- FTSE 100 index closes up 82 points
- US non-farm payrolls rose by 4.8mln in June, well above the 3.23mln economists were expecting
- Wall Street shares higher
5.10pm: FTSE closes ahead
FTSE 100 index closed higher on Thursday as the strong US jobs report cheered investor sentiment.
Britain's blue-chip benchmark finished up over 82 points at 6,240.
America created 4.8 million jobs in June as companies rehired workers, which were previously let go. The figure was far more than the 3 million that had been expected by economists. It also followed a rebound in May when 2.5 million joined the labour market. There was a loss of 20 million jobs in April when the pandemic lockdown kicked in.
London's FTSE 250 also gained ground, adding over 178 points to close at 17,367.
"The strong US jobs report lifted the already bullish mood. Stocks were pushing higher this morning on the back of the news that Pfizer and BioNTech saw positive results from their drug trial that they are hoping will be a vaccine for Covid-19," said David Madden, analyst at CMC Markets.
"The news encouraged traders to buy into the market, but the results have yet to be reviewed by a medical journal."
Madden also noted that the US labour market still has "a long way to go but it is clearly heading in the right direction".
On Wall Street, the Dow Jones Industrial Average added over 198 points at 25,933. The S&P 500 added around 25 at 3,141.
3.50pm: Banks drive the Footsie higher
The FTSE 100 moved into consolidation mode in late afternoon, rising 67 points (1.1%) to 6,227.
Banks were prominent among the blue-chip gainers, with Royal Bank of Scotland Group PLC (LON:RBS), Barclays PLC (LON:BARC) and HSBC Holdings PLC (LON:HSBA) all notching up gains of more than 4%.
Sentiment was boosted by better-than-expected US jobs numbers.
“US employment data surprised on the upside in June for the second month running, with nonfarm payrolls increasing 4.8m after a 2.7m gain in May,” reported Rupert Thompson, the chief investment officer at Kingswood.
“The unemployment rate also fell back more than anticipated to 11.1% from 13.3%. These numbers are the latest in a string of recent economic releases to show the US economy is bouncing back quicker than expected. While undoubtedly encouraging, it remains very early days in the economic recovery and with the recent surge in infections in a number of US states now leading to a re-imposition of social distancing measures, it remains to be seen if this pace of improvement can continue. Even after the 7.5m rise in the last couple of months, employment still remains 14.7m lower than back in February,” he noted.
Ranko Berich, the head of Market Analysis at Monex Europe, was very sceptical about the numbers.
"With the amount of noise in the data, this non-farm payrolls report might as well be an inkblot test that reveals more about the readers' prior beliefs than the US labour market,” he suggested.
"The most important questions about the US labour market have been left unanswered by todays release. Firstly, although many workers laid off in March and April have been re-hired, we know little about how buoyant future reports will prove amid rising case counts. Secondly, with case counts still rising in much of the US, we dont know how labour markets will respond to the re-imposition of lockdown measures – and if the impact of a second wave will be far more lasting than the first,” Berich said.
3.00pm: US indices race ahead
US indices opened sharply higher after the June jobs report showed millions more US citizens returning to the payroll.
The Dow Jones raced to a 400 points gain before ebbing a tad to 26,120, up 394 points (1.5%) while the S&P 500 was up 46 points (1.5%) at 3,162.
“Another big upside surprise for payrolls of 4.8mln while the unemployment rate plunges to 11.1%. Great news, but it doesn't tell the whole story. 31.5mln people are claiming unemployment benefits and employment is still 15 million lower than February. Moreover, with states dialling back on re-openings the July jobs report could be far more sobering,” cautioned INGs James Knightley.
“The spike in Covid-19 cases means several states are announcing renewed containment measures with others delaying their phased re-opening. Many businesses (leisure and hospitality in particular) may take the view that it simply isnt viable for them to stay open, which will only add to the problems in the jobs market.
“Furthermore, given the downturn in global economic activity, many manufacturing and professional service firms may also not need as many staff as they face up to the new economic environment of weaker corporate profits and higher debt levels. This is before we consider the longer-term structural issues facing specific sectors such as transport, retail, commercial real estate, hospitality. So, while todays jobs report gives a good headline, there are huge headwinds which mean a full recovery in the jobs market is a very long way off,” Knightley said.
None of which is likely to stop investors from stampeding into the equity market.
In London, the FTSE 100 he immediate wake of the US jobs numbers to briefly top 6,250 and is now hovering around 6.257, up 89 points (1.4%) on the day.
Nearly all of the jobs rebound has been in low work-from-home industries, which shut and are re-opening.
But jobs in high WFH industries down 4.5%, w little rebound. In Great Recession, jobs in those same industries fell 3.9% peak-to-trough. We're in for some long-term damage. pic.twitter.com/GfONQ7hnXQ
— Jed Kolko (@JedKolko) July 2, 2020
1.40pm: US jobs numbers beat expectations
US non-farm payrolls rose by 4.8mln in June, well above the 3.23mln economists were expecting and up from the 2.51mln added in May.
The unemployment rate fell to 11.1% from 13.3% in May; economists had expected the rate to fall to 12.5%.
Average hourly earnings fell 1.2% month-on-month in June after falling 1.0% in May; the consensus forecast had been for a fall of 1.0%.
On a year-on-year basis, earnings were up 5.0%, compared to a 6.7% increase in May and expectations of a 5.3% increase.
US futures indicated a subdued but positive response to the numbers, with the mini-Dow continuous contract rising to 25,818, up 243 points.
US June Non-Farm Payrolls Report – BLShttps://t.co/BY6gKuLhUa pic.twitter.com/jVZIELKV26
— LiveSquawk (@LiveSquawk) July 2, 2020
The mini-S&P 500 contract was up 37 points at 3,140.
On the other hand, weekly figures revealed that another 1.43mln people sought unemployment benefits for the first time last week, down 55,000 on the previous week's number.
Latest US unemployment numbers: Another 1.427 million sought jobless benefits for the first time last week(the week ended June 27),a decrease of 55K from a week earlier. Continued claims were 19.29 million in the week ended June 20, an increase of 59K from a week earlier pic.twitter.com/QUSp4DAuFL
— NumberStory (@numberstory2019) July 2, 2020
In London, the FTSE 100 was a bit more responsive, recovering to 6,230, up 72 points (1.2%); the index had been loitering around the 6,200 mark prior to the release of the jobs data.
11.40am: A bit of unease creeps in
A tinge of nervousness seems to be apparent in London ahead of the release of the US jobs figures at 1.30pm.
The FTSE 100 has come off the top and is up 35 points (0.6%) at 6,193.
“Stocks are in positive territory this morning on the back of hopes for a Covid-19 vaccine. Pfizer and BioNTech are working on a potential vaccine and the results so far have been positive, but the data has not been reviewed by a medical journal yet, so its still in its early stages,” reported CMCs David Madden.
“These days, even if there is a whiff of progress being made towards developing a drug to tackle the coronavirus, it usually sparks buying. That being said, dealers are aware that at least 12 US states have rowed back on reopening their economies because of a rise in new case, so the health crisis is still a major issue,” he cautioned.
On that subject … new cases of coronavirus infection in the US rose by 50,700, which was a record daily increase and up from 34,900 new cases on the same day of last week.
According to the analysis of Ian Shepherdson, the chief economist at Pantheon Macroeconomics, the trend in the rate of increases appears to have peaked, however, although the growth rate in total cases needs to fall substantially further before the new number of new cases per day begins to fall.
“We still think that's a decent bet for later this month, given the downshift in economic activity in most of the hardest-hit states, visible in restaurant, employment and mobility data,” Shepherdson said.
Meanwhile, “the fall in new UK cases stalled yesterday. Localised outbreaks appear to be to blame; in June, the infection rate in Leicester was nearly 10 times higher than in Nottingham, just 30 miles away,” he noted.
Tomorrow – July 4 – is a day of national celebration in some parts of the world; I write, of course, of the pubs reopening in England and so it is perhaps appropriate that pubs group Mitchells & Butlers PLC (LON:MAB) has chosen today to release its interim results.
READ Mitchells & Butlers pushed into losses by coronavirus property hit[hhmc]
Shares rose 5.4% to 201.5p despite the company taking a huge paper-based hit on the valuation of its pubs relating to the impact of the recent lockdown.
"Mitchells & Butlers said it was working on the basis that sales take 9 months to recover to 2019 levels"
Ok. But on what basis have you chosen this basis?
— Hawkeye Soames (@HawkeyeSoames) July 2, 2020
10.40am: What goes up, goes up
Hopes that a successful coronavirus vaccine may be a few steps closer are driving equity prices higher.
The FTSE 100 was up 53 points (0.9%) at 6,210, with British Airways owner International Consolidated Airlines (LON:IAG) the best performer on expectations that the government will give the go-ahead today for air travel to dozens of foreign destinations to resume with no quarantine on the travellers return.
UK govt likely to allow travel to up to 75 countries with no quarantine on return from Monday – rather than agreed air bridges with specific countries.
I have concerns this may leave some people without travel insurance cover. See attached… pic.twitter.com/rXONKRGFGB
— Martin Lewis (@MartinSLewis) July 2, 2020
IAG was up 5.8% at 232p, closely followed on the Footsie leaderboard by two aerospace engineers, Rolls-Royce Holdings PLC (LON:RR.) and Melrose PLC (LON:MRO); the former was up 4.6% at 298.8p and the latter up 4.5% at 122.25p.
“UK-focused airlines are enjoying a surge nearly trade today, as the government air bridge plans expanded beyond expectations to include a potential 75 nation whole visitors would avoid the 14-day quarantine,” reported IGs Joshua Mahony.
“News of very strong booking numbers for Ryanair highlights the demand that has been locked down up until now. With airline activity expected to surge over the coming months, the ability to recover some semblance of normality for the typically busy summer months will be key to boosting the balance sheets after months of lockdown. With quarantine fears largely removed for travellers, European-focused UK airlines are likely to find demand lift to the benefit of their share price. The big question is whether we will see the Coronavirus cases kept low enough to allow for increased travel, with another lockdown or resumption of quarantine rules likely to deal a major blow to the travel sector if implemented,” he added.
9.20am: AB Foods leads the charge
The positive mood seen at the start of trading has been maintained although this afternoons US jobs data could change things.
The FTSE 100 was up 54 points (0.9%) at 6,211, with Primark owner Associated British Foods PLC (LON:ABF) leading the way with a 7.3% rise to 2,108p, after a trading update.
“Theres a lot to like in these numbers – and its the first time weve been able to say that in a while!” exclaimed Nicholas Hyett, an equity analyst at Hargreaves Lansdown.
“Yes Primark sales are down dramatically in the third quarter, but trading in the first few weeks of June looks very promising and with almost all stores now open that provides a strong base for recovery. Meanwhile, the groups food focussed operations have not only benefitted from consumers being stuck at home but have also delivered margin improvements – doubly good news for profits,” he added.
8.50am: Positive start for Footsie
The FTSE 100 opened firmly in positive territory on Thursday amid hopes that a coronavirus vaccine can be found.
The index of UK blue-chip shares rose 39 points to 6,197.44.
Researchers from Oxford working on inoculation for the deadly virus are optimistic one will be found by the autumn.
Geoffrey Hsu of Orbimed, the worlds largest dedicated healthcare investment company, told the Telegraph: "The chances are close to 100% that one or more [potential vaccine] will show some level of efficacy. So many approaches on vaccines and treatments are being tried – think about the collective brainpower being applied worldwide."
But US June jobs data later has the potential to dent the upbeat mood in London, though it seems to be a mugs game predicting just how the American jobs market is reacting to the pandemic with wild weekly and monthly swings.
In the City early on it was hard to see what excited investors in Associated British Foods (LON:ABF) after the Primark owner reported a 39% fall in quarterly revenues.
The shares rose 7% after the financial impact on its retail operation proved not to be as bad as predicted.
Even so, “the pandemic has left a financial stain which cannot be erased from this years trading”, said Richard Hunter, stockpicker-in-chief at Interactive Investor.
For DS Smith the reaction to news wasnt quite so uplifting as the packing group said full-year profits nosed higher, but it provided a cautiously optimistic commentary. However, it reckons it is premature to reinstate the dividend. The shares fell 8%.
Proactive news headlines:
NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF) (OTCQB:NQMIY) said last months plant upgrade at the Hellyer Gold Mine in Tasmania has resulted in a 44% increase in production. The enhancements, done six months ahead of expectation, have resulted in hourly production of 150 tonnes, which equates to an annualised rate of 1.3mln tonnes. As chairman David Lenigas pointed out, the changes should boost the companys finances.
IronRidge Resources Limited (LON:IRR) said it has defined a drill-ready target at the Zaranou gold license in Côte d'Ivoire from recently secured historical data, while the company has also enlarged a second phase drilling programme over the Ehuasso and Ebilassokro targets. The AIM-listed company said the historical data had confirmed the new target, called Yakassé, as a “significant soil anomaly” that warranted follow-up drilling which is planned to begin either on completion of the current drill programme or after the wet season.
Primary Health Properties PLC (LON:PHP), one of the UK's leading investors in modern primary healthcare facilities, has announced that, further to its announcement of May 11, 2020, regarding of the acquisition of a portfolio of medical centres, it has today completed on the acquisition of the last of the conditional purchases referred to in that announcement, for a price of £3.6mln. This completes the purchase of the entire portfolio of 22 properties, it added.
Pan African Resources plc (LON:PAF) advised shareholders that it has established a sponsored Level -1 ADR programme today on the over-the-counter market in the United States (US) with the Bank of New York Mellon (BNY Mellon) being the appointed Depository. Each depository receipt in the ADR programme represents twenty (20) ordinary shares in Pan African Resources and trades under the symbol PAFRY. Pan African Resources CEO Cobus Loots commented: “Pan African has a strong shareholder base in South Africa and in the United Kingdom. By establishing the ADR programme, the Company will make investing in its shares even more accessible to international investors, particularly the US investor market. Furthermore, Pan African joins a number of its peers which have successfully implemented an ADR programme.”
Oracle Power PLC (LON:ORCP) said it has received notices of exercise in respect of certain pre-existing warrants to subscribe for, in aggregate, 2,000,000 new ordinary shares of 0.1p each in the capital of the company at a price of 0.25p per share. It said the exercise of these warrants amounts to an aggregate cash subscription of £5,000.
Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has received a major boost to its finances with a A$10 million strategic investment from Equatorial Resources Ltd (ASX:EQX) as part of a A$15 million placement of convertible notes to corporate and institutional investors. Equatorial has subscribed for A$10 million of unsecured convertible notes in the company following a detailed review by Equatorial focused on investigating opportunities related to Salt Lakes current financing requirements and operational progress. Salt Lake Potash is in the final stages of completing a significant project financing that will support the development of its Lake Way Sulphate of Potash (SOP) Project in the Goldfields region of Western Australia.
Block Energy PLC (LON:BLOE), the exploration and production company focused on Georgia, has announced that, on July 1, 2020, it issued to directors/PDMRs, employees and a consultant nil-cost options over a total of 1,059,839 ordinary shares of 0.25p each. The options were issued in lieu of payment of cash for 40% of salaries, directors' fees and consultancy fees for the month of June 2020, in accordance the cash conservation announced on April 7, 2020.
Gore Street Energy Storage Fund PLC (LON:GSF), London's first listed energy storage fund supporting the transition to low carbon power, has announced an extension to the expected timetable announced on June 19. The company said it has been encouraged by the strong interest received from a wide range of investors to participate in the current fundraising, and in order to facilitate orders from some significant additional investors, the latest time for receipt of placing commitments has been extended by two business days to 3.00pm on Monday July 6, 2020. The new ordinary shares will still be eligible for the dividend announced on June 19, 2020, in respect of the period from January 1 to March 31, 2020. It added that the timetable for retail investors to participate via the PrimaryBid platforRead More – Source
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