London close: Stocks squeeze out gains as US payrolls miss forecasts

London stocks managed to break into positive territory by the close on Friday, with investors digesting fresh jobs data out of the United States, while travel plays remained under after the government’s latest announcement.
The FTSE 100 ended the session up 0.07% at 7,069.04, and the FTSE 250 was 0.13% firmer at 22,832.73.

Sterling was in the green as well, last trading 0.5% stronger on the dollar at $1.4176, and advancing 0.13% against the euro to 1.1646.

“The latest US non-farm payrolls report for May turned out to be a bit of a damp squib, adding a less than expected 559,000 jobs in May, helping to support a view, that for all of the recent talk of a possible central bank retreat of support measures, any such action was likely to be later rather than sooner,” said CMC Markets chief market analyst Michael Hewson.

“The slight miss on the headline number has seen yields fall back, and in the process act as a drag on financials which are the worst performing sector in Europe today, with the likes of HSBC, Standard Chartered and Lloyds Banking Group all underperforming.

“With airline stocks still under pressure as a result of yesterday’s changes to the travel traffic light system, the likes of Ocado and Just Eat are amongst the best performers on the basis of expectations of a slower relaxation of restrictions.”

Hiring in the US bounced back by a bit less than expected last month, led by a jump in leisure and hospitality as the economy continued to reopen, according to the non-farm payroll data released earlier in the afternoon.

According to the Department of Labor, non-farm payrolls grew by 559,000 in May, undershooting economists’ projections for a gain of 663,000, although payrolls figures for the preceding two months were revised higher by a combined 27,000.

Average hourly earnings outpaced expectations, meanwhile, rising by 0.5% month-on-month against a consensus forecast for 0.2% growth.

“April’s figures were a shock, coming in at a quarter of the expected increase despite stellar economic growth and otherwise-positive employment data,” said Close Brothers Asset Management chief investment officer Robert Alster.

“Now we are seemingly back on track, and signals are pointing towards a bright future for the US.

“While a rise in disposable income and consumer spending would be positive, if wage growth prompts a persistent increase in inflation then the Fed may be forced to step in with a monetary fire extinguisher, risking dampening the recovery before it’s really begun.”

On home shores, a survey released earlier showed activity in the construction sector grew in May at the fastest rate in nearly seven years amid a record jump in new orders.

The IHS Markit/CIPS construction purchasing managers’ index rose to 64.2 61.6 in April, coming in ahead of consensus expectations of 62.3.

A reading above 50.0 indicates growth, while a reading below signals contraction.

The survey found that new order volumes increased at the fastest pace since the survey began just over 24 years ago.

Housebuilding was the best-performing category, with the index for that rising to 66.3 from 61.2, followed by commercial work, the index for which ticked up to 64.4 in May from 62.2 in April.

In equity markets, British Airways owner IAG, engine maker Rolls-Royce, and budget airlines easyJet and Wizz Air were all on the downside, falling 0.93%, 2.15%, 2.63% and 3.27%, respectively.

Those moves came on the back of disappointment over the government’s updated travel list late on Thursday, which saw no new countries added to the ‘safe’ green list, while Portugal was moved from green to amber.

Doorstep lender Provident Financial was knocked 1.07% lower by a rating downgrade at Peel Hunt.

Packaging group Smurfit Kappa slipped 0.88% after agreeing to buy Peruvian packaging company Cartones del Pacifico in Peru for an undisclosed sum.

ContourGlobal lost 0.31% after saying it has agreed, in partnership with Energy Infrastructure Partners, to buy Green Hunter Group, a portfolio of solar photovoltaic (PV) assets in Italy totalling 18 MW for 49.7m.

On the upside, lockdown-friendly stocks were in the green on the prospect of more Brits staying at home over summer and the 21 June reopening for England possibly being delayed.

Online supermarket Ocado was up 3.04%, and restaurant delivery firm Just Eat Takeaway added 2% by the end of trading.

Market Movers

FTSE 100 (UKX) 7,069.04 0.07%
FTSE 250 (MCX) 22,832.73 0.13%
techMARK (TASX) 4,387.61 0.54%

FTSE 100 – Risers

Ocado Group (OCDO) 1,884.00p 3.04%
Renishaw (RSW) 5,595.00p 2.85%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,416.00p 2.08%
Entain (ENT) 1,733.00p 2.03%
Flutter Entertainment (CDI) (FLTR) 13,310.00p 1.91%
Next (NXT) 8,214.00p 1.86%
London Stock Exchange Group (LSEG) 7,574.00p 1.83%
Aveva Group (AVV) 3,501.00p 1.74%
Anglo American (AAL) 3,254.50p 1.67%
Glencore (GLEN) 330.20p 1.58%

FTSE 100 – Fallers

Rolls-Royce Holdings (RR.) 107.32p -2.15%
Pershing Square Holdings Ltd NPV (PSH) 2,555.00p -2.11%
Associated British Foods (ABF) 2,299.00p -2.00%
Bunzl (BNZL) 2,265.00p -1.99%
Weir Group (WEIR) 1,914.00p -1.77%
Legal & General Group (LGEN) 279.10p -1.62%
Sainsbury (J) (SBRY) 265.60p -1.56%
Standard Chartered (STAN) 496.70p -1.53%
BP (BP.) 319.45p -1.43%
Phoenix Group Holdings (PHNX) 741.40p -1.41%

FTSE 250 – Risers

CMC Markets (CMCX) 497.00p 4.85%
Premier Foods (PFD) 110.60p 3.75%
Hochschild Mining (HOC) 199.30p 3.59%
Network International Holdings (NETW) 396.80p 3.33%
Centamin (DI) (CEY) 115.50p 2.90%
Syncona Limited NPV (SYNC) 219.50p 2.81%
AJ Bell (AJB) 435.80p 2.78%
Biffa (BIFF) 295.00p 2.61%
Marshalls (MSLH) 729.50p 2.46%
SSP Group (SSPG) 299.40p 2.43%

FTSE 250 – Fallers

Just Group (JUST) 102.20p -4.22%
Wizz Air Holdings (WIZZ) 4,531.00p -3.31%
Volution Group (FAN) 420.00p -2.89%
Oxford Instruments (OXIG) 2,070.00p -2.82%
easyJet (EZJ) 934.00p -2.63%
Cineworld Group (CINE) 93.04p -2.56%
Trainline (TRN) 271.00p -2.31%
Pantheon International (PIN) 2,630.00p -2.05%
Inchcape (INCH) 780.50p -2.01%
Tyman (TYMN) 494.00p -1.98%

Featured News

This Week’s Most Read

  • Price of scarcity: Central banks are driving large valuation premiums on assets with limited supply

    By Charles-Henry Monchau, CIO at Syz Bank It is important to understand the concept of scarcity to better understand its mechanics and its impact on markets. Scarcity refers to the

  • Why now is the right time to invest in Japan

    By Masakazu Takeda, lead portfolio manager of the Japan Focus All Cap strategy at SPARX Asset Management The issues that have plagued Japan over the years are now at the doorstep of

  • Why high yield bonds could be the next ESG frontier

    By Lila Fekih & Mark Remington, Co-Portfolio Managers of the New Capital Sustainable World High-Yield Bond Fund at EFG Asset Management  Equities have garnered the most attention in the ESG

  • Fundsmith hints at bumpy ride

    Terry Smith’s annual letter to shareholders reports a slight underperformance of the MSCI World Index over one year Despite the value rally, quality stocks outperformed in 2021 Smith says unexpectedly

  • Brooks Macdonald Funds under Management hit £17.3bn

    Brooks Macdonald today publishes an update on its Funds under Management (“FUM”) for its second quarter ended 31 December 2021, together with a Trading Update for the half year. FUM

  • Ninety One appoints Juliana Hansveden

    Hansveden to develop emerging markets sustainable equity capability Ninety One has today announced the appointment of Juliana Hansveden, CFA, as Portfolio Manager, Emerging Markets Sustainable Equity. In this newly created

  • Man GLG’s Atherton: Governance revolution in Japan like the UK in the 80s and 90s

    The ESG-driven corporate governance revolution in Japan is creating investment opportunities similar to those in the UK in the 1980s and 1990s, says Jeff Atherton, manager of the Man GLG

  • US December CPI inflation rises 7% from a year ago

    David Goebel, Investment Strategist at Tilney Smith & Williamson, the wealth management and professional services group, comments on the latest US CPI inflation data: US December headline CPI inflation rose

  • BlackRock launches two new active Climate Action funds

    The BGF Climate Action Multi-Asset Fund and the BGF Climate Action Equity Fund leverage BlackRock’s deep expertise in active sustainable investing with the objective of generating positive environmental impact.  As

Wealth DFM