 mark that separates growth from contraction.

While commercial building led the way with a reading of 53.7, residential construction saw its best performance in nearly a year at 52.7, supported by improved borrowing conditions.

Civil engineering remained positive with a PMI of 51.8.

Firms remained optimistic, with half of respondents expecting an increase in output over the next year.

"The UK construction sector appears to have turned a corner after a difficult start to 2024, with renewed vigour in the house building segment the most notable development," said Tim Moore, economics director at S&P Global Market Intelligence.

"Improving sales pipelines and a turnaround in demand conditions led to a relatively strong degree of business optimism across the sector.

"However, some firms cited a slowdown in civil engineering activity and concerns about the outlook for infrastructure work as constraints on growth expectations."

UK car registrations also saw a slight dip in August, down 1.3% year-on-year, as buyers awaited the release of new number plates in September.

According to the Society of Motor Manufacturers and Traders (SMMT), 84,575 new cars were registered last month, while demand for battery electric vehicles (BEVs) rose by 10.8%.

The SMMT said it expected BEV market share to climb to 18.5% by the end of the year.

On the continent, eurozone construction activity remained weak in August, with the HCOB eurozone construction PMI stuck at 41.4, indicating a sharp contraction.

The sector had now contracted for 28 consecutive months, with new orders and employment both declining amid rising costs.

Meanwhile, eurozone retail sales saw only slight improvement in July, up 0.1% month-on-month, according to Eurostat.

Sales of food, drink, and tobacco grew by 0.4%, but automotive sales fell by 1%, underscoring ongoing difficulties in the region's retail sector.

Vestry Group surges on buyback announcement, ex-divs prove a drag

On London's equity markets, housebuilder Vistry Group surged 8.5% after announcing a £130m share buyback and reporting a 7% increase in first-half pre-tax profits, which rose to £186.2m from £174m in the same period last year.

The company also reported a 9.1% rise in completions, with strong demand in its partner funded markets.

Premier Inn owner Whitbread climbed 3.76% following an upgrade to 'neutral' at Redburn, while RS Group saw gains of 1.51% after Citi upgraded the stock to 'buy.'

Food manufacturer Bakkavor Group increased by 2.27%, and asset manager Ashmore Group rose 0.93% following positive results.

WAG Payment Solutions jumped 6.3% despite reporting a drop in half-year profits, citing an 18% rise in total net revenue and adjusted earnings for the first half of the year.

On the downside, Currys slipped 1.56% despite reporting a significant increase in sales for the 17 weeks ended 24 August, where it captured almost 50% of the UK laptop market.

Several other stocks, including Admiral Group, Antofagasta, DS Smith, Aviva, Croda International, Prudential, and Ithaca Energy, were all down as they traded without dividend entitlements.

Associated British Foods dropped 5.01%, hurt by lower-than-expected like-for-like sales at Primark, which were impacted by wet weather in the UK and Ireland, leading to reduced footfall and weaker seasonal sales.

Genus fell 2.68% despite reporting strategic progress, citing potential currency headwinds and challenges in China.

Upper Crust and Ritazza owner SSP Group declined 4.47% following a downgrade to 'equalweight' by Morgan Stanley.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,241.71 -0.34%

FTSE 250 (MCX) 20,762.50 -0.22%

techMARK (TASX) 4,844.24 -0.79%

FTSE 100 - Risers

Vistry Group (VTY) 1,430.00p 8.50%

WPP (WPP) 746.60p 5.63%

Entain (ENT) 647.20p 5.06%

Whitbread (WTB) 3,008.00p 3.76%

SSE (SSE) 1,970.00p 2.95%

Severn Trent (SVT) 2,670.00p 2.65%

United Utilities Group (UU.) 1,056.00p 2.62%

Burberry Group (BRBY) 637.40p 2.28%

Barclays (BARC) 228.55p 2.17%

Land Securities Group (LAND) 652.50p 2.11%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,289.00p -8.48%

Admiral Group (ADM) 2,814.00p -3.99%

AstraZeneca (AZN) 12,540.00p -3.88%

Smith (DS) (SMDS) 449.40p -3.15%

Spirax Group (SPX) 7,295.00p -2.80%

M&G (MNG) 207.00p -2.77%

CRH (CDI) (CRH) 6,334.00p -2.73%

Halma (HLMA) 2,488.00p -2.20%

Croda International (CRDA) 3,884.00p -2.11%

Relx plc (REL) 3,486.00p -1.91%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 77.60p 6.30%

Pennon Group (PNN) 633.50p 5.15%

Aston Martin Lagonda Global Holdings (AML) 156.60p 3.50%

Big Yellow Group (BYG) 1,294.00p 2.86%

ITV (ITV) 80.60p 2.54%

International Public Partnerships Ltd. (INPP) 131.40p 2.51%

Future (FUTR) 1,075.00p 2.48%

Supermarket Income Reit (SUPR) 75.80p 2.43%

Bridgepoint Group (Reg S) (BPT) 302.40p 2.30%

Bakkavor Group (BAKK) 157.50p 2.27%

FTSE 250 - Fallers

Ithaca Energy (ITH) 116.00p -10.08%

SSP Group (SSPG) 162.50p -4.47%

Renishaw (RSW) 3,285.00p -4.09%

Hilton Food Group (HFG) 912.00p -4.00%

Baltic Classifieds Group (BCG) 280.50p -3.61%

Kainos Group (KNOS) 890.00p -3.47%

FirstGroup (FGP) 159.20p -3.05%

Trustpilot Group (TRST) 197.40p -3.00%

Genus (GNS) 1,758.00p -2.68%

Bloomsbury Publishing (BMY) 680.00p -2.58%