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London open: Stocks rise ahead of non-farm payrolls
London stocks rose in early trade on Friday following solid sessions in Asia and on Wall Street, as investors eyed the latest US non-farm payrolls report.
At 0820 BST, the FTSE 100 was up 0.3% at 8,196.59.
The non-farm payrolls report for April is due at 1330 BST, along with the unemployment rate and average earnings.
Richard Hunter, head of markets at Interactive Investor, said: “The next test of investors’ mettle comes later today with the release of the eagerly anticipated non-farm payrolls report, where the consensus is that 243,000 jobs will have been added in April, as compared to 303,000 the previous month, and for the unemployment rate to remain unchanged at 3.8%.
“More recent NFP prints have tended to provide surprises which have resulted in sharp market moves and any large deviation from the consensus in either direction would add to volatility. A particularly high reading, for example, would play against the narrative that higher interest rates are cooling demand, potentially pushing the need for any rate cuts at all further out.”
On home shores, industry data showed that retail footfall fell sharply in April, hit by poor weather and the early timing of Easter.
According to the latest BRC-Sensormatic IQ Footfall Monitor, total UK footfall fell 7.2% in April year-on-year, further compounding March’s 1.3% decline.
Within that, high street footfall fell by 6.9% while footfall in retail parks was down 6.2%. In shopping centres, which had seen a marginal 0.3% uptick in March, footfall slid 7.2%.
The British Retail Consortium attributed much of the decline to the early timing of Easter. This year Easter was at the end of March, whereas last year it was over a week later in April.
Helen Dickinson, chief executive of the BRC, said: “While UK footfall was impacted by poor weather last month, this was artificially exacerbated by the comparison with 2023, when Easter was in April.
“All locations saw declines on the previous months, and nearly all major cities performed similarly poor.”
In equity markets, Anglo American was sitting pretty at the top of the FTSE 100 following a Reuters report that Glencore is studying an approach for the miner after it rejected a £31bn proposal from BHP.
Online rail ticket selling platform Trainline surged as it reported better-than-expected revenue along with a sharp jump in annual sales and profits, driven by competition for passengers in Spain and Italy along with a greater take-up of digital tickets in the UK.
On the downside, InterContinental Hotels Group fell as it reported a substantial easing in revenue per available room (RevPAR) growth in the first quarter as weakness in the Americas and a big slowdown in China limited progress.
Packaging firm Mondi was also weaker after a first-quarter trading update.
In broker note action, Jefferies downgraded AJ Bell and Tyman to ‘hold’ from ‘buy’.
British Land was cut to ‘equalweight’ from ‘overweight’ by Barclays.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Anglo American Plc | +3.23% | +86.00 | 2,747.50 |
| 2 |  |
Rolls-royce Holdings Plc | +2.14% | +8.70 | 415.20 |
| 3 |  |
Burberry Group Plc | +2.00% | +23.00 | 1,173.00 |
| 4 |  |
Flutter Entertainment Plc | +1.90% | +290.00 | 15,555.00 |
| 5 |  |
Relx Plc | +1.89% | +62.00 | 3,346.00 |
| 6 |  |
Wpp Plc | +1.74% | +14.00 | 818.20 |
| 7 |  |
Smurfit Kappa Group Plc | +1.69% | +62.00 | 3,736.00 |
| 8 |  |
Itv Plc | +1.60% | +1.15 | 72.95 |
| 9 |  |
Croda International Plc | +1.54% | +72.00 | 4,748.00 |
| 10 |  |
Bae Systems Plc | +1.50% | +20.00 | 1,349.50 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Intercontinental Hotels Group Plc | -2.74% | -216.00 | 7,672.00 |
| 2 |  |
Hiscox Ltd | -1.87% | -22.00 | 1,153.00 |
| 3 |  |
Mondi Plc | -1.35% | -21.00 | 1,533.00 |
| 4 |  |
Glencore Plc | -1.14% | -5.25 | 453.45 |
| 5 |  |
Astrazeneca Plc | -0.99% | -120.00 | 12,036.00 |
| 6 |  |
Bp Plc | -0.64% | -3.30 | 512.50 |
| 7 |  |
Bhp Group Limited | -0.45% | -10.00 | 2,222.00 |
| 8 |  |
Unilever Plc | -0.33% | -14.00 | 4,166.00 |
| 9 |  |
Easyjet Plc | -0.29% | -1.60 | 545.20 |
| 10 |  |
Shell Plc | -0.28% | -8.00 | 2,865.00 |
US close: Tech stocks lead the surge
US stocks rose strongly on Thursday with tech names leading the surge as investors continued to absorb comments from the Federal Reserve the previous session, who reassured that interest rates are unlikely to rise despite stickier-than-expected inflation.
The Dow and S&P 500 both finished 0.9% higher while the tech-heavy Nasdaq jumped 1.5%, as markets started to turn their attention to Friday’s non-farm payrolls report.
US job creation for April is pencilled in at 243,000, according to consensus estimates, down from 303,000 in March, while investors will keep a close eye on the hourly earnings detail given how higher salaries put upwards pressure on inflation.
The Fed’s decision on Wednesday to leave interest rates unchanged was widely expected. However, Fed chair Jerome Powell quashed recent concerns that resilient economic data could in fact lead to tighter monetary policy.
However, he did acknowledge that while interest rates are unlikely to rise further, there was a “lack of further progress” in bringing down inflation to target levels. “It’s likely to take longer for us to gain confidence that we are on a sustainable path to 2% inflation,” he said.
“The past month saw market expectations for the first Fed rate cut pushed from June to December, although Powell managed to moderately lift hopes of an earlier shift in November,” said chief market analyst Joshua Mahony from Scope Markets.
“All eyes turn to Friday’s US jobs report, with the average earnings figure expected to remain at a concerning 4.1%. With the quarterly employment cost index having surged to a lofty 1.2% this week, there is a distinct risk that we could similarly see average earnings strengthen to throw another curveball in the direction of the Fed.”
Economic data in focus
On the macro front, jobless claims were unchanged at 208,000 in the week ended 27 April, according to the Labor Department, remaining at the lowest level in two months and firmly below market expectations for a reading of 212,000.
US employers announced 64,789 cuts in April, down 28% from March’s 14-month high of 90,309 and the 66,995 cuts announced at the same time a year earlier, according to Challenger, Gray & Christmas. The reading was still consistent with a tight labour market, but with labour costs continuing to rise, companies will probably be slower to hire and likely to make further cuts in the coming months.
The US trade deficit in goods and services dipped by 0.1% month-on-month to reach $69.4bn, according to the Department of Commerce. Economists had forecast a deficit of -$69.1bn. Exports shrank 2.0% to reach $257.6bn, while imports were down by 1.6% at $327.0bn.
US workers’ productivity slowed more sharply than anticipated at the start of 2024, pushing labour costs much higher. According to the Department of Labor, in seasonally adjusted terms labour productivity grew at a quarter-on-quarter pace of 0.3% over the three months ending in March (consensus: 0.8%) – principally due to an unexpected decline in output growth to 1.3% during the first quarter.
Finally, new orders for US-manufactured goods rose by 1.6% to $584.5bn in March, according to the Census Bureau, following a 1.2% increase in February. New orders expanded by 2.6% for durable goods industries, while non-durable goods orders rose by 0.6%.
Market movers
Moderna saw its share price surge on Thursday after posting a smaller-than-expected quarterly loss as the Covid vaccine maker sets its sights on regulatory approvals of its second product later in the year. The company reported a net loss of $1.2bn for the quarter, compared with a profit of $79m the year before, with the loss per share of $3.07 better than the $3.56 projected by analysts.
Goldman Sachs rose on reports that the bank will remove a cap on bonuses for its London-based staff. According to Sky News, the firm is now set to resume making multi-million-pound payouts to its top-performing traders and dealmakers.
Chipmaker Qualcomm jumped 10% on better-than-expected adjusted earnings and strong revenue guidance, pointing to sales of $8.8bn to $9.6bn in the current quarter, compared with analysts’ expectations of $9.05bn.
Heading the other way was food delivery firm DoorDash which fell 10% after posting a wider-than-expected loss per share, even though revenues came in ahead of forecasts.
Peloton slipped 3% after announcing the departure of its chief executive, alongside plans to cut around 15% of its workforce amid a restructuring programme aimed at reducing annual expenses by more than $200m.
Apple was putting in decent gains ahead of its second-quarter earnings after the closing bell.
Friday newspaper round-up: Paramount Global, Apple, Coutts
Paramount Global’s share price soared on Thursday following a report that Sony Pictures and Apollo Global Management had made a $26bn offer for the troubled media giant. According to the Wall Street Journal, the offer was made on Wednesday by Sony’s chief executive, Tony Vinciquerra, and Aaron Sobel, a partner at Apollo. Paramount’s shares rose 12% on the news. – Guardian
Fossil fuel companies will be allowed to explore for oil and gas under offshore wind-power sites for the first time, the government will announce on Friday, in a move that campaigners said is further proof that ministers are abandoning the climate agenda. The North Sea Transition Authority (NSTA), which regulates North Sea oil and gas production, will confirm that it is granting licences to about 30 companies to look for hydrocarbons on sites earmarked for future offshore windfarms. – Guardian
Apple has suffered its biggest drop in iPhone sales for more than three years as Chinese shoppers turn away from the company and embrace domestic rivals such as Huawei. The Californian tech giant said on Thursday night that revenues from the iPhone fell by 10.5pc in the first three months of the year. Total sales fell by 4pc to $90.8bn (£72.4bn), while profits were down 2pc to $23.6bn. Shares rose in after-hours trading however, with the sales decline not as severe as feared. Sales from China fell by 8pc. – Telegraph
The King’s bank is pulling nearly £2bn out of the London stock market in the latest hammer blow to the beleaguered exchange. Coutts, which banks the Royal family and operates an ATM in Buckingham Palace, has announced plans to move away from UK stocks and instead invest its money abroad. The changes will see the amount it invests in UK equities drop from 33pc of assets to just 2pc, meaning Coutts will sell £1.96bn of British stocks and plough the money into other regions. – Telegraph
Hong Kong’s financial regulator has launched criminal proceedings against Simon Sadler, the owner of Blackpool Football Club, and the hedge fund he founded, Segantii Capital Management, over allegations of insider trading. The Securities and Futures Commission also said it had started proceedings against former Segantii trader Daniel LaRocca. Sadler and LaRocca were both released on a cash bail of HK$1 million (£102,000) and HK$500,000 respectively. Segantii pledged to “defend itself vigorously” against the charges. – The Times
