• FTSE 100 index closes up 82 points
  • US non-farm payrolls rose by 4.8mln in June, well above the 3.23mln economists were expecting
  • Wall Street shares higher

5.10pm: FTSE closes ahead

FTSE 100 index closed higher on Thursday as the strong US jobs report cheered investor sentiment.

Britain’s blue-chip benchmark finished up over 82 points at 6,240.

America created 4.8 million jobs in June as companies rehired workers, which were previously let go.  The figure was far more than the 3 million that had been expected by economists. It also followed a rebound in May when 2.5 million joined the labour market. There was a loss of 20 million jobs in April when the pandemic lockdown kicked in.

London’s FTSE 250 also gained ground, adding over 178 points to close at 17,367.

“The strong US jobs report lifted the already bullish mood. Stocks were pushing higher this morning on the back of the news that Pfizer and BioNTech saw positive results from their drug trial that they are hoping will be a vaccine for Covid-19,” said David Madden, analyst at CMC Markets.

“The news encouraged traders to buy into the market, but the results have yet to be reviewed by a medical journal.”

Madden also noted that the US labour market still has “a long way to go but it is clearly heading in the right direction”.

On Wall Street, the Dow Jones Industrial Average added over 198 points at 25,933. The S&P 500 added around 25 at 3,141.

3.50pm: Banks drive the Footsie higher

The FTSE 100 moved into consolidation mode in late afternoon, rising 67 points (1.1%) to 6,227.

Banks were prominent among the blue-chip gainers, with Royal Bank of Scotland Group PLC (LON:RBS), Barclays PLC (LON:BARC) and HSBC Holdings PLC (LON:HSBA) all notching up gains of more than 4%.

Sentiment was boosted by better-than-expected US jobs numbers.

“US employment data surprised on the upside in June for the second month running, with nonfarm payrolls increasing 4.8m after a 2.7m gain in May,” reported Rupert Thompson, the chief investment officer at Kingswood.

“The unemployment rate also fell back more than anticipated to 11.1% from 13.3%. These numbers are the latest in a string of recent economic releases to show the US economy is bouncing back quicker than expected. While undoubtedly encouraging, it remains very early days in the economic recovery and with the recent surge in infections in a number of US states now leading to a re-imposition of social distancing measures, it remains to be seen if this pace of improvement can continue. Even after the 7.5m rise in the last couple of months, employment still remains 14.7m lower than back in February,” he noted.

Ranko Berich, the head of Market Analysis at Monex Europe, was very sceptical about the numbers.

“With the amount of noise in the data, this non-farm payrolls report might as well be an inkblot test that reveals more about the readers’ prior beliefs than the US labour market,” he suggested.

“The most important questions about the US labour market have been left unanswered by today’s release. Firstly, although many workers laid off in March and April have been re-hired, we know little about how buoyant future reports will prove amid rising case counts. Secondly, with case counts still rising in much of the US, we don’t know how labour markets will respond to the re-imposition of lockdown measures – and if the impact of a second wave will be far more lasting than the first,” Berich said.

3.00pm: US indices race ahead

US indices opened sharply higher after the June jobs report showed millions more US citizens returning to the payroll.

The Dow Jones raced to a 400 points gain before ebbing a tad to 26,120, up 394 points (1.5%) while the S&P 500 was up 46 points (1.5%) at 3,162.

“Another big upside surprise for payrolls of 4.8mln while the unemployment rate plunges to 11.1%. Great news, but it doesn’t tell the whole story. 31.5mln people are claiming unemployment benefits and employment is still 15 million lower than February. Moreover, with states dialling back on re-openings the July jobs report could be far more sobering,” cautioned ING’s James Knightley.

“The spike in Covid-19 cases means several states are announcing renewed containment measures with others delaying their phased re-opening. Many businesses (leisure and hospitality in particular) may take the view that it simply isn’t viable for them to stay open, which will only add to the problems in the jobs market.

“Furthermore, given the downturn in global economic activity, many manufacturing and professional service firms may also not need as many staff as they face up to the new economic environment of weaker corporate profits and higher debt levels. This is before we consider the longer-term structural issues facing specific sectors such as transport, retail, commercial real estate, hospitality. So, while today’s jobs report gives a good headline, there are huge headwinds which mean a full recovery in the jobs market is a very long way off,” Knightley said.

None of which is likely to stop investors from stampeding into the equity market.

In London, the FTSE 100 he immediate wake of the US jobs numbers to briefly top 6,250 and is now hovering around 6.257, up 89 points (1.4%) on the day.

1.40pm: US jobs numbers beat expectations

US non-farm payrolls rose by 4.8mln in June, well above the 3.23mln economists were expecting and up from the 2.51mln added in May.

The unemployment rate fell to 11.1% from 13.3% in May; economists had expected the rate to fall to 12.5%.

Average hourly earnings fell 1.2% month-on-month in June after falling 1.0% in May; the consensus forecast had been for a fall of 1.0%.

On a year-on-year basis, earnings were up 5.0%, compared to a 6.7% increase in May and expectations of a 5.3% increase.

US futures indicated a subdued but positive response to the numbers, with the mini-Dow continuous contract rising to 25,818, up 243 points.

The mini-S&P 500 contract was up 37 points at 3,140.

On the other hand, weekly figures revealed that another 1.43mln people sought unemployment benefits for the first time last week, down 55,000 on the previous week’s number.

In London, the FTSE 100 was a bit more responsive, recovering to 6,230, up 72 points (1.2%); the index had been loitering around the 6,200 mark prior to the release of the jobs data.

11.40am: A bit of unease creeps in

A tinge of nervousness seems to be apparent in London ahead of the release of the US jobs figures at 1.30pm.

The FTSE 100 has come off the top and is up 35 points (0.6%) at 6,193.

“Stocks are in positive territory this morning on the back of hopes for a Covid-19 vaccine. Pfizer and BioNTech are working on a potential vaccine and the results so far have been positive, but the data has not been reviewed by a medical journal yet, so it’s still in its early stages,” reported CMC’s David Madden.

“These days, even if there is a whiff of progress being made towards developing a drug to tackle the coronavirus, it usually sparks buying. That being said, dealers are aware that at least 12 US states have rowed back on reopening their economies because of a rise in new case, so the health crisis is still a major issue,” he cautioned.

On that subject … new cases of coronavirus infection in the US rose by 50,700, which was a record daily increase and up from 34,900 new cases on the same day of last week.

According to the analysis of Ian Shepherdson, the chief economist at Pantheon Macroeconomics, the trend in the rate of increases appears to have peaked, however, although the growth rate in total cases needs to fall substantially further before the new number of new cases per day begins to fall.

“We still think that’s a decent bet for later this month, given the downshift in economic activity in most of the hardest-hit states, visible in restaurant, employment and mobility data,” Shepherdson said.

Meanwhile, “the fall in new UK cases stalled yesterday. Localised outbreaks appear to be to blame; in June, the infection rate in Leicester was nearly 10 times higher than in Nottingham, just 30 miles away,” he noted.

Tomorrow – July 4 – is a day of national celebration in some parts of the world; I write, of course, of the pubs reopening in England and so it is perhaps appropriate that pubs group Mitchells & Butlers PLC (LON:MAB) has chosen today to release its interim results.

READ Mitchells & Butlers pushed into losses by coronavirus property hit

Shares rose 5.4% to 201.5p despite the company taking a huge paper-based hit on the valuation of its pubs relating to the impact of the recent lockdown.

10.40am: What goes up, goes up

Hopes that a successful coronavirus vaccine may be a few steps closer are driving equity prices higher.

The FTSE 100 was up 53 points (0.9%) at 6,210, with British Airways owner International Consolidated Airlines (LON:IAG) the best performer on expectations that the government will give the go-ahead today for air travel to dozens of foreign destinations to resume with no quarantine on the travellers’ return.

IAG was up 5.8% at 232p, closely followed on the Footsie leaderboard by two aerospace engineers, Rolls-Royce Holdings PLC (LON:RR.) and Melrose PLC (LON:MRO); the former was up 4.6% at 298.8p and the latter up 4.5% at 122.25p.

“UK-focused airlines are enjoying a surge nearly trade today, as the government air bridge plans expanded beyond expectations to include a potential 75 nation whole visitors would avoid the 14-day quarantine,” reported IG’s Joshua Mahony.

“News of ‘very strong’ booking numbers for Ryanair highlights the demand that has been locked down up until now. With airline activity expected to surge over the coming months, the ability to recover some semblance of normality for the typically busy summer months will be key to boosting the balance sheets after months of lockdown. With quarantine fears largely removed for travellers, European-focused UK airlines are likely to find demand lift to the benefit of their share price. The big question is whether we will see the Coronavirus cases kept low enough to allow for increased travel, with another lockdown or resumption of quarantine rules likely to deal a major blow to the travel sector if implemented,” he added.

9.20am: AB Foods leads the charge

The positive mood seen at the start of trading has been maintained although this afternoon’s US jobs data could change things.

The FTSE 100 was up 54 points (0.9%) at 6,211, with Primark owner Associated British Foods PLC (LON:ABF) leading the way with a 7.3% rise to 2,108p, after a trading update.

“There’s a lot to like in these numbers – and it’s the first time we’ve been able to say that in a while!” exclaimed Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“Yes Primark sales are down dramatically in the third quarter, but trading in the first few weeks of June looks very promising and with almost all stores now open that provides a strong base for recovery. Meanwhile, the group’s food focussed operations have not only benefitted from consumers being stuck at home but have also delivered margin improvements – doubly good news for profits,” he added.

8.50am: Positive start for Footsie

The FTSE 100 opened firmly in positive territory on Thursday amid hopes that a coronavirus vaccine can be found.

The index of UK blue-chip shares rose 39 points to 6,197.44. 

Researchers from Oxford working on inoculation for the deadly virus are optimistic one will be found by the autumn.

Geoffrey Hsu of Orbimed, the world’s largest dedicated healthcare investment company, told the Telegraph: “The chances are close to 100% that one or more [potential vaccine] will show some level of efficacy. So many approaches on vaccines and treatments are being tried – think about the collective brainpower being applied worldwide.”

But US June jobs data later has the potential to dent the upbeat mood in London, though it seems to be a mug’s game predicting just how the American jobs market is reacting to the pandemic with wild weekly and monthly swings.

In the City early on it was hard to see what excited investors in Associated British Foods (LON:ABF) after the Primark owner reported a 39% fall in quarterly revenues.

The shares rose 7% after the financial impact on its retail operation proved not to be as bad as predicted.

Even so, “the pandemic has left a financial stain which cannot be erased from this year’s trading”, said Richard Hunter, stockpicker-in-chief at Interactive Investor.

For DS Smith the reaction to news wasn’t quite so uplifting as the packing group said full-year profits nosed higher, but it provided a cautiously optimistic commentary. However, it reckons it is premature to reinstate the dividend. The shares fell 8%.

Proactive news headlines:

NQ Minerals PLC (LON:NQMI) (OTCQB:NQMLF) (OTCQB:NQMIY) said last month’s plant upgrade at the Hellyer Gold Mine in Tasmania has resulted in a 44% increase in production. The enhancements, done six months ahead of expectation, have resulted in hourly production of 150 tonnes, which equates to an annualised rate of 1.3mln tonnes. As chairman David Lenigas pointed out, the changes should boost the company’s finances.

IronRidge Resources Limited (LON:IRR) said it has defined a drill-ready target at the Zaranou gold license in Côte d’Ivoire from recently secured historical data, while the company has also enlarged a second phase drilling programme over the Ehuasso and Ebilassokro targets. The AIM-listed company said the historical data had confirmed the new target, called Yakassé, as a “significant soil anomaly” that warranted follow-up drilling which is planned to begin either on completion of the current drill programme or after the wet season.

Primary Health Properties PLC (LON:PHP), one of the UK’s leading investors in modern primary healthcare facilities, has announced that, further to its announcement of May 11, 2020, regarding of the acquisition of a portfolio of medical centres, it has today completed on the acquisition of the last of the conditional purchases referred to in that announcement, for a price of £3.6mln. This completes the purchase of the entire portfolio of 22 properties, it added.

Pan African Resources plc (LON:PAF) advised shareholders that it has established a sponsored Level -1 ADR programme today on the over-the-counter market in the United States (US) with the Bank of New York Mellon (BNY Mellon) being the appointed Depository. Each depository receipt in the ADR programme represents twenty (20) ordinary shares in Pan African Resources and trades under the symbol ‘PAFRY’. Pan African Resources CEO Cobus Loots commented: “Pan African has a strong shareholder base in South Africa and in the United Kingdom. By establishing the ADR programme, the Company will make investing in its shares even more accessible to international investors, particularly the US investor market. Furthermore, Pan African joins a number of its peers which have successfully implemented an ADR programme.”

Oracle Power PLC (LON:ORCP) said it has received notices of exercise in respect of certain pre-existing warrants to subscribe for, in aggregate, 2,000,000 new ordinary shares of 0.1p each in the capital of the company at a price of 0.25p per share. It said the exercise of these warrants amounts to an aggregate cash subscription of £5,000.

Salt Lake Potash Ltd (ASX:SO4) (LON:SO4) has received a major boost to its finances with a A$10 million strategic investment from Equatorial Resources Ltd (ASX:EQX) as part of a A$15 million placement of convertible notes to corporate and institutional investors. Equatorial has subscribed for A$10 million of unsecured convertible notes in the company following a detailed review by Equatorial focused on investigating opportunities related to Salt Lake’s current financing requirements and operational progress. Salt Lake Potash is in the final stages of completing a significant project financing that will support the development of its Lake Way Sulphate of Potash (SOP) Project in the Goldfields region of Western Australia.

Block Energy PLC (LON:BLOE), the exploration and production company focused on Georgia, has announced that, on July 1, 2020, it issued to directors/PDMRs, employees and a consultant nil-cost options over a total of 1,059,839 ordinary shares of 0.25p each. The options were issued in lieu of payment of cash for 40% of salaries, directors’ fees and consultancy fees for the month of June 2020, in accordance the cash conservation announced on April 7, 2020.

Gore Street Energy Storage Fund PLC (LON:GSF), London’s first listed energy storage fund supporting the transition to low carbon power, has announced an extension to the expected timetable announced on June 19. The company said it has been encouraged by the strong interest received from a wide range of investors to participate in the current fundraising, and in order to facilitate orders from some significant additional investors, the latest time for receipt of placing commitments has been extended by two business days to 3.00pm on Monday July 6, 2020. The new ordinary shares will still be eligible for the dividend announced on June 19, 2020, in respect of the period from January 1 to March 31, 2020. It added that the timetable for retail investors to participate via the PrimaryBid platform remains open until 3.00pm today.

Stobart Group Limited (LON:STOB) has confirmed its annual general meeting (AGM) will take place at 11.00am on Thursday, July 30, 2020, at the company’s London office: 15 Stratford Place, London W1C 1BE. Due to coronavirus (COVID-19), the AGM will be functional and shareholders will not be able to attend in person but can attend electronically, details for which are set out in the Notice of AGM. Shareholders are encouraged to exercise their right to vote and, accordingly, it is strongly recommended that shareholders vote by way of proxy, the group said.

Hardman & Co Research has issued a research note on Advanced Oncotherapy PLC (LON:AVO) entitled ‘End-goal fast approaching’. It says: “A recent equity issue, new loan facilities and some commercial announcements earlier in 2020 highlight the increasing confidence that is building in AVO’s ability to achieve its goal to deliver LIGHT in the near future.” The full report can be seen via the following link: https://www.hardmanandco.com/research/corporate-research/funded-through-to-clinical-events/

6.30am: Vaccine hopes set to lift the market

The FTSE 100 index is expected to bounce higher in early trade on Thursday as US and Asia markets rose overnight on coronavirus vaccine hopes, although all eyes later will be on US jobs data and the path for recovery from the pandemic.

Spread betting firm CMC Markets expects the blue-chip index to open around 40 points higher at 6,198, having shed 11.78 points on Wednesday.

Asian stocks tracked higher on Thursday, with Japan’s Nikkei ahead 0.4%, China’s blue-chip index up 0.6%, while Hong Kong’s Hang Seng index rose 1.7%. Meanwhile, on commodity markets, copper prices jumped to more than six-month highs on a better global outlook and supply fears in top producer Chile.

Overnight in New York, the Dow Jones Industrials Average ended around 78 points, 0.3% lower after some profit-taking following strong opening gains to close at 25,734..97.

But the broader S&P 500 index added 0.5%, and the tech-laden Nasdaq Composite gained 1.0% helped by a better than expected US ADP private payrolls report.

The big focus on Thursday, however, will be the June US jobs report brought forward by a day because of the Independence Day holiday weekend, meaning it will be announced on the same day as the more timely initial weekly jobless claims.

Head-scratching on jobs path

Michael Hewson, chief market analyst at CMC Markets UK commented: “Yesterday’s ADP payrolls report may well have come in slightly below expectations, at 2.37m jobs added, but it wasn’t that number that stole the headlines, it was the revision to the May number, that prompted a huge amount of head-scratching. In May, ADP reported that -2.76m jobs were lost, however in yesterday’s revision this was changed to 3.06m jobs added, a swing of nearly 6m jobs.

He added: “After the loss of a record 20m jobs in April, expectations were high that May’s non-farm payrolls report would produce further job losses in the millions, given how disappointing the ADP report a few days before had been. This belief was turned on its head, on both counts, as the BLS numbers for May confounded expectations with 2.5m jobs added, while yesterday we discovered that ADP revised their May numbers by a record 6m, prompting a head-wrenching turnaround to 3.06m jobs added.”

Hewson continued: “The extent of yesterday’s revision, suggests that we can expect further volatility later in the US jobs data in the days and weeks ahead, however it does offer hope that, over the course of the next few months, more furloughed staff will return to work.”

He concluded: “Expectations for today’s June employment report are for further jobs gains, though the estimates vary widely from just under a million to as high as 8m, though the consensus is for just over 3m. In light of the revision to the May ADP number we should also be mindful of a similarly significant revision here as well.  

“The unemployment rate is expected to fall from 13.3% to 12.5%, however before we get too carried away, while these job gains are very welcome, further progress could become much more difficult given the sharp rise in coronavirus infection rates we are already seeing in a number of US states, which has seen them either close back down, or delay their re-opening plans.”

ABF sees Primark tills ring once again

On the corporate front, Primark owner Associated British Foods PLC (LON:ABF) is expected to issue a trading update on Thursday, around two and a half weeks after outlets of the cheap clothing chain reopened for business amid a relaxation of UK lockdown restrictions.

Investors will be keen to hear about initial trading as hordes of UK consumers queued up for the company’s products, as well as how badly the closures during lockdown have the company’s bottom line.

Meggitt PLC (LON:MGGT) will also provide a trading update on Thursday, with the aerospace engineer now back as a FTSE 250 company again, with its relegation from the blue chip index confirmed last month as its shares have halved since the start of the year back to roughly where they were 13 years ago.

Despite being part of the consortium of engineering and manufacturing companies working on ventilators to help the NHS shortage amid the coronavirus pandemic, its civil aerospace business has been hit by a sharp drop in demand.

Significant events expected on Thursday July 2:

Trading updates: Associated British Foods PLC (LON:ABF), Meggitt PLC (LON:MGGT)

Finals: DS Smith plc (LON:SMDS)

FTSE 100 ex-dividends to knock 4.98 points off the index: Coca-Cola HBC AG (LON:CCH), Homeserve PLC (LON:HSV), National Grid PLC (LON:NG.)

Economic data: US non-farm payrolls, US weekly jobless claims

Around the markets:

  • Sterling: US$1.2490, up 0.1%
  • Gold: US$1,770.20 an ounce, down 0.2%
  • Brent crude: US$42.07 a barrel, up 0.1%

City headlines:

  • John Lewis is to permanently close up to 19 stores and warned staff to brace for mass redundancies and the loss of their prized annual bonus – The Daily Telegraph
  • Wigan Athletic have become the first professional club in England to fall into administration during the Covid-19 crisis – The Guardian
  • Spire Healthcare has admitted that one of its hospitals was involved in illegal fee fixing – The Times
  • Just a day after quitting as chief executive of London-listed Indivior, Shaun Thaxter, pleaded guilty to a criminal charge related to sales of opioid addiction treatments – Daily Mail
  • Foreign secretary Dominic Raab has launched a fresh broadside against HSBC over its support for a brutal crackdown in Hong Kong – The Daily Telegraph
  • Wirecard’s administrator said “numerous” companies have expressed interest in buying parts of the payments group – Financial Times
  • Ryanair pilots have agreed to take a 20% pay cut as part of efforts to avoid up to 3,000 job cuts at Europe’s biggest budget airline – The Guardian
  • Tesla has overtaken Toyota to become the world’s most valuable carmaker by market value – Financial Times
  • Google has told US employees to work from home for another two months as coronavirus infections spike across the US – The Times
  • Macy’s slumped to a $3.6 billion first-quarter loss as it was forced to close all of its stores – The Times
  • Volvo Cars has confirmed it is recalling 2.2 million vehicles worldwide due to an ‘extremely rare’ seatbelt safety issue, which impacts almost 170,000 UK cars – Daily Mail
  • Equinor, Norway’s state oil giant, has revealed plans to build the world’s biggest hydrogen production plant with carbon capture and storage technology near Hull – The Times