London close: Stocks finish flat after US nonfarms surprise

(Sharecast News) - London's benchmark finished pretty close to flat on Friday, as investors - sweltering in an August heatwave - digested a surprisingly positive US nonfarm payrolls report, released during the afternoon.
The FTSE 100 ended the session up 0.09% at 6,032.18, and the FTSE 250 was 0.82% firmer at 17,622.93.

Sterling was mixed by the late afternoon, last trading 0.77% weaker against the dollar at $1.3042, but strengthening 0.05% on the euro to €1.1073.

"A consistently better than forecast set of jobs figures out of the US helped shield the markets from the latest US-China TikTok turmoil," said Spreadex analyst Connor Campbell.

"It may not be the kind of market-shocking report seen a couple of months ago, and the slowdown in jobs creation is a worry given the US is nowhere near recouping those lost in April, but it was solid enough to keep the Dow Jones at a steady rather than accelerated decline."

According to the nonfarms, hiring in the US slowed last month, but by less than expected by many observers on Wall Street.

The Department of Labor said payroll growth in the country printed at 1.763m in July, down from 4.791m for June.

Consensus forecasts were for an increase of 1.635m, but the so-called 'whisper' number in financial markets was around 1.1m.

Meanwhile, the unemployment rate, derived from a separate survey, dropped to 10.2% for July from 11.1% in June, and against consensus forecasts for a measure of 10.5%.

"The president's 'crystal ball' proved to be correct, perhaps unsurprisingly, and the headline non-farms figure beat forecasts, knocking the ADP miss out of investors' minds," saig IG chief market analyst Chris Beauchamp.

"Wages also rose, and the unemployment rate dropped. All this is welcome, but the US economy has much further to go before it makes a full recovery, and with other measures such as small business activity and credit card spending plateauing investors know that there is much more work to be done.

"At least things aren't getting much worse however, and the focus on both sides of the Atlantic will remain on how to move back to a more normal mode of life, which is still the most important thing for financial markets."

In the background meanwhile, traders were holding their breath ahead of a self-imposed deadline by US lawmakers later in the global day to thrash out an agreement on a fourth coronavirus stimulus package in the US.

There was also concern around the US-China geopolitical situation, after the Trump administration imposed a vague ban overnight on US residents and businesses from working with Chinese technology companies Tencent and ByteDance - owners of the WeChat and TikTok apps, respectively - starting 45 days from now.

A mixed reading on Chinese foreign trade for July was also dragging on shares, as the year-on-year rate of growth in dollar-denominated exports from the People's Republic picked up to 7.2% in July from 0.5% for June, and against consensus expectations for a fall of 0.5%.

The data for imports, however, slipped to a decline of 1.4% from 2.7% growth in June, with traders anticipating a rise of 0.9% there.

Despite the dip in imports, which is directly tied to domestic demand, Capital Economics' Martin Rasmussen judged that China's recovery was set to continue "in coming months" thanks to the stimulus put in place by Beijing and given the continued acceleration in credit growth.

The boost to exports from foreign demand for Covid-19-related equipment on the other hand was likely to fade, Rasmussen added.

On a positive note, house prices across the UK hit their highest mark in the history of the Halifax house price index in July, adding to the emerging view that the market is experiencing a surprising spike post lockdown.

House prices hit an average of £241,604 across the UK in July - up 1.6% month-on-month and 3.8% higher year-on-year as pent-up demand from lockdowns continues to be released into a largely open housing market.

A low supply of available homes also helped to exert upwards pressure on house prices.

In equity markets, Hargreaves Lansdown was up 2.19% after it posted a much better than expected full-year performance, contributing to a hike in its dividend payout.

Revenues over the year ending on 30 June grew by 15% to £550.9m, driving an 11% jump in underlying profits before tax to £339.5m.

Assets under administration, meanwhile, printed at £104bn, thanks to an improved market performance.

Online real estate agency Rightmove was 9.12% firmer, even after it posted a sharp fall in half-year profits and agency branches, reflecting the impact of the coronavirus lockdown.

It also reported a cautiously optimistic outlook from trading in July.

Operating profit fell 43% to £61.7m on revenue of £98m, a fall of 34%, while membership numbers for agency branches and new home developments combined were 3.3% lower than at the start of the year, at 19,158.

Standard Life Aberdeen managed gains of 0.65% after it proposed an unchanged dividend, as the investment manager reported a 30% drop in first-half profit and declining revenue.

Adjusted pretax profit for the six months to the end of June fell to £195m from £280m as fee-based revenue dropped 13% to £706m.

On the downside, TP ICAP was 7.68% weaker after it reported an improvement in underlying revenue, to £990m for the six months ended 30 June, from £922m a year earlier.

The FTSE 250 company said its operating profit was up marginally to £159m from £158m, while basic earnings per share were 19.9p, rising from 19.3p.

It said a 5.6p per share interim dividend would be paid on 6 November, in line with the interim dividend last year.

Market Movers

FTSE 100 (UKX) 6,032.18 0.09%
FTSE 250 (MCX) 17,622.93 0.82%
techMARK (TASX) 3,860.64 1.54%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,393.00p 10.94%
Rightmove (RMV) 630.60p 9.14%
Melrose Industries (MRO) 101.30p 3.62%
Aveva Group (AVV) 4,505.00p 2.99%
Smith & Nephew (SN.) 1,581.00p 2.96%
Intertek Group (ITRK) 5,810.00p 2.94%
Berkeley Group Holdings (The) (BKG) 4,512.00p 2.73%
Avast (AVST) 597.00p 2.67%
Rentokil Initial (RTO) 541.40p 2.25%
Hargreaves Lansdown (HL.) 1,865.00p 2.19%

FTSE 100 - Fallers

Glencore (GLEN) 174.56p -3.21%
Fresnillo (FRES) 1,294.00p -2.74%
BP (BP.) 287.25p -2.71%
Pearson (PSON) 590.20p -2.45%
Coca-Cola HBC AG (CDI) (CCH) 2,110.00p -2.44%
Anglo American (AAL) 1,887.80p -2.17%
Royal Dutch Shell 'A' (RDSA) 1,154.60p -1.80%
Royal Dutch Shell 'B' (RDSB) 1,116.80p -1.74%
Lloyds Banking Group (LLOY) 27.79p -1.33%
Aviva (AV.) 293.60p -1.31%

FTSE 250 - Risers

Spirent Communications (SPT) 304.00p 10.95%
Marshalls (MSLH) 653.50p 4.81%
Greencore Group (GNC) 130.50p 4.78%
Greggs (GRG) 1,433.00p 4.51%
FirstGroup (FGP) 38.60p 4.47%
Aggreko (AGK) 430.60p 4.34%
Ascential (ASCL) 294.60p 4.10%
PayPoint (PAY) 636.00p 4.09%
FDM Group (Holdings) (FDM) 1,038.00p 4.01%
UDG Healthcare Public Limited Company (UDG) 745.50p 3.98%

FTSE 250 - Fallers

TP ICAP (TCAP) 313.20p -7.68%
Bank of Georgia Group (BGEO) 777.00p -6.27%
Airtel Africa (AAF) 56.40p -4.08%
Hochschild Mining (HOC) 301.40p -3.40%
Provident Financial (PFG) 179.80p -2.81%
Investec (INVP) 143.95p -2.80%
easyJet (EZJ) 575.00p -2.71%
TBC Bank Group (TBCG) 797.00p -2.56%
Kaz Minerals (KAZ) 572.20p -2.35%
Bodycote (BOY) 561.50p -2.35%