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London open: FTSE little changed ahead of payrolls
London stocks were little changed in early trade on Friday as investors eyed the latest US non-farm payrolls report.
At 0905 BST, the FTSE 100 was up just 0.1% at 7,524.92.
Richard Hunter, head of markets at Interactive Investor, said: “The latest update on the US economy will come later with the release of the non-farm payrolls report, which is expected to show that around 470000 jobs were added in March, as compared to 678000 in February.
“Of equal significance will be the unemployment rate, which has latterly implied tightness in a labour market approaching full employment. While this effectively frees up the Fed to concentrate on inflation, the tightness could also lead to wage rises which would be further inflationary factors of their own.
“The consumer is a vital cog in the US economy, and the choices over the following months are ones which are being echoed globally. It remains to be seen whether accumulated savings during the pandemic will be sufficient to offset the impending cost crunch created by higher energy and food prices, and how sentiment will continue to be affected by the ongoing conflict between Russia and Ukraine.”
Investors were also waiting to see whether Russian president Putin will cut off Europe’s gas supplies if countries refuse to pay in roubles, as he threatened on Thursday.
Earlier, data out of China showed the Caixin manufacturing purchasing managers’ index fell in March as it fastest pace in two years, as a resurgence in Covid cases and the conflict in Ukraine weighed.
The index declined to 48.1 from 50.4 in March, coming in below the 50 mark that separates contraction from expansion and below consensus expectations for a reading of 49.9.
The reading was in line with the official PMI released by the National Bureau of Statistics on Thursday.
Pantheon Macroeconomics said the Caixin PMI “largely confirmed the message of its official counterpart, and if anything provided a bleaker depiction of China’s manufacturing sector in March”. Economist Craig Botham said worse is likely to come for China’s PMIs.
“Not only do infections continue to rage, but Omicron has reportedly resurfaced in Shenzhen, suggesting the city may have been too hasty in relaxing its controls, and acting as a warning to other regions of China, which will now likely pursue existing stringent measures for longer.”
In equity markets, Taylor Wimpey and Persimmon were among the high risers, recovering after the housebuilding sector took a beating in the last quarter.
Bridgepoint and Lancashire Holdings were both boosted by upgrades to ‘buy’ at Citi.
Mitie was on the front foot after the outsourcer announced the acquisition of P2ML, a specialist telecoms tower design company, for £2.1m.
Top 10 FTSE 100 Risers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Taylor Wimpey Plc | +2.14% | +2.80 | 133.50 |
| 2 |  |
Carnival Plc | +1.97% | +26.70 | 1,383.50 |
| 3 |  |
Bhp Group Limited | +1.93% | +57.00 | 3,009.00 |
| 4 |  |
Easyjet Plc | +1.83% | +10.20 | 566.80 |
| 5 |  |
Unilever Plc | +1.79% | +62.00 | 3,517.00 |
| 6 |  |
Ocado Group Plc | +1.75% | +20.50 | 1,191.50 |
| 7 |  |
Persimmon Plc | +1.58% | +34.00 | 2,185.00 |
| 8 |  |
Next Plc | +1.56% | +94.00 | 6,126.00 |
| 9 |  |
Mondi Plc | +1.37% | +20.50 | 1,512.00 |
| 10 |  |
Barclays Plc | +1.35% | +2.00 | 150.30 |
Top 10 FTSE 100 Fallers
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Compass Group Plc | -1.91% | -31.50 | 1,618.50 |
| 2 |  |
Prudential Plc | -1.10% | -12.50 | 1,121.50 |
| 3 |  |
Bae Systems Plc | -0.89% | -6.40 | 711.00 |
| 4 |  |
Rolls-royce Holdings Plc | -0.83% | -0.84 | 100.26 |
| 5 |  |
Rightmove Plc | -0.76% | -4.80 | 628.00 |
| 6 |  |
Aviva Plc | -0.75% | -3.40 | 448.70 |
| 7 |  |
Crh Plc | -0.68% | -21.00 | 3,051.00 |
| 8 |  |
Halma Plc | -0.60% | -15.00 | 2,495.00 |
| 9 |  |
Scottish Mortgage Investment Trust Plc | -0.54% | -5.50 | 1,020.50 |
| 10 |  |
Fresnillo Plc | -0.52% | -3.80 | 730.20 |
Europe open: Shares subdued ahead of Putin gas deadline
European shares started Friday in fretful mood as investors waited to see if Russian hardline leader Vladimir Putin would turn of the gas taps unless foreign buyers started paying up in roubles.
The pan-European Stoxx 600 index edged ahead by 0.23% in early deals with all regional bourses looking for direction.
Putin on Thursday threatened to cut off gas supplies unless paid in local currency from April 1. Most European states, including Germany, a major customer, dismissed the dictator’s demand as blackmail.
Europe’s biggest economy has already activated an emergency plan that could lead to rationing.
Crude oil prices fell overnight after the US announced the largest ever release from its strategic reserve and called on oil companies to increase drilling, as US President Joe Biden moved to control soaring petrol costs. West Texas Intermediate fell below $100.
Investors were also eyeing US non-farm payrolls, with forecasts of 470,000 added in March, compared with 678000 in February.
In equity news, French catering and food services group Sodexo fell 4.93% on narrowing its full-year revenue growth forecast, citing uncertainties due to Covid-19 and the war in Ukraine.
US close: Stocks weaker as Biden confirms huge oil reserves release
Wall Street stocks closed below the waterline in the last session of the quarter on Thursday, as the US president confirmed plans to start daily releases from the country’s strategic oil reserves.
At the close, the Dow Jones Industrial Average was down 1.56% at 34,678.35, as the S&P 500 lost 1.57% to 4,530.41 and the Nasdaq Composite was 1.54% lower at 14,220.52.
The Dow closed 550.46 points lower on Thursday, extending losses from earlier in the session and those recorded on Wednesday.
Commodity prices were in focus at the open, with West Texas Intermediate futures last up 0.82% at $101.10 per barrel, after falling through much of the global day.
Earlier, president Joe Biden confirmed reports that his administration would release one million barrels per day from the US Strategic Petroleum Reserves for the next six months.
That came after OPEC and its allies agreed to stick to their plan to up production by 432,000 barrels per day in May, as was widely expected by markets.
On the macro front, inflation continued to mount in the US in February, official data showed on Thursday, putting further pressure on the Federal Reserve.
According to estimates from the Bureau of Economic Analysis, annual core personal consumption expenditures reached 5.4% in February, compared to 5.2% a month earlier and 1.4% in February 2021. It is the fastest pace since 1983.
On a monthly basis, core PCE – the Federal Reserve’s preferred measure of inflation – rose 0.4%, in line with forecasts and down marginally on January’s 0.5% gain.
Elsewhere, Americans filed new claims for unemployment benefits at an accelerated pace in the week ended 26 March, according to the Labor Department, with the overall figure rising by 14,000 to 202,000 – above market expectations for a print of 197,000.
Despite the increase, that figure was still close to the prior week’s revised level of 188,000 – the lowest seen since 1969.
Still on data, US firms planned to cut 21,387 jobs from their payrolls in March, according to Challenger, Gray & Christmas – the most in five months.
Most cuts were due to store, unit, or plant closures and vaccine refusal.
“There appears to be a return of a healthier churn in the labour market. Some US employers report hiring is getting easier, particularly with the incentives many companies put in place to attract and retain talent,” said the consultancy’s senior vice-president Andrew Challenger.
“Meanwhile, inflation impacts and war concerns are causing workers who were depending on savings or investments to seek out paid employment.”
In the corporate space, Walgreens Boots Alliance lost 5.67% despite beating earnings estimates for the second quarter, on the back of Omicron-fuelled demand for tests and booster shots.
Friday newspaper round-up: Price hikes, P&O Ferries, S4 Capital
More UK businesses are preparing to raise prices than at any time since the 1980s, heaping further pressure on hard-pressed consumers amid recent increases in gas, electricity and petrol prices. The British Chambers of Commerce said its latest quarterly survey found almost two-thirds of firms expected to raise prices over the next three months, the highest since the survey began in 1989.m – Guardian
A two-week battle to hold P&O Ferries to account for the summary sacking of 786 crew members appears to have ended with a whimper, as unions said the Dubai-owned company had “got away with it” after ministers backtracked on legal action and all but one employee accepted the firm’s controversial payoff ahead of Thursday’s deadline. All of P&O Ferries’ crew working on British contracts issued out of Jersey were fired on 17 March, to be replaced by cheap agency workers. The firm gave the sacked workers a deadline of 5pm on Thursday to accept or forfeit a payoff which they said compensated for the breach of their employment rights. – Guardian
Britain’s GDP was celebrated for rising to within a hair’s breadth of its pre-Covid size as the economy grew faster than expected at the end of last year. A spending spree by Rishi Sunak, however, has masked a two-year depression in the private sector. Britain’s output grew by 1.3pc in the fourth quarter of 2021, according to the Office for National Statistics (ONS), better than the estimated 1pc. It left the economy just 0.1pc short of its size in the same period of 2019 – the last full quarter before the pandemic. – Telegraph
When Sir Martin Sorrell’s S4 Capital digital advertising business posted bumper full-year results a year ago, the veteran industry tycoon was talking up the company’s “sweet spot”. The pandemic was driving demand for digital marketing expertise and bolstering its strong performance against traditional rivals, while S4 was bringing in “whopper” clients and launching its latest acquisition. S4, Sorrell said, was “in the right place at the right time”. – The Times
The two most senior directors who were in charge of Vectura, the respiratory drugs firm, at the time of its £1 billion takeover by Philip Morris International have stepped down. Will Downie and Paul Fry quit their respective roles as chief executive and chief financial officer following the completion of the deal with the maker of Marlboro cigarettes last year. The bid provoked a fierce backlash from public health experts.- The Times
