FTSE 100 closes 14 points up
Wall Street shares higher
ITV biggest Footsie gainer
US-China trade tariffs kick in
FTSE 100 closed higher on Friday, but not a great deal, as trade war fears and a mixed US jobs report dented stocks.
The UK blue-chip index closed up around 14 points, or 0.19% at 7,617 with broadcaster ITV (LON:ITV) the top gainer. On the week as a whole, Footsie was lower - down around 0.25%.
Benchmarks on Wall Street are trading higher, with the Dow Jones Industrial Average up 116 points at the time of writing.
"Trade tensions and a mixed US non-farm payrolls report has put pressure on stocks. The stand-off between the US and China has ratcheted up a level, and President Trump has made it clear he could ramp up tariffs again if needed. Equities are set for a subdued finish to the week," said David Madden, at CMC Markets.
In June, the US added 213,000 jobs in a sign of confidence despite the start of a trade war with China, but the unemployment rate rose to 4% from 3.8% as more people began looking for work and wage gains were soft.
On Footsie, the top riser was ITV boosted by hopes for a viewing surge in the semi-final match if England makes it through the quarter-final against Sweden, and on reports of an upgrade in rating by Societe Generale.
Top loser on Footsie was Associated British Foods (LON:ABF) as its results continued to put investors off.
3.50pm: Mixed jobs report sends dollar lower
The US job report revealed that although US added 213,000 jobs in June, the unemployment rate rose to 4% from 3.8%.
“All this left the dollar, which has been acting as a safe haven for trade war-fearing traders, down in the dumps, with the greenback falling 0.2% against the yen, 0.4% against the pound and 0.6% against the euro,” said Connor Campbell, financial analyst at Spreadex.
He added: “That decline is assumedly being informed by the fear that these figures may put the Fed off another rate hike in the coming months.”
2.50pm: US opens lower after mixed jobs report
The FTSE 100 continues to fall, down 25 points at 7,578 as the pound rose 0.36% against the dollar.
Meanwhile, the US opened lower after a mixed jobs report, which revealed that although the US added 213,000 jobs in June, the unemployment rate rose to 4.0% from 3.8%.
The Dow Jones opened 5 points lower at 24,349, while the S&P 500 was up 4 points at 2,740 and the Nasdaq was up 28 points at 7,615.
David Lamb, head of dealing at FEXCO Corporate Payments, said: “Such an abrupt and unexpected rise in unemployment has hit Dollar sentiment like a bucket of cold water.
“Rising unemployment plus softening wage growth are not the ideal backdrop for an interest rate rise, and the markets are now predicting that the Fed’s plan to gradually hike rates will not be accelerated.”
He added: “Even if the rise in unemployment is dismissed as a side effect of the improved participation rate, the slowing of wage rises is a genuine worry."
"And while it’s too early to second guess if or when the Fed might change its rate hike plans, these numbers suggest it will be more likely to reach for the brake rather than the gas pedal.”
1.50pm: US employers add more jobs than expected
FTSE 100 is down 25 points at 7,586 after a mixed US non-farm jobs report.
The US non-farm payroll report revealed employers added 213,000 jobs in June, higher than analysts' estimates of 195,000.
The unemployment rate, however, unexpectedly rose to 4.0% in June from 3.8% in May while average hourly earnings growth eased to 0.2% month-on-month from 0.3%, the US Labor Department said.
Nancy Curtin, chief investment officer at Close Brothers Asset Management, said: “The US labour market continues to go from strength to strength, matching the second quarter upswing seen in the wider economy”
”While wage growth is finally showing signs of picking up, Powell will be keen to see whether recent small improvements in productivity continue to accelerate serving as a counterbalance to these wage gains. Powell has made it clear the he is looking to pursue a gradual rise in rates that does not undermine further non-inflationary growth. As the yield curve flattens, the market is telling Powell not to push tightening too far,” Nancy Curtin said.
1.05pm: UK High street sales fall for the fifth successive month
UK High street sales fell for the fifth successive month in June, according to a survey by advisory firm BDO.
The survey revealed that total in-store like-for-like sales were down by 1.7%, with in-store growth falling to exceed 1% for the ninth month in a row.
All three sectors – lifestyle, fashion and homewares- were in red for in-store growth in June, with lifestyle posting only marginal decline from a positive week last year.
However, non-store like-for-like sales rose 10.9%, the lowest increase on record since December 2015.
12.30pm: Dow Jones to open 60 points lower
The FTSE 100 lost its early gains and fell 21 points to 7,582 with mining shares lower on a drop in copper prices as trade tensions between US and China heighten.
In the US, stocks futures are pointing to a lower open.
David Madden, market analyst at CMC Markets UK expects the Dow Jones to open down 60 points at 24,296 and S&P 500 down 2 points at 2,734.
“How the Dow starts may be down to Friday’s non-farm jobs report. The headline figure is expected to slip from 223k to 195k month-on-month, with wage growth unchanged at 0.3% and the unemployment rate steady at 3.8%,” said Connor Campbell, financial analyst at Spreadex.
Also, a report from the Recruitment and Employment Confederation revealed that UK firms hired permanent staff last month at the slowest pace since October.
However, the report said that both permanent and temporary opportunities continued to rise in June, as candidate availability fell at sharper rates.
Neil Carberry, REC Chief Executive said: “It’s a great time for people looking to take the next step in their careers, as employers compete for new staff in a tight market. It’s a candidate’s market out there.
UK productivity numbers, released by the Office of National Statistics, revealed that labour productivity is down 0.4% in the first three months of the year, as a result of continued strength in employment growth combined with weaker output growth.
This is the first fall in output per hour since the second quarter of 2017.
Howard Archer, chief economic advisor to the EY ITEM Club, commented: “Part of the UK’s recent poor labour productivity performance has undoubtedly been that low wage growth has increased the attractiveness of employment for companies.”
He said: “Employment may have been lifted in recent times by some UK companies being keen to take on workers - or at least hold on to them - given concerns over labour shortages in some sectors and reports of fewer EU workers coming to the UK since the 2016 Brexit vote.”
11.00am: Direct Line biggest faller, ITV top riser on FTSE 100
After opening above 7,600 mark, the London index has lost ground and is now down 6 points at 7,596.
Mike van Dulken, head of research at Accendo Markets, said: “The FTSE100 is back below 7600, back from 7650 highs as traders digest, 1) the US following through on its threat to impose the first in a potential series of trade tariffs, and, 2) China following through with its pledge to retaliate.”
He added: “An element of risk-off into the weekend, albeit limited, as we've been prepped for this for weeks, if not months.”
On the corporate front, Direct Line PLC (LON:DLG) is the biggest faller on the FTSE 100 after Barclays Capital downgraded its rating on the stock to ‘equal weight’ from ‘underweight’ and lowered its target price to 357p from 420p.
In a note on UK motor insurance, Barclays said that the company is well positioned for the current soft market environment.
“However, as the most liquid stock in a sector dominated by a negative top-down view at present, Direct Line may find itself in an unfavourable position – despite defensive characteristics and attractive yield, investors either don’t have to own any of the motor insurers, or use DLG as an instrument to short the theme,” the analysts said.
Shares in Direct Line are down 2.7% to 336p.
ITV PLC (LON:ITV) was the top blue chip gainer in mid-morning trading, up 3.8% to 179.65p boosted by hopes for a viewing surge in the semi-final match if England makes it through the quarter-final against Sweden, and on reports of an upgrade in rating by Societe Generale.
Traders said the French broker has upped its stance on the commercial TV broadcaster to ‘buy’ from ‘hold’ with a target price of 220p in a media note which also saw it downgrade its stance on newspaper publisher Daily Mail and General Trust PLC – down 1.7% to 744p) – to ‘sell’.
9.55am: UK house price growth flat at 1.8%
After opening up at 7,603 points, the FTSE 100 is still in positive territory, rising 12 points to 7,615 as US and China trade tariffs came into effect.
Meanwhile, monthly data from the mortgage lender Halifax revealed that UK annual house price growth remains flat at 1.8% in June.
On a monthly basis, prices rose 0.3% in June to £225,654 after jumping 1.7% in May.
Jonathan Hopper, managing director of Garrington Property Finders said: "At a national level, house prices are stuck in an awkward, shuffling dance – periodically taking one step forward and two steps back.”
He added: “But that assessment overlooks the other important ‘t’ – tactics. In regions where prices have corrected most sharply – such as prime areas of London – astute buyers who sense there are bargains to be had are returning to the market in some numbers.
“Meanwhile prices are rising at a steady clip in regions such as the Midlands, where affordability is good and long-term value is perceived to be high, as buyers decide that now is the time to strike before prices rise out of reach."
8.50am: FTSE 100 edges up ahead of US non-farm payrolls
The FTSE 100 has opened slightly higher as traders look ahead to the all-important US non-farm payrolls report later in the session.
The London index rose 14 points to 7,617 in early trading after stocks advanced in Asia and Wall Street as US President Donald Trump imposed new tariffs on China.
The US imposed a 25% levy on Chinese goods worth US$34bn, which came into effect at midnight in Washington. China retaliated by imposing a similar tariff on 545 US products, also worth a total of US$34bn.
Mike van Dulken, head of research at Accendo Markets, said the positive close in the US and overnight gains in Asia suggests the imposition of the first batch of US-China trade tariffs had already been priced in.
“Sentiment may be off its best (China teasing markets by delaying reciprocation, declaring US fired first shots), but even the threat of Trump going as far as $500bn in import duties to penalise China has failed to derail markets,” he said.
Meanwhile, minutes from the Federal Reserve’s June meeting published yesterday showed policymakers had expressed concerns global trade tensions could hit the economy. Many policymakers said gradual hikes could take interest rates above the neutral level some time next year, the minutes revealed.
Turning to today’s agenda, the focus is on the US non-farm payroll report, which is expected to show employers added 195,000 jobs and the unemployment rate remained at 3.8%.
On this side of the pond, Halifax said UK house prices rose 0.3% month-on-month in June, compared to 1.5% growth in May. Compared to a year ago, house prices were up 1.8% in June after a 1.9% year-on-year gain in May.
Elsewhere, Rolls-Royce Holdings PLC (LON:RR) shares declined as it said it would sell its marine business to Norwegian firm Kongsberg for £500mln as part of a plan to simplify the group.
Going the other way, Burberry PLC (LON:BRBY) was on the front foot after saying it had repurchased 182,221 shares.
Hurricane Energy PLC (LON:HUR) shares jumped after it told investors its Lancester well operations have been completed.
Proactive news headlines:
Hurricane Energy PLC (LON:HUR) updated investors on the development of Lancaster’s early production system, where well completion operations have now concluded. It said that both previously drilled production wells for the EPS are now ready to be tied-in to the subsea infrastructure.
Echo Energy PLC (LON:ECHO) told investors that the testing rig has now been mobilised for a hotly anticipated programme planned for the group’s newly drilled wells in Argentina. First, the rig is being moved to the ELM-1004 well (drilled and suspended in May) where it will spend between two and three weeks of testing.
PowerHouse Energy Group PLC (LON:PHE) has raised £594,030 net of expenses via a placing and a share subscription at a price of 0.5p per share, which it said will be used to further the company’s commercial activities.
Stobart Group PLC’s (LON:STOB) head of finance has stepped down ahead of a crucial vote at today’s AGM that will determine who runs the Southend Airport owner. Richard Laycock, chief financial officer and executive director, will not stand for re-election at the meeting and the company has started to look for a replacement.
Alliance Pharma PLC (LON:APH) announced that the Medicines and Healthcare products Regulatory Agency (MHRA) has approved the UK Marketing Authorisation Application for Diclectin, a prescription product for the treatment of nausea and vomiting of pregnancy.
Range Resources Ltd (LON:RRL) has updated investors on operations at the Perlak project, in Indonesia, where it is advancing a programme of well workovers. The first reactivated well, POG-D, is continuing testing as production rates are being optimised – as previously reported, the well has flowed 145 barrels of high-quality light oil from one of the multiple production zones over intermittent pumping periods, over a total of 117 hours.
ECR Minerals PLC (LON:ECR) announced late yesterday that Christian St. John-Dennis has resigned as a non-executive director of the company with immediate effect, in order to focus on his other business interests. The miner also confirmed that it expects to release assay results at its Blue Moon project on Friday.
Wishbone Gold PLC (LON:WSBN), the precious metals trading and exploration company, said it will be presenting at the Shares Investor Evening on Tuesday 10 July at the Novotel London Tower Bridge, when its chairman and CEO Richard Poulden will be giving an overview of the company's strategy and its latest activities.
6.20am: Footsie to open higher
The FTSE 100 was expected to open on the front foot Friday ahead of the US jobs report for June and as US trade tariffs on China take effect.
Having risen 30 points yesterday to close at 7,603, the FTSE 100 was tipped to open around 35 points higher at 7,608.
US investors returned from the July 4 holiday in a bullish mood, pushing the Dow Jones average up 182 points to 24,357 and the S&P 500 up 23 to 2,737, showing no fear ahead of the US jobs data.
Non-farm payrolls increased by 223,000 in May, which was well above forecasts for a 188,000 increase, while the jobless rate declined again to 3.8%, its lowest level since April 2000.
Economists expect jobs growth to moderate in June, with David Morrison, senior market strategist at GKFX.Com forecasting a figure of around 185,000, while the jobless rate is seen holding steady.
“Better-than-expected data will reinforce the view that the US economy is strong and this could see equities catch a bid; however, there’s a danger that traders may worry that the Fed could accelerate its programme of rate hikes which would weigh on business activity going forward. Much will depend on how the bond market behaves. A further flattening of the yield curve looks likely to curb risk appetite,” Morrison suggested.
“For the same reason, it’s difficult to predict how equities may respond to a poor (sub-180,000) number. A very weak reading would sow doubts over the strength of economic growth going forward. Although this should be negative longer term, we could see a knee-jerk rally in equities on hopes the Fed will dial back on rate hikes,” he added.
US average earnings grew by 2.7% in May, up from 2.6% in April, with that level also expected to be maintained for June, according to GKFX’s Morrison.
“Once again, traders must pay close attention to Average Hourly Earnings. This is forecast to come in unchanged at +0.3% month-on-month but a pick-up here will signal that wage growth is accelerating and that inflationary pressures are building. Bear in mind that January’s unexpected rise in Average Earnings was a precursor to a sharp sell-off across global stock indices,” Morrison advised.
In Asia this morning, most markets were making headway despite the imposition of US$34bn of US tariffs on Chinese goods starting from today.
In Japan, the Nikkei 225 was up 280 points at 21,827 while in Hong Kong, the Hang Seng index was up 205 points at 28,387.
In the UK, there are no company trading statements – big or otherwise – scheduled, which leaves attention focused on the annual general meeting (AGM) of Stobart Group.
Stobart would no doubt prefer not to be the centre of attention but seeing as Andrew Tinkler, its former chief executive, intends to propose himself for election to the board at the AGM, things are likely to get a little bit lively.
Stobart summarily terminated Tinkler's employment on June 14, turfing him off the board, so the last thing the directors want to see is shareholders voting him back on.
“Accordingly, the board recommends that the shareholders vote against any resolution to appoint Mr Tinkler as a director, if proposed at the Annual General Meeting,” the company said on Monday.
Significant announcements expected
Economic data: US non-farm payrolls; US average earnings; US balance of trade
Around the markets
- Sterling: US$1.3224, up 0.01 cents
- 10-year gilt: yielding 1.262%
- Gold: US$1,255.90 an ounce, down US$2.90
- Brent crude: US$77.35 a barrel, down four cents
- Bitcoin: US$6,505.64, down US$1.87
The Bank of England Governor Mark Carney has warned that trade sanctions imposed by the US against its partners and the ensuing trade war will cost the world economically
The US economy will soon be weaned off the monetary stimulus that it received in response to the financial crisis of 2008, the Federal Reserve officials have indicated.
France’s market watchdog fears a surge in global bond yields and a Wall Street crash as soon as this year, warning that contagion will spread to Europe and wipe out the fragile recovery.
Manchester Airport Group (MAG), the owner of Manchester and Stansted airports, recorded faster growth than rivals Gatwick and Heathrow due to a rise in new long-haul routes, boosting its annual profits by almost a quarter last year.
Rolls-Royce has begun the process to shift the design approval for large jet engines out of the UK, becoming the latest iconic British brand to press for Brexit clarity.
Sale of new cars in the UK fell by 3.5% in June, ending a short-lived recovery in the automotive market.
Oil giant Shell has backed calls for the UK to bring forward its 2040 ban on new petrol and diesel car sales.
EU lawmakers have voted to reject the proposed changes to copyright rules that aimed to make the tech companies share more of their revenues with press publishers, record labels and artists.