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London open: Stocks steady ahead of payrolls report
London stocks were steady in early trade on Friday as investors kept their powder dry ahead of the US non-farm payrolls report.
At 0825 BST, the FTSE 100 was flat at 7,167.22.
Richard Hunter, head of markets at Interactive Investor, said: “Investors are keeping their nerve ahead of the non-farm payrolls report, with both the S&P500 and the Nasdaq hitting fresh record closing highs.
“The consensus is for 750000 jobs to have been added in August, as against the much better than expected number of 943000 reported in July.
“Such a figure would probably be enough to keep a lid on concerns of overheating, and would leave the level of employment around 5 million lower than the February 2020 peak. The lower figure for August is expected to have resulted from a resurgence in Covid-19 cases, which has crimped job growth as some remain unwilling to return to work in the face of the variant, and as some generous unemployment benefits persist.
“At the same time, the shortage of raw materials which has been blocking the supply chain globally has also had an impact, with the likes of the motor sector hit by a shortage of semiconductors, and making general restocking more difficult.
“Even so, a non-farms reading which confirms steady, rather than rapid economic expansion is likely to ease the pressure on the Federal Reserve to taper and at the same time vindicate its current views on the immediate outlook.”
The payrolls report is due out at 1330 BST, along with the unemployment rate and average earnings. On home shores, Markit’s services PMI for August is scheduled for release at 0930 BST.
In equity markets, Berkeley Group edged higher despite saying it was experiencing construction cost inflation and “mindful of ongoing supply chain and labour market issues due to Brexit and the pandemic”. The housebuilder maintained full-year guidance of pre-tax profit at or above last year’s £518m for the 12 months to April 30, 2022.
AstraZeneca ticked up after it said its Ultomiris blood disorder treatment has been approved in the European Union for expanded use to include children and adolescents.
Discoverie was the standout gainer on the FTSE 250 after it raised £55m in a placing to fund two acquisitions.
Emerging markets asset manager Ashmore fell despite posting a jump in full-year assets under management as it benefited from a positive investment performance as economic activity picks up. In the year to the end of June 2021, AuM rose 13% to $94.4bn, with an investment performance of $9.6bn and net inflows of $1.2bn.
Top 10 FTSE 100 Risers
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| 72% of retail CFD accounts lose money. | |
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Barratt Developments Plc | +1.61% | +11.40 | 720.80 |
| 2 |  |
Imperial Brands Plc | +1.16% | +18.00 | 1,563.50 |
| 3 |  |
Melrose Industries Plc | +1.09% | +2.01 | 186.25 |
| 4 |  |
Legal & General Group Plc | +1.05% | +2.90 | 279.50 |
| 5 |  |
Bhp Group Plc | +1.02% | +21.50 | 2,128.50 |
| 6 |  |
Rightmove Plc | +0.99% | +7.20 | 734.00 |
| 7 |  |
Persimmon Plc | +0.94% | +27.00 | 2,903.00 |
| 8 |  |
Unilever Plc | +0.74% | +29.50 | 3,990.50 |
| 9 |  |
Burberry Group Plc | +0.73% | +14.00 | 1,928.00 |
| 10 |  |
Coca-cola Hbc Ag | +0.72% | +19.00 | 2,653.00 |
Top 10 FTSE 100 Fallers
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| 72% of retail CFD accounts lose money. | |
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -2.06% | -43.00 | 2,047.00 |
| 2 |  |
Marks And Spencer Group Plc | -1.23% | -2.25 | 180.55 |
| 3 |  |
Bunzl Plc | -1.17% | -31.00 | 2,621.00 |
| 4 |  |
Informa Plc | -0.86% | -4.80 | 554.00 |
| 5 |  |
Ferguson Plc | -0.70% | -75.00 | 10,570.00 |
| 6 |  |
Auto Trader Group Plc | -0.69% | -4.40 | 637.40 |
| 7 |  |
Ashtead Group Plc | -0.65% | -38.00 | 5,792.00 |
| 8 |  |
Tui Ag | -0.60% | -1.90 | 313.20 |
| 9 |  |
Spirax-sarco Engineering Plc | -0.54% | -90.00 | 16,505.00 |
| 10 |  |
Intercontinental Hotels Group Plc | -0.47% | -22.00 | 4,656.00 |
Europe open: Shares slip ahead of US payroll data
European stocks were lower in early trade on Friday ahead of US non-farm payroll numbers.
The pan-European Stoxx 600 index was down 0.12% in early deals. Investors are watching the US employment data and any impact it could have on the timing and pace of the Federal Reserve’s tapering of stimulus.
“Investors are keeping their nerve ahead of the non-farm payrolls report, with both the S&P500 and the Nasdaq hitting fresh record closing highs,” said Richard Hunter, head of markets at Interactive Investor.
“The consensus is for 750000 jobs to have been added in August, as against the much better than expected number of 943000 reported in July.
“Such a figure would probably be enough to keep a lid on concerns of overheating, and would leave the level of employment around 5 million lower than the February 2020 peak.”
“Even so, a non-farms reading which confirms steady, rather than rapid economic expansion is likely to ease the pressure on the Federal Reserve to taper and at the same time vindicate its current views on the immediate outlook.”
The payrolls report is due out at 1330 BST, along with the unemployment rate and average earnings.
In equity markets, Berkeley Group edged higher despite saying it was experiencing construction cost inflation and “mindful of ongoing supply chain and labour market issues due to Brexit and the pandemic”. The housebuilder maintained full-year guidance of pre-tax profit at or above last year’s £518m for the 12 months to April 30, 2022.
AstraZeneca ticked up after it said its Ultomiris blood disorder treatment has been approved in the European Union for expanded use to include children and adolescents.
Investment group Ashmore fell to the bottom of the Stoxx, down 4.2% after its full-year results.
US close: Stocks positive as initial jobless claims fall
Wall Street stocks closed in the green on Thursday, as investors digested a number of key data points.
At the close, the Dow Jones Industrial Average was up 0.37% at 35,443.82, as the S&P 500 added 0.28% to 4,536.95 and the Nasdaq Composite was 0.14% at 15,331.18.
The Dow closed 131.29 points higher on Thursday, reversing losses recorded in the prior session as market participants digested a number of major data points.
Thursday’s primary focus was weekly jobless claims numbers, which revealed the number of Americans filing for unemployment claims continued to drop at the end of August.
According to the Department of Labor, in seasonally adjusted terms, initial jobless claims fell by 14,000 during the week ended 28 August to reach 340,000.
Secondary unemployment claims retreated by 160,000 to approximately 2.75m.
Traders thumbed over the report for any potential hints as to how tomorrow’s big August jobs report, which could show how fast the Federal Reserve will remove easy monetary policy, might play out.
Also on the macro front, America’s shortfall in trade with the rest of the world shrank last month as exports picked up.
According to the Department of Commerce, in seasonally adjusted terms, the foreign deficit narrowed by 4.3% month-on-month to reach -$70.1bn, with exports up 1.3% on the month at $212.8bn and imports down 0.2% at $282.9bn.
Elsewhere, unit labour costs in the US grew a bit more quickly than anticipated during the second quarter, revised data showed.
According to the Department of Labor, in seasonally adjusted terms, unit labour costs increased at a quarter-on-quarter pace of 1.3% over the three months to June.
That was higher than the preliminary estimate of 1.0%.
Lastly, US factory orders grew 0.4% month-on-month in July, slightly beating expectations for a print of 0.3% but still well short of the previous month’s 1.5% increase.
Also in focus, OPEC+ agreed to stick to its initial plan of enhancing its oil supply by 400,000 barrels per day per month, gradually eliminating its unprecedented supply reductions caused by the Covid-19 pandemic.
However, it did raise its demand forecast for 2022 amid pressure from the Biden administration to ramp up production.
In the corporate space, chipmaker Broadcom closed 0.26% weaker, ahead of its earnings report due after the close of trading.
Friday newspaper round-up: Reddit, Virgin Galactic, rail cuts
The government is being urged to “get a handle” on the supply chain crisis, as the chair of a cross-party commission created to scrutinise the UK’s post-Brexit trade deals said ministers need to act now to avoid empty shelves in the run-up to Christmas. “Red tape and labour shortages from Brexit have exacerbated problems that are being acutely felt across production, processing, manufacturing, retail and of course logistics,” said Aodhá¡n Connolly, who chaired an extraordinary session of the UK Trade and Business Commission, a group of cross-party MPs and business representatives set up as an independent adviser to government in April. – Guardian
Reddit is seeking to hire investment bankers and lawyers for an initial public offering in New York, two people familiar with the matter told the Reuters news agency. Reddit was valued at $10bn in a private fundraising round last month. By the time the IPO would take place early next year, the online message board company is hoping it will be valued at more than $15bn, one of the sources said. – Guardian
Virgin Galactic has been grounded by US authorities after the plane carrying Sir Richard Branson to the edge of space veered off course on its return to earth. The Federal Aviation Authority is investigating the mishap involving SpaceShipTwo that occurred over New Mexico on its return to Spaceport America on July 11. – Telegraph
Cuts to commuter rail services threaten London’s faltering recovery from the pandemic, business leaders have warned the Transport Secretary. Bosses said in a letter to Grant Shapps that service reductions would lead to overcrowding on the network, forcing commuters to travel to work by car or continue working from home. – Telegraph
One in ten shoppers opting for “buy now, pay later” services are being chased by debt collectors amid surging demand for this form of credit, according to a Citizens Advice report. Regulators urgently need to crack down on the offerings and ensure that there are clearer warnings to online shoppers who are entering a formal credit agreement and could be pursued for the money, the charity said. – The Times
