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London open: Stocks rise on US jobs report, Chinese stimulus
London stocks rose in early trade on Monday, with sentiment underpinned by Chinese stimulus measures and expectations the US Federal Reserve will pause on rates this month.
At 0930 BST, the FTSE 100 was up 0.6% at 7,511.46.
US markets will be closed for Labor Day.
Russ Mould, investment director at AJ Bell, said: “Investors are growing warm to the idea that the Federal Reserve might not rush to raise interest rates again at its next meeting. An increase in unemployment for August and lower than expected wage growth suggest the Fed may sit on its hands and make no change to rates/
“Judging by the messages from US corporates regarding a slowdown in trading, it does feel like we could be at a turning point for monetary policy. Nonetheless, it is impossible to say for certain what the Fed will do, given these are only data points from a brief period of time.
“Sentiment across Asian markets improved after the weekend vote by creditors in favour of restructuring a bond repayment by troubled Chinese property developer Country Garden. Chinese authorities also lowered downpayment requirements for first and second-time home buyers, thereby providing yet another stimulus initiative to drive greater economic growth.”
In equity markets, miners rallied, with Glencore, Rio Tinto and Anglo American all up, while Asia-focused insurer Prudential also advanced.
Engineering company Wood Group rose after saying it had struck a $330m services agreement with North Sea oil and gas producer Harbour Energy.
Online trading platform CMC Markets edged lower as it announced the appointment of Albert Soleiman as chief financial officer, replacing Euan Marshall, who has retired from the board.
Outside the FTSE 350, Ergomed surged after the biopharmaceutical services group agreed to be bought by private equity firm Permira for around £703.1m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | +3.53% | +16.00 | 469.40 |
| 2 |  |
Easyjet Plc | +3.08% | +13.10 | 438.10 |
| 3 |  |
Glencore Plc | +2.56% | +10.95 | 438.10 |
| 4 |  |
Anglo American Plc | +2.32% | +49.50 | 2,185.50 |
| 5 |  |
Rio Tinto Plc | +2.08% | +103.50 | 5,076.00 |
| 6 |  |
Melrose Industries Plc | +2.05% | +10.60 | 526.80 |
| 7 |  |
Bhp Group Limited | +2.02% | +46.50 | 2,350.50 |
| 8 |  |
Pearson Plc | +1.88% | +15.80 | 855.60 |
| 9 |  |
Burberry Group Plc | +1.88% | +41.00 | 2,223.00 |
| 10 |  |
Rolls-royce Holdings Plc | +1.69% | +3.70 | 222.80 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Vodafone Group Plc | -0.99% | -0.73 | 72.87 |
| 2 |  |
Johnson Matthey Plc | -0.84% | -15.00 | 1,775.50 |
| 3 |  |
Fresnillo Plc | -0.77% | -4.40 | 564.80 |
| 4 |  |
Direct Line Insurance Group Plc | -0.76% | -1.20 | 157.60 |
| 5 |  |
Admiral Group Plc | -0.41% | -10.00 | 2,420.00 |
| 6 |  |
British Land Company Plc | -0.29% | -0.90 | 313.60 |
| 7 |  |
Marks And Spencer Group Plc | -0.26% | -0.60 | 227.60 |
| 8 |  |
Coca-cola Hbc Ag | -0.18% | -4.00 | 2,249.00 |
| 9 |  |
Bt Group Plc | -0.17% | -0.20 | 115.20 |
| 10 |  |
Gsk Plc | -0.16% | -2.20 | 1,385.40 |
US close: Markets rise after jobs data, but gains limited
US stock markets finished with small gains on Friday ahead of the long weekend after a crucial jobs report raised hopes that the Federal Reserve’s current rate-raising cycle is finally over.
“[A] softening US jobs market suggests the Fed’s work is done”, according to economist James Knightley from ING Bank after economic data showed big downwards revisions to job creation over recent months and an unexpected uptick in the jobless rate.
“The US August jobs report shows modest jobs growth, benign wage pressures and a large jump in the unemployment rate as the labour market slackens. With inflation set to continue slowing, the Fed is surely not hiking interest rates in September and is unlikely to do so in November either,” Knightley said.
The data was broadly met with positivity on stock markets, though gains were capped as 10-year Treasury yields rose 7.1 basis points at 4.182%.
The Dow Jones Industrial Average finished 0.3% higher at 34,838, the S&P 500 gained 0.2% to 4,516, while the Nasdaq was flat at 14,032. Wall Street is closed on Monday for Labor Day.
According to the Bureau of Labor Statistics, non-farm payrolls rose by 187,000 from July, well ahead of the 170,000 consensus forecast, but data for July was revised down to 157,000 from 187,000 initially reported and June’s figures were revised to 105,000 from 185,000 initially.
The unemployment rate pushed up to 3.8% in August from 3.5% the month before, versus expectations for no change. The figures also showed that average hourly earnings rose just 0.2% on the month.
Meanwhile, the ISM manufacturing purchasing managers’ index was also released, showing that the contraction in activity lessened slightly last month, with the PMI improving from 46.4 to 47.6. While a level below 50 still indicates a decline, the consensus forecast was 47.
Dell soars
Tech giant Dell surged over 21% after delivering second-quarter adjusted earnings of $1.74 per share, up just 4% year-on-year but well ahead of the $1.14 expected by analysts. Management also gave stronger-than-expected guidance for the current quarter and full year.
Workout gear group Lululemon was also in demand, rising 6% after impressing with its quarterly results, raising its forecasts after a strong performance in China.
Eos Energy Enterprises was a big mover, jumping 18% after the energy storage company received a loan commitment of nearly $400m from the Department of Energy.
Monday newspaper round-up: AI lab, fuel prices, pension contributions
About 7,000 businesses are likely to fail every quarter in 2024 as high interest rates cause financial strain and the UK economy enters recession, according to a thinktank. The Centre for Economics and Business Research said debt taken on during the pandemic, higher borrowing costs and the cost of living crisis would drive an increasing number of businesses under, particularly in the retail and hospitality sectors. – Guardian
Officials are scrambling to secure extra electricity capacity for the likely home of Britain’s new sovereign artificial intelligence (AI) lab, amid fears the overloaded grid could undermine Rishi Sunak’s ambitions for the technology. The Prime Minister is understood to have become personally interested in efforts to secure extra grid capacity for a supercomputing lab in Bristol, which is the leading contender for a taxpayer-funded £100m “AI Research Resource”. – Telegraph
Drivers had to stomach one of the largest monthly fuel price rises in more than two decades in August, new data shows. The average price of petrol jumped up by 6.68p a litre last month to 145.57p, adding nearly £4 to the cost of a tank. Diesel shot up by 8p to 154.37p on average, adding nearly £4.50 to the cost of filling up. The increase for petrol was the fifth biggest monthly jump in 23 years, according to the RAC, while the rise in diesel was the sixth biggest monthly rise. – Telegraph
The boss of one of Britain’s biggest fund managers has called for a doubling of minimum pension contributions from 8 per cent of pay to 16 per cent in what would amount to a huge change to the retirement saving rules. Stephen Bird, the chief executive of Abrdn, said millions of people were heading for an inadequate income in retirement because the present minimum 3 per cent contribution from employers and 5 per cent from employees was not nearly enough. – The Times
Millions of low-paid British workers should be given extra legal protections to boost their wages and job security, according to a leading think tank. The Resolution Foundation wants “good work agreements” between private sector companies and employees in industries that suffer from low pay and poor working conditions. – The Times
