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FTSE 100 closes at new high

Last updated: 12:50 03 Nov 2017 EDT, First published: 13:42 03 Nov 2017 EDT

London Eye
  • FTSE 100 rises 5 points to 7,560

  • Pound rises after BoE deputy governor suggests further rate hikes

  • UK services PMI rises unexpectedly in October

  • US non-farm payrolls misses forecasts

Close: Footsie limps to new high

We've become used to US indices regularly hitting new highs, but today the FTSE 100 got in on the act.

The UK's benchmark index only rose 5 points to 7,560, but it was enough to propel it to a new closing high, topping the previous best achieved last month.

Smith & Nephew PLC (LON:SN.) did its bit for the index, rising 2.1% despite revealing that full-year growth would be at the lower end of its guidance range.

Platinum miner Lonmin PLC (LON:MI) took a bath, plunging 31% after it said it would not be releasing its full-year results until it has completed its operational review.

3.50pm: Pound pares gains after ISM services index

The FTSE 100 climbed 4 points to 7,554 as the pound pared earlier gains against the dollar after Bank of England deputy governor Ben Broadbent said interest rates will need to rise further to tackle rising inflation.

The pound increased 0.11% against the dollar to US$1.3073. Sterling erased some of its earlier spike after the greenback rose on stronger-than-expected US services data from ISM. Against the euro, sterling was up 0.46% versus the euro to €1.1257.

In corporate news, Smith & Nephew shares gained following an earlier decline after saying it expects full year profits would be at the lower end of its guidance.

IAG shares dropped after revealing that it expects capital expenditure to rise in its targets for 2018-22.

TP ICAP slumped after saying the outlook was “challenging” outlook and announced the departure of its chief financial officer, Andrew Baddeley.

BT Group was on the back foot after Deutsche Bank gave it a ‘sell’ rating and said it was disappointed that the telecoms firm left its interim dividend unchanged.  

G4S was higher after Deutsche Bank upgraded the stock to ‘buy’.

 

2.30pm: ISM services index beats expectations

The ISM non-manufacturing index, the most widely followed measure of service sector activity, rose to a 12-year high of 60.1 in October, beating expectations of 58.5 and following a reading of 59.8 in September.

"After a bit of a wobble post-jobs report that ISM services PMI seemed to swing things in favour of the dollar, which rose 0.4% against the euro and 0.3% against the yen. Only against the pound did the greenback struggle, and even then it held onto almost all of Thursday’s hefty gains," said Connor Campbell, financial anlayst at Spreadex

He added: "Though the pound couldn’t make any great inroads against the dollar, rising just 0.1%, against the euro it had more successful, climbing half a percent to re-cross €1.125. This helped erase the FTSE’s early growth, meaning the UK index may struggle to close at the record high it was promising during the morning’s trading."

 

1.30pm: US non-farm payrolls misses forecasts

The US economy added less jobs than expected in October but the unemployment rate surprised to the upside, the Labor Department revealed.

US non-farm payrolls rose 261,000, well below forecasts of 310,000 while September was revised down to 18,000 job adds. 

The jobless rate fell to 4.1% in October from 4.2% a month ago, compared to expectations for the rate to remain unchanged.

Wage growth disappointed with average hourly earnings flat month-on-month and up 2.4% year-on-year in October, compared to expectations of a monthly 0.2% rise and a 2.7% annual increase.

The dollar weakened against the pound as the worse-than-expected non-farm payrolls was seen to suggest an expected December interest rate hike by the Federal Reserve was now less certain.

“Such an ambivalent jobs report has complicated the calculus for a December rate hike – but so far not shifted the markets’ expectations," said David Lamb, head of dealing at FEXCO Corporate Payments.

“While a pre-Christmas rate hike remains firmly on the cards, it's no longer the nailed down certainty it was a few days ago."

12.30pm: FTSE slips back 

The FTSE 100 was flat in lunchtime trading, erasing early gains, after the pound received a boost from unusually hawkish remarks by Bank of England deputy governor Ben Broadbent.

The normally dovish Broadbent, who has consistently voted against rate hikes, said interest rates may need to rise again to combat rising inflation.

Sterling rose 0.23% against the dollar to US$1.3089 and increased 0.34% versus the pound to €1.1240.

Investors also weighed better-than-expected UK services PMI, which showed expansion in sector activity accelerated in October.

Company-wise, Scottish Mortgage Investment Trust shares gained after reporting a 17.5% jump in net asset value to 420.2p in its latest half year.  

TP ICAP slumped after it pointed to a “challenging” outlook for the final quarter and announced the departure of its chief financial officer, Andrew Baddeley

Smith & Nephew shares reversed early declines after saying its full year profits would be at the lower end of its guidance.

International Consolidated Airlines Group slumped after an earlier rise following the release of its targets for 2018-2022, which revealed capital expenditure would increase.

BT Group was on the back foot after Deutsche Bank issued a ‘sell’ rating, saying the Thursday’s third-quarter results were ‘okay’ but it was disappointed the dividend payment was left pat. 

11.30am: Pound gains on remarks by BoE's Broadbent 

Bank of England deputy governor Ben Broadbent said he expects “a couple more” interest rate hikes to bring inflation back towards the central bank’s 2% target.

Broadbent has consistently voted against raising the Bank’s benchmark so his remarks helped to push the pound higher.

Sterling rose 0.21% against the dollar to US$1.3087 and increased 0.32%  versus the euro to €1.1238.  

The stronger pound caused FTSE 100 gains to lessen. 

Speaking to the BBC, Broadbent admitted that Thursday's rate increase would cause some pain to households.

"I think one should keep the scale of this in context,” he said.

“Interest payments on debt - in aggregate - for households, are lower than they’ve ever been, relative to income, and this is a moderate rise."

10.30am: Services PMI lifts fourth quarter hopes, says EY

The October services PMI survey showed activity improving significantly to a six-month high, thereby boosting fourth quarter growth hopes, said Howard Archer, chief economic advisor to the EY ITEM Club.

“October’s markedly stronger services survey follows on from improved manufacturing and construction surveys – although the construction PMI still only indicated marginal growth.

“Overall, the October PMIs suggest that the economy continued to improve gradually at the start of the fourth quarter after GDP growth improved modestly to 0.4% q/q in the third quarter from 0.3% in both the second and first quarters.”

However, he noted that despite the pick-up in activity and new business growth, service companies’ confidence was reported to be relatively subdued amid uncertainties over the outlook, particularly relating to Brexit.

Still, he thinks the Bank of England will see the improving PMI surveys as supportive to its decision to raise interest rates.

 

9.30am:  UK services PMI rises unexpectedly in October 

UK services activity growth accelerated in October as new orders rebounded from the previous month’s low, according to Markit/CIPS.

The purchasing managers’ index for the services industry rose to 55.6 from 53.6 in September, beating forecasts of 53.3 and above the 50 level that indicates an expansion in activity.

It follows the PMIs on manufacturing and construction, which both showed expansion.

“The good news was that October saw business activity across services, manufacturing and construction grow at its fastest rate for six months,” said Chris Williamson, chief business economist at IHS Markit.

“The data point to the economy growing at a quarterly rate of 0.5%, representing an encouragingly solid start to the fourth quarter.”

However, he noted that a “downturn in business optimism about the year ahead, fuelled mainly by Brexit-related uncertainty, suggests that risks are tilted to the downside as far as future growth is concerned”.

“Not surprisingly, employment growth slowed for a second successive month as the business mood grew more cautious and risk averse,” he added. 

8.30am: FTSE opens higher ahead of US non-farm payrolls

The FTSE 100 got off to a solid start, rising 21 points to 7,576.74 in early trade and ahead of US jobs data later – the only real potentially market moving news of note Friday.

The advance was really only follow-through from Thursday’s 67 point advance aftr the quarter-point interest rise - and more pertinent the dovish comments that accompanied Bank of England Monetary Policy Committee decision.

The poleaxed pound, which gave the Footsie its lift yesterday, remained weak and is in danger of falling through the US$1.30 trapdoor.

Among the large-caps, gold miner Rangold Resources (LON:RRS) bounced back 1.4% after Thursday’s results-inspired sell-off, while hip replacement group Smith & Nephew (LON:SN.) was weaker after updating on trading.

In the second-tier, all eyes were on the dealing firm ICAP (LON:IAP). Shares were down 6% after its quarterlies failed to pass muster.

6.45am...solid start predicted 

The FTSE 100 is set to kick off the final trading session of the week in positive territory, carrying on Thursday’s momentum.

It wasn’t so much the long-awaiting hike to borrowing costs that sparked the buying activity yesterday, but the dovish statement accompanying the Bank of England Monetary Policy Committee decision.

This put the skids under the pound, which provided the lift to Britain’s leading stocks, which finished 67 points higher. The spread betting firms are predicting index of blue-chips will add a further 16 points at the open to climb to 7,571.31.

Traders will be largely keeping their powder dry until early afternoon and the publication of monthly US employment data.

The world’s largest economy is forecast to have created 310,000 new jobs after losing 33,000 in September.

Hurricanes will have impacted US jobs data ...

“The hurricanes have potentially skewed the data so we should look at the data over at two month period, and then average it out,” said David Madden, commentator at CMC Markets.

“Revisions to the previous month’s number is normal, but this time round we could we could see a major swing. 

“If the US wants to stick to the path of hiking rates, it will need to keep producing solid earnings growth numbers.

“In order for the US economy to keep growing, Americans need to see a real rises in earnings, and in turn go out and spend some of their hard earned money.”

After the bell in the US, Apple weighed in with better than expected earnings, buoyed by strong pre-sales of the iPhone X.

The fortunes of the California consumer tech giant, whose shares hit an all-time high, had a knock-on positive impact on its suppliers during a mixed session for the Asian markets.

  • Pound worth US$1.3073, up 0.11%
  • Gold worth US$1,268.69 an ounce, down 0.58% 
  • Brent crude costs US$60.77 a barrel, up 0.25%

Proactive news headlines:

High street pawnbroker H&T GROUP PLC (LON:HAT) expects full-year results to come in ahead of forecasts after telling investors the “strong trading performance” seen in the first half has been maintained.

Silence Therapeutics PLC’s (LON:SLN) bid to protect a “fundamental” chemical modification it says is integral to the emerging science of RNA interference (RNAi) took a fresh turn. One of the companies in its cross-hairs, the US giant Alnylam Pharmaceuticals Inc (NASDAQ:ALNY), has responded robustly to legal action initiated by Silence.

Premier African Minerals Limited (LON:PREM) was in demand on Friday morning after the mining and exploration group gave a bullish update on Casa Mining, in which it holds a 4.5% stake. Casa is currently carrying out a 5,000 metre (m) drill programme at its Akyanga gold deposit in Democratic Republic of Congo as it looks to increase and upgrade the existing mineral resource estimate.

Ortac Resources Ltd (LON:OTC) has revealed significant drill results from the Akyanga gold deposit in the Democratic Republic of Congo. The company reported a 24.75 metre intersection at a grade of 8.04 grams per tonne, including 5 metres at a grade of 22.63 grams per tonne - which represent the ‘highest ever’ grade and thickness at the Akyanga Deposit.

Berkeley Energia Limited (LON:BKY) said it has issued and allotted 22,222 fully paid ordinary shares and it has applied for the shares to be admitted to London’s junior market AIM. The shares have been issued to a key consultant as part of their service fees.

Union Jack Oil PLC (LON:UJO) said G.P (Jersey) Limited has raised its stake in the company to 6.03% from 5.43%.

Business Headlines

President Donald Trump has announced Jerome Powell as his pick to become the new chair of the Federal Reserve – a move that is unlikely to affect the roaring stock market.

Financial Times

GlaxoSmithKline has received approval to fast-track the development of a potentially “transformation” blood cancer treatment, as it doubles down on its search for new blockbuster drugs to offset declining sales of its older products.

Adani Group has turned to China to help fund a vast coal mine in Australia, holding talks with a big state-owned enterprise and enlisting Canberra’s support to market the project.

Time Warner shares dropped after a report that the US Department of Justice is “actively considering” whether to challenge its acquisition by telecom giant AT&T.

Blue Apron sales beat estimates despite decline in customer count: Blue Apron revealed on Thursday that its customer count declined in the third quarter, but investors sent shares rising after the meal delivery service kit’s sales beat forecasts.

Daily Telegraph

Drug firms will be offered a fast-track route to get “breakthrough” medicines to NHS patients up to four years early under a new Government system to be overseen by former GSK Boss Sir Andrew Witty.

Argos is opening two new regional warehouses and creating 500 new jobs as it gears up to expand its same-day delivery service in time for Christmas.

Oka, the luxury furniture company founded by Samantha Cameron’s mother Lady Astor, is on the verge of being put up for sale after receiving a number of unsolicited approaches from would-be buyers.

Bombardier said it was on the brink of selling up to 61 new C Series jets in a potential £3.7bn deal that will provide fresh cheer to workers at the firm’s Belfast plant.

Guardian

Ferrari is on course to rake in a record €1bn profit this year as the world’s wealthy buy more supercars than ever before.

The UK’s property market will take this week’s expected rise in interest rates in its stride, according to ratings agency Moody’s, but it warned that the outlook for the buy-to-let market has worsened significantly.

Daily Mail

Thousands of BT staff face having retirement nest eggs cut as chief executive Gavin Patterson moves to rein in the firm’s pension scheme deficit.

Revamp at luxury fashion brand Hugo Boss sees sales rise by 3%.

Tesco Executives waited 18 days to tell new chief of £246mln hole in accounts, a court heard.

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