ADVFN Morning London Market Report: Friday 8 October 2021

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London open: Stocks edge up ahead of non-farm payrolls

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London stocks rose in early trade on Friday after the US Senate approved a deal to raise the debt ceiling, but gains were unspectacular as investors eyed the release of the latest US non-farm payrolls report.

At 0825 BST, the FTSE 100 was up 0.3% at 7,097.63.

Richard Hunter, head of markets at Interactive Investor, said: “Investors took heart from a legislative breakthrough before turning attention to the non-farm payroll numbers due later.

“After some limited fears around a potential US default, the Senate approved a temporary lift to the $28.4 trillion debt limit which should stave off such concerns for the time being.

“In terms of economic data, today marks the culmination of the week, as the jobs figure is announced. After a much weaker than expected reading of 235,000 for August (which is likely to be revised higher today), the consensus is that 500,000 jobs will have been added in September. While there is no official number available, it is believed that such a reading would trigger the tapering of Federal Reserve stimulus, and would be announced at the November meeting.

“By the same token, and perhaps less likely, another miss on the consensus figure would further heighten inflationary concerns, and the possibility of the emergence of stagflation in particular.”

In equity marketsRoyal Mail gained after saying it had bought Canadian logistics company Mid-Nite Sun Transportation for CAD$360m (£210.5m).

Electronic parts distributor Electrocomponents was also in the black as it lifted annual guidance after reporting interim trading ahead of expectations, but said supply chain issues would persist.

Elsewhere, Tullow Oil was boosted by an upgrade to ‘buy’ at Jefferies.

On the downside, Weir slumped after the engineer warned late on Thursday that profit was set to take a hit of up to £40m following a cyberattack.

Unite Group was also weaker after the student accommodation provider said 2022 rental income was expected to fall due to lower rental income in terms two and three of 2021/2022.

 

Top 10 FTSE 100 Risers

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# Name Change Pct Change Cur Price
1 International Consolidated Airlines Group S.a. +2.67% +4.72 181.54
2 Centrica Plc +2.11% +1.24 60.10
3 Informa Plc +1.72% +9.80 579.00
4 Bp Plc +1.71% +5.90 350.70
5 Royal Dutch Shell Plc +1.41% +23.60 1,696.00
6 Easyjet Plc +1.41% +9.00 648.20
7 Rolls-royce Holdings Plc +1.26% +1.78 143.00
8 Marks And Spencer Group Plc +1.14% +1.95 173.75
9 Standard Chartered Plc +1.12% +5.30 477.30
10 Imperial Brands Plc +1.07% +16.00 1,514.50

 

Top 10 FTSE 100 Fallers

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# Name Change Pct Change Cur Price
1 Tui Ag -12.80% -44.40 302.60
2 Micro Focus International Plc -2.19% -8.50 379.10
3 3i Group Plc -1.46% -18.50 1,247.50
4 Smurfit Kappa Group Plc -1.27% -49.00 3,808.00
5 Rightmove Plc -1.24% -8.40 670.80
6 Evraz Plc -1.17% -6.80 572.60
7 Carnival Plc -1.17% -19.40 1,641.60
8 Auto Trader Group Plc -1.12% -6.60 580.60
9 Smith (ds) Plc -1.11% -4.30 383.20
10 Bt Group Plc -1.06% -1.55 144.70

 

Europe open: Stocks slip as investors eye US jobs data

European stocks slipped at the opening on Friday as investors eyed US non-farm payroll data later in the day.

The pan-European Stoxx fell 0.43% with regional markets mixed. Investors were relieved that the US avoided a default as the Senate approved a temporary lift to the $28.4trn debt limit.

US employers are expected to have added 490,000 jobs in September, up from 235,000 in August, sharply lower than forecasts.

“NFPs are important and could be market moving later since the Federal Reserve has explicitly tied tapering and subsequent rates lift-off to the labour market,” said Markets.com analyst Neil Wilson.

“A weak number could just dissuade the Fed from announcing its taper in November, but I see this as a low-risk outcome. More likely is steady progress on jobs and the November taper announcement to follow.”

“The persistence of inflation and rising fuel costs in particular has changed the equation for the Fed entirely. Benign inflation that we were used to is no longer to be counted on to provide cover for trying to juice the labour market.”

In equity news, British-Airways owner IAG and travel company TUI gained as the UK was set to scrap Covid-19 quarantine requirements for 47 destinations.

Online pharmacy group Zur Rose fell to the bottom of the Stoxx with a decline of 6.28% after Berenberg downgraded the stock to ‘neutral’ from ‘buy’.

UK letter carrier Royal Mail gained after saying it had bought Canadian logistics company Mid-Nite Sun Transportation for CAD$360m (£210.5m).

 

US close: Markets firmer as jobless claims surprise to the downside

Wall Street stocks were in positive territory at the close on Thursday, as Congress reached agreement to stave off US debt limit for the time being, avoiding a government default, with jobless claims surprising to the downside.

At the close, the Dow Jones Industrial Average was up 0.98% at 34,754.94, the S&P 500 added 0.83% to 4,399.76, and the Nasdaq Composite was 1.05% firmer at 14,654.02.

The Dow Jones closed 337.95 points higher on Thursday, extending gains recorded in the previous session.

Major indices got a boost early in the session on news that Senate Minority Leader Mitch McConnell had offered a short-term suspension proposal to Senate Democrats that will raise the debt ceiling by a certain amount and allow the government to continue operating until December.

Tech stocks were in the green, with Twitter up 4.37%, Nvidia ahead 1.81% and Advanced Micro Devices 2.71% higher.

Reopening play General Motors was also in the green, by 4.65%, while membership retailer Costco Wholesale advanced 0.79% after it posted better-than-expected sales for September.

Also boosting sentiment, weekly jobless claims in the US surprised to the downside last week, according to the Department of Labor, with initial unemployment claims for the week ended 2 October decreasing by 38,000 to 326,000.

Economists had been expecting a rise to 370,000.

The four-week moving average increased by 3,500 to 344,000, while secondary claims dropped by 97,000 to 2.71m.

Elsewhere on the macro front, Challenger, Gray & Christmas revealed that US-based employers had cut 17,895 jobs in September, a 14% jump from August’s 24-year low.

 

Friday newspaper round-up: Power cuts, US debt ceiling, Weir Group

The risk of power cuts to factories and homes this winter has increased, the National Grid warned, as the business secretary prepared for a crunch meeting with industry bosses concerned the energy crisis may force them to scale back production. The price of gas and electricity has soared in recent weeks, leading to the collapse of multiple energy suppliers and prompting warnings of higher costs for consumers, factory shutdowns and increased pollution as plants switch to dirtier but cheaper fuels. – Guardian

The US Senate has approved a deal to extend the government’s borrowing authority into December. The compromise between Republican and Democratic leaders would temporarily avert an unprecedented federal default that experts say would have devastated the economy. With a 50-48 vote, senators agreed to increase the borrowing limit by $480bn, sufficient to prevent the US government from defaulting by keeping debt payments up until 3 December. – Guardian

Ireland has been forced to abandon its low tax business model in the face of pressure from Joe Biden, putting the country’s status as a haven for global companies at risk. The sacrosanct 12.5pc tax rate has been the cornerstone of the Irish economy for almost two decades, and helped attract some of the world’s biggest corporations, such as Facebook and Google, to set up their European headquarters in the country. – Telegraph

Checkout.com, one of Europe’s most valuable private companies, had a 73 per cent rise in UK and European sales last year as it benefited from the boom in online shopping. The payment processor, which was valued at $15 billion in a January funding round, recorded revenues of $252.7 million last year in its UK business, up from $146.4 million in 2019. – The Times

The mining equipment supplier Weir Group expects its profit to be trimmed by up to £40 million as the result of a cyberattack, it said in an update. The FTSE250 company said that many of its systems had to be shut down, disrupting orders into next year. – The Times

 

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