• FTSE 100 closes up 54 points on day
  • But is 0.3% lower over week
  • Resource firms top Footsie risers

5.10pm: FTSE closes to the good

FTSE 100 index closed higher Friday but was down over the week, as markets were buoyed ahead of the weekend by a strong jobs report from across the pond.

The UK’s premier share index finished up 54.04 points at 7,302.42.

The closely watched non-farm payrolls rose by 128,000 in the month of October as the US economy overcame the weight of the strike by General Motors Company’s (NYSE:GM) 46,000 autoworkers. Economists had expected the addition of a mere 75,000 jobs.

“While monthly wage growth was a touch softer, the overall impression backs up that given by the Fed earlier in the week, one of a healthy economy that does not look like it is heading into recession. Doubtless the usual consortium of naysayers will find the cloud in the silver lining, but aside from job weakness in the proverbial New Snoring, there is little to be concerned about,” commented Chris Beauchamp,  chief market analyst at spreadbetter IG.

The news sent US stocks soaring with the S&P 500 and Nasdaq recording new intraday highs. The Dow Jones Industrial Average added around 230 points.

In London, FTSE 100 was up on the day but lost around 0.3% on the week. Meanwhile, FTSE 250  jumped 137.27 points to stand at 20,158.77.

3.00pm: FTSE 100 and FTSE 250 walk arm-in-arm

After making steady progress over the lunchtime session, the Footsie has traded sideways since then.

The index of blue-chip shares was up 38 points (0.5%) at 7,286, thanks largely to mining stocks, which have seen some buying interest.

Unusually, the mid-cap FTSE 250 mirrored its bigger brother, rising 100 points (0.5%) to 20,122, helped by a 4.4% rise for Homeserve PLC (LON:HSV).

The home repairs business was upgraded to ‘add’ from ‘hold’ by Peel Hunt; the share price target was bumped up to 1,250p from 1,150p.

2.00pm: US stocks open higher

The lift from the US jobs figure is proving slow but steady, with the Footsie sidling back up towards the 7,300 level.

London’s index of leading shares has a way to go yet but at 7,286, up 38 points (0.5%), it is within lurching distance.

“The October US Employment Report was excellent, especially given the negative impact of the GM [General Motors] strike,” was the view of Mickey Levy at Berenberg Capital Markets.

US non-farm payrolls increased by 128,000 in November, well above the consensus forecast of 85,000.

“The solid increase in payrolls – 128k is more than enough to keep the unemployment rate below 4% – coupled with the strong upward back revisions suggests that labour markets are strong and have even more room to improve. Indeed, households continued to have very favourable assessments of labour market conditions in October and initial jobless claims remained low. Fortunately, the manufacturing slowdown has not yet spilled over into broader economic activity,” Levy said.

Samuel Fuller of Financial Markets Online possibly overlooked the “non-farm” aspect of the data release when he said it was a “barnstorming set of jobs numbers”.

“Coming so soon after Jerome Powell hinted that the Fed is to pause its interest rate cuts, the confirmation that America’s job-creation engine is still running smoothly means any further rate cuts could now be months away.

“With such a buoyant labour market, decent GDP growth and brisk consumer spending, it’s clearly business as usual for much of the US economy.

James Knightley of ING Economics said, “With a net 95,000 upward revision to jobs numbers for August and September it suggests that the US labour market is more resilient than feared and offers support to the view that the Fed well may leave interest rates unchanged in December after three consecutive cuts”.

“Nonetheless, payrolls growth remains on a softening trend. Having averaged 223,000 jobs per month through 2018, employment creation is running at a net 167,000 for 2019. Interestingly, this can be broadly seen in all components expect one – leisure and hospitality – which has recorded consecutive gains of 48,000, 45,000 and 61,000 per month. The fact that this one, relatively modest-sized component was responsible for half of all the jobs created is perhaps a signal that we shouldn’t get too excited by today’s figures,” Knightley suggested.

READ US stocks blast higher after October jobs growth outpaces expectations

12.42pm: US jobs rise more than expected

The US economy added 128,000 new jobs in October, versus expectations of an increase of around 85,000.

The September reading was revised to an increase of 180,000 from a provisional reading of an increase of 136,000.

The unemployment rate rose to 3.6%, as expected, from 3.5% in September.

Average hourly earnings for all employees on private nonfarm payrolls rose by 6 cents to $28.18.

The FTSED 100 tacked a bit higher following the release, climbing to 7,279, up 30 points (0.4%) on the day.

12.05pm: Stocks mark time ahead of US jobs data

Day traders love volatility so they must be hating the stock market today, which has stagnated after a moderately bright start.

The traders may get their burst of volatility at 12.30pm when the US jobs report for October is released but for now, the FTSE 100 is holding station on or around 7,270, up 22 points.

In the meantime, analysts have been picking the bones out of the October manufacturing purchasing managers’ index (PMI).

“The October purchasing managers’ survey points to the manufacturing sector still struggling early on in the fourth quarter with both domestic and foreign demand under pressure,” said Howard Archer, the chief economic advisor to the EY ITEM Club.

The PMI moved to a six-month high of 49.6 in October but as the level was below this still pointed to a contraction, albeit modest, Archer explained.

Furthermore, the underlying performance was significantly weaker than indicated by the headline figure as activity was lifted by a pick-up in stock-building ahead of the previously scheduled 31 October date for Brexit.

“Domestic demand for manufactured goods has been hampered by businesses’ caution over investment amid a myriad of uncertainties (Brexit, domestic economic and political, global economic) which is limiting expenditure on capital goods. Indeed, the survey highlighted that the investment goods sector was particularly weak adding to the evidence that businesses are still holding back on investment amid all of the uncertainties.

“Consumers also appear cautious over spending on big-ticket manufactured items even though consumer spending has largely been resilient and purchasing power has risen appreciably overall,” Archer said.

“Meanwhile, weakened global growth and an uncertain trading environment is weighing down on foreign demand for UK manufactured goods,” Archer observed.

As for corporate news, there has been precious little from the big guns to get traders’ excited.

Russian steel-basher Evraz PLC (LON:EVR) was 0.3% lower at 366.2p after it revealed sales were flat in the third quarter.

Vodafone Group plc (LON:VOD) got few people excited – other than the marketing department of ethical smartphone maker Fairphone – with its announcement that it would be making the Fairphone 3 handset available this year to its European customers.

The shares were up 0.2% at 157.74p.

10.50am: Profit warning from Lookers sends car dealerships sector into reverse

Traders are understandably reticent to make big bets ahead of this afternoon’s jobs data from the US.

As a result, the FTSE 100 has been gently nursing early gains, with the index up 18 points (0.2%) at 7,266, despite a 2.6% fall for Auto Trader PLC (LON:AUTO).

The cars-for-sale listings website operator was hit by this morning’s profit warning from car dealer, Lookers PLC (LON:LOOK).

Lookers said that the second half of September – one of the most important selling months of the year for the Arthur Daleys of his world – fizzled out.

Lookers shares were down 13% at 43p after its second profit warning of the year. The chief executive officer, Andy Bruce and Nigel McMinn, the chief operating officer have stepped down from the board.

Broker Liberum Capital downgraded its rating to ‘hold’ from ‘buy’ and slashed its target price to 30p from 68p.

9.45am: UK manufacturing activity contracts again

The IHS Markit / CIPS UK Manufacturing Purchasing Managers Index (PMI) hit a six-month high in October.

At 49.6, however, the reading was still below the 50-point level that marks the crossover point between a contraction and an expansion in activity. O)n the plus side, the reading was an improvement on September’s 48.3 and was ahead of economists’ forecasts for a reading of 48.1. 

Respondents replied to the latest survey between 11-28 October, which was before the confirmation of the latest Brexit deadline extension and the passing of the Early Parliamentary General Election Bill by the UK House of Commons on 28 October; as such, activity was almost certainly affected by the uncertainty surrounding Brexit.

The downturn in manufacturing production continued, although the rate of contraction slowed.

IHS Markit said that firms reported weaker inflows of new business, especially from the domestic market, had led to a further scaling back of output. This was partly offset by manufacturers who raised production to build-up stocks in advance of the October Brexit deadline.

“The manufacturing downturn continued at the start of the final quarter as uncertainties surrounding Brexit, the economic outlook and domestic politics all took their toll; however, the underlying picture looks even darker than even these disappointing headline numbers suggest, as output and new orders fell despite short-term boosts from stock-building activity in advance of the October 31st Brexit deadline, which included a rise in exports as clients in the EU sought to mitigate supply risk,” said Rob Dobson, a director at IHS Markit.

“The high degree of uncertainty is hitting two areas of the manufacturing economy especially hard. The first is the trend in employment, as job losses resulting from disappointing sales are exacerbated by manufacturers implementing hiring freezes until the outlook clears.

“The second is the investment goods industry, where output and new orders are falling sharply as clients postpone capital spending plans.

“With a further Brexit extension confirmed and the prospect of a December general election, it looks as if the spectre of uncertainty will cast its shadow over manufacturing for the remainder of 2019,” Dobson speculated.

The FTSE 100 was largely unmoved by the announcement, hovering around 7,273, up 25 points (0.3%) on the day. On the foreign exchange markets, sterling perked up against the dollar.

“A positive surprise in the UK Manufacturing sector activity data rescued the GBP bulls, lifting the Cable quickly from daily lows of 1.2944 to now trade back near 1.2960 region,” reported FXStreet.

8.35am: Positive start to new month

It wasn’t exactly a surge higher, but the FTSE 100 opened in positive territory, clawing back some of Thursday’s losses with a 22-point rise to 7,270.23.

“Yesterday, trade and recession worries were unwanted Halloween visitors, as global equity markets took fright at signs not all is well,” said Neil Wilson, an analyst at Markets.com.

Sentiment Friday looks likely to be driven by America’s monthly jobs print, with around 80,000 workers expected to be added to non-farm payrolls, representing 109 months of growth.

We’ll also get a further reading on the general health of the world’s largest economy in the form of manufacturing data.

Ahead of the double dose of US news, the UK equity market was fairly quiet.

Much of the price action was in the second-tier with Crest Nicholson (LON:CRST) off 5% after the builder sounded the earnings alarm on Thursday.

There was an appetite for Restaurant Group (LON:RTG), which rose 4.7% as bargain hunters weighed in after a recent mini sell-off.

Proactive news headlines:

Iconic Labs PLC (LON:ICON) has performed a soft relaunch of LGBT+ news website Gay Star News (GSN) after previously acquiring the site for £33,000 in September. The media firm said revenue is now being generated from advertising on the brand’s Facebook page, while a formal relaunch of the GSN website and a rebranding is planned in the near-term.

Mosman Oil and Gas Limited (LON:MSMN) shares surged in early deals as the company dangled the prospect of becoming cash-flow positive. In the year to the end of June, the company saw revenue rise to US$1.11mln from US$740,853 the previous year but this only tells half the story as two of its wells (Stanley 1 & 2) only commenced production this year while Stanley-3 has come on stream in the current financial year – i.e. since June. As a result, the board believes becoming cash flow positive on a company level is “an increasingly achievable objective”.

Europa Metals PLC (LON:EUZ) said it was now “formalising and developing” its stakeholder engagement programme for the Toral Project after meeting local mayors in the Castilla y León area of north-west Spain, which is host to the lead, zinc and silver deposit. “Mining activity should only go forward with correct, standardised community engagement and we are fortunate to be operating in a mining region where community representatives fully understand the impact of future mining development,” said Europa director Laurence Read. The local mayors have said they want to work with Europa on the next round of meetings.

Oncimmune Holdings PLC (LON:ONC) has clinched a commercialisation deal with US diagnostics firm Biodesix for its EarlyCDT Lung cancer test. The biotechnology group said the deal, originally announced in June, will be worth up to US$28mln over the next five years, with the agreement open for renewal for another five year period up to 2029 and thereafter.

Genel Energy PLC (LON:GENL) provided the antidote to some rather lacklustre trading from the UK oil industry’s two super-majors as it weighed in with a “robust” third-quarter update that has set the scene for higher dividend payments going into 2020. “We continue to deliver on our strategy,” said chief executive Bill Higgs. “Robust production is generating material free cash flow, which we are recycling into low-risk and quick returning projects.”

Tower Resources PLC (LON:TRP) has signed a contract for a site survey at its intended Njom-3 well location on the Thali licence, offshore Cameroon.   The survey is the final operational step before drilling starts, said Tower. MV Investigator will arrive in Cameroon between 15 November and 30 December, subject to permits and the requisite license extension being received from the Ministry of Mines prior to mobilisation.

Touchstone Exploration Inc (LON:TXP) has boosted its long-term credit facility by C$5mln to C$20mln to fund the second exploration well on its Ortoire concession in Trinidad and Tobago. The 8% fixed interest rate on the facility remains unchanged though the Production Payment Agreement rises to 1.33% of petroleum sales from 1% previously. 

ADES International Holding PLC (LON:ADES) has hired Khaled Hassan as its new chief financial officer, with effect from 1 December 2019, replacing Ahmed El Khatib who has been in the role for two years. The company, which specialises in onshore and shallow water jack-up rigs for oil and gas drilling, noted that Hassan most recently served as chief financial officer at Egyptian firm Cleopatra Hospitals Group, having held previous positions at Franke, Olympic Group, ASEC Holding (NDT), Gozour Holding, and Dina Farms.

Arc Minerals Limited (LON:ARCM) has announced the appointment of Rémy Welschinger as its new finance director to replace John Forrest, who is retiring. Welschinger, an existing director of the AIM-listed mining company, is also the founder and managing director of Limehouse Capital, an investment holding company specialising in natural resources projects. 

Katoro Gold PLC (LON:KAT) has updated investors regarding the sale of the Imweru gold project, located in Tanzania, to Lake Victoria Gold Limited, a private Australian group. While the two miners initially deferred the completion to 31 October, Lake Victoria has now requested a further extension, currently under consideration by Katoro’s board.

United Oil & Gas PLC (LON:UOG) has handed back two licences it was provisionally awarded in the UK’s 31st licensing round. At the time of the award, Blocks 98/11b and 98/12 in the English Channel included an area adjacent to the Colter South discovery. The acreage was subsequently amended by the UK Oil and Gas Authority, which meant the blocks no longer were next to Colter South nor contained the targets that interested UOG and its partners.

RM Secured Direct Lending PLC (LON:RMDL) announced that it has renewed and amended its Revolving Credit Facility with OakNorth. Under the terms of the amended RCF, the company may draw down loans up to an aggregate value of £10.5mln, on materially similar terms as the previous RCF, and the new facility will expire in November 2020. RM said the RCF will provide it with flexible capital for maintaining and preserving liquidity and general corporate purposes including to invest in the substantial pipeline of investment opportunities.

ADM Energy Plc (LON:ADME), said that the second stage of the conditional fundraising, announced on 30 September 2019, which amounts to £278,910, has been subject to further delays. The company said it will provide a further update to the market in due course.

ITM Power PLC (LON:ITM), the energy storage and clean fuel company, has announced the appointment of Juergen Nowicki, currently senior vice president Commercial & CFO of Linde Engineering, as a non-executive director of ITM Power with effect from 1 November 2019.

Tekcapital PLC (LON:TEK), the UK intellectual property (IP) investment group focused on creating marketplace value from investing in university technology, said that SP Angel Corporate Finance has been appointed as its Nominated Adviser (Nomad) and joint broker with immediate effect.

Alba Mineral Resources plc (LON:ALBA), the diversified mineral exploration and development company, announced that its updated corporate presentation is available on the company’s website.

6.40am: FTSE 100 set to claw back some of Thursday’s losses

London’s leading shares are expected to claw back some of yesterday’s losses today, ahead of the release of the US jobs report this afternoon.

The FTSE 100, which yesterday shed 82 points, looks set to open some 37 points higher at 7,285 but there will likely be a certain amount of hesitant trading ahead of the US non-farm payrolls for October.

“Fed chair Powell said it would take a “material” change in the FOMC’s outlook for a “strong” labour market in order to convince them to cut rates again. The question then is, does the market expect the data to show such a change? And the answer is a resounding ‘no’,” declared Marshall Gittler at ACLS Global.

“Payrolls are expected to grow by 80k, the 109th consecutive month of job gains. This would be well below trend – the six-month moving average is 165k – but it’s distorted by the impact of the strike at General Motors (GM), which resulted in around GM 48k workers being not on payrolls plus an unknown number of people in the GM supply chain. That would be somewhat offset by 28k temporary workers who were hired for the US census. These temporary distortions make the underlying change difficult to discern,” he added.

“The unemployment rate is expected to tick up 0.1 percentage point to 3.6%. A rise in the unemployment rate can be a good thing if it’s due to more people joining the labour force, but in this case, the participation rate is forecast to fall slightly, meaning it’s a negative. Still, 3.5% was a 50-year low, so a small rise from that is hardly worrisome,” Gittler said.

Trade talk fears unsettle markets

Overnight, US markets retreated on concerns over the US-China trade talks, after the APEC summit was cancelled because of unrest.

The Dow Jones fell 140 points to close at 27,046 and the S&P 500 shed 9 points to finish at 3,038.

In Asia this morning, the Nikkei 225 in Tokyo is in the red, down 92 points at 22,836 but in Hong Kong, the Hang Seng is heading the other way, with a 164 point rise at 27,070.

As usual on a Friday, the number of scheduled announcements from the big players is on the low side with Evraz PLC (LON:EVR), the highest yielding company in the FTSE 100, the most notable item on the agenda with its third-quarter update.

Earlier this month the Russian steel basher told investors it was now targeting cost savings of US$300m per year from next year, with US$350mln expected this year from its “efficiency improvement programme”.

For the current year, Evraz estimates capital expenditure will be around US$850mln, before rising to US$1bn for 2020 to 2023 as it considers three major investment projects with the target to increase sales of finished steel products.

Significant events expected today

Trading statement: Evraz PLC (LON:EVR), TP ICAP PLC (LON:TCAP)

Economic announcements: US non-farm payrolls, manufacturing PMI data for the UK, USA, China

Around the markets

  • Sterling: US$1.2958, up 0.16 cents
  • 10-year gilt: yielding 0.63%, down 5.42 bps
  • Gold: US$1,512.30 an ounce, -US$2.50
  • Brent crude: US$60.21 a barrel, down 40 cents
  • Bitcoin: US$9,112, down US$69

Business headlines

Daily Mail

Sirius Minerals’ bosses are under mounting pressure to outline their plans for the potash miner after a self-imposed deadline passed without an update.

Estee Lauder has slashed its profit forecasts as protests in Hong Kong and a slowdown in China hit business.

The Times

The US House of Representative yesterday passed a resolution on the impeachment of President Donald Trump, throwing the country’s deep divisions over his presidency into stark relief.

Royal Dutch Shell has warned that the completion of its $25 billion share buyback programme could be delayed as slowing global economic growth is depressing oil and gas prices.

Royal Dutch Shell has warned that the completion of its $25 billion share buyback programme could be delayed as slowing global economic growth is depressing oil and gas prices.

Indivior’s blockbuster anti-opioid treatment Suboxone has lost half of its market share and taken a hit on its revenue and profit due to generic competition.

IAG, the owner of British Airways, has taken a €155 million hit from the first strike by pilots in the carrier’s history.

Crest Nicholson has issued a profit warning after a period of volatile trading driven by Brexit-related consumer uncertainty.

BT chief executive Philip Jansen has called on the next government to prioritise plans for faster broadband and dismissed concerns about nationalisation under a Corbyn administration.

Grant Thornton has cut pay for partners and delayed its accounts after a tough year.

Three former top executives at Unaoil, an oil and gas consultancy, have pleaded guilty to foreign bribery charges in the US.

Financial Times

The PPI scandal still haunts Lloyds Bank, as it lost almost all its third-quarter profits after a £1.8 billion charge for the payment protection insurance scandal and a sharp rise in provisions for bad loans.

Bombardier has sold three of its aerospace plants to US outfit Spirit AeroSystems for US$1.1bn.

The Daily Telegraph

The eurozone economy could dodge recession as stronger growth in France and Spain offsets a slump in Germany.

Hong Kong’s economy tumbled into its deepest recession since the financial crisis in the three months to September.

Profits tumbled by £80 million at sportswear billionaire Mike Ashley’s private investment business despite an uptick in sales.

The Guardian

The announcement of a successor for Mark Carney as governor of the Bank of England has been postponed until after the general election