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London open: Stocks edge down ahead of payrolls
London stocks were a little lower in early trade on Friday, unable to hold on to opening gains as nervousness crept in ahead of the latest US non-farm payrolls report.
At 0820 GMT, the FTSE 100 was down 0.2% at 7,680.89.
Stocks in the US closed higher after Federal Reserve chair Jerome Powell signalled in remarks to the Senate Banking Committee that interest rates may be cut soon.
Responding to a question about rates and inflation, he said: “We’re waiting to become more confident that inflation is moving sustainably at 2%. When we do get that confidence, and we’re not far from it, it’ll be appropriate to begin to dial back the level of restriction.”
Looking ahead to the rest of the day, the focus will shift to the payrolls report, unemployment rate and average earnings, all due at 1330 GMT.
Richard Hunter, head of markets at Interactive Investor, said: “With little to upset the applecart, US markets powered to new record highs as peak optimism continued to drive buying interest.
“Investors have been reassured over recent days following Federal Reserve Chair Powell’s comments to lawmakers, which have contained no negative surprises. Most pertinently, the Fed stands prepared to reduce interest rates this year when circumstances dictate, and implied that such a move is not far away, even though there is no immediate rush to ease monetary policy in light of consistently favourable economic data.
“Indeed, the relatively benign backdrop will be put to the test again today with the release of the non-farm payrolls report. Investors will be hoping to see employment beginning to slow, while remaining solid, while also keeping an eye on wage growth which itself is inflationary. The data is expected to show that 200,000 jobs were added in February, following the previous month’s blowout number of 353,000, while unemployment is likely to remain unchanged at 3.7%.”
In equity markets, there was more deal news for investors to sink their teeth into after packaging firm Mondi agreed to buy smaller rival DS Smith for £5.1bn. In a joint statement, the companies said that the agreement in principle has an implied value of 373p per DS Smith share, which is a premium of 33% to the closing share price on Thursday.
DS Smith was firmly in the black but Mondi shares were trading lower.
Informa was the top gainer on the FTSE 100 as it upped 2024 guidance after strong growth in overseas markets boosted full-year revenues and profits.
The specialist B2B events organiser and publisher saw revenues jump 41% in the year to December end to £3.19bn, while adjusted operating profit was £853.8m, compared to £496.3m a year previously. Pre-tax profits surged £492.1m from £168.8m.
Mike Ashley’s Frasers Group lost ground as it confirmed the closure of Matchesfashion after just two months of ownership.
Currys was also a little weaker after it said Greek regulators had approved the sale of its Greece and Cyprus retail business Kotsovolos to Public Power Corporation for an enterprise value of €200m (£175m). The UK electrical retailer said it expected to get around £156m net from the deal and use the cash to pay down debt.
In broker note action, PZ Cussons slumped after Barclays downgraded shares of the Imperial Leather maker to ‘equalweight’ from ‘overweight’. However, Irn-Bru maker AG Barr fizzed higher after an upgrade to ‘equalweight’ from ‘underweight’ by the same outfit.
Outside the FTSE 350, Petrofac surged after it was awarded a $200m, three-year operations contract from Turkemengas at the Galkynysh Gas Field, in Turkmenistan.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smith (ds) Plc | +6.83% | +22.20 | 347.40 |
| 2 |  |
Informa Plc | +1.42% | +11.40 | 817.00 |
| 3 |  |
Itv Plc | +1.37% | +0.94 | 69.32 |
| 4 |  |
Anglo American Plc | +1.31% | +24.40 | 1,881.80 |
| 5 |  |
Shell Plc | +1.01% | +25.00 | 2,507.00 |
| 6 |  |
Prudential Plc | +0.97% | +7.60 | 788.80 |
| 7 |  |
Bp Plc | +0.85% | +4.05 | 480.10 |
| 8 |  |
Smurfit Kappa Group Plc | +0.85% | +28.00 | 3,324.00 |
| 9 |  |
Segro Plc | +0.82% | +7.20 | 887.60 |
| 10 |  |
Flutter Entertainment Plc | +0.67% | +115.00 | 17,235.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | -3.35% | -16.90 | 487.30 |
| 2 |  |
Spirax-sarco Engineering Plc | -2.44% | -260.00 | 10,400.00 |
| 3 |  |
Ocado Group Plc | -2.42% | -11.10 | 447.20 |
| 4 |  |
Melrose Industries Plc | -2.01% | -12.40 | 605.00 |
| 5 |  |
Mondi Plc | -1.99% | -27.50 | 1,352.50 |
| 6 |  |
Tui Ag | -1.90% | -11.00 | 566.50 |
| 7 |  |
Marks And Spencer Group Plc | -1.80% | -4.40 | 239.90 |
| 8 |  |
Centrica Plc | -1.62% | -2.15 | 130.80 |
| 9 |  |
Smith & Nephew Plc | -1.56% | -17.00 | 1,070.50 |
| 10 |  |
Barclays Plc | -1.40% | -2.42 | 170.64 |
US close: S&P 500 hits new record after Powell comments
US stock markets rose on Thursday, with the S&P 500 notching another record high on the back of strong gains for tech stocks, after comments from the head of the Federal Reserve raised hopes that interest-rate cuts were nearing a reality.
The S&P 500 reached a new high of 5,157.36, rising 1.03% on the day, surpassing a previous peak of 5,137.08 reached on 1 March. The Dow finished up 0.34%, while the tech-heavy Nasdaq jumped 1.5% with six of the Magnificent Seven stocks finishing with gains.
Sentiment was being boosted by Federal Reserve chair Jerome Powell who said that the central bank would consider “carefully removing” its restrictive stance as long as data keeps moving in the right direction. In a testimony on Capitol Hill, Powell said policymakers were “not far” from gaining the confidence needed to cut rates.
“Powell said that the Fed was not yet ready to cut. But he also said that the central bank wasn’t looking for better inflation readings than those seem recently, just a longer run of them,” said David Morrison, senior market analyst at Trade Nation.
It’s a busy week for labour-market data releases: Wednesday’s ADP employment report was broadly in line with forecasts; job openings were little changed showing that hiring demand was still relatively strong; while jobless claims were unchanged from the prior week’s upwardly revised reading of 217,000. Friday will see the all-important non-farm payrolls survey, which is expected to show that job growth cooled from January’s forecast-beating print of 353,000 to 200,000 in February.
In other news, the US trade deficit in goods widened to $90.20bn in January, up from a revised print of $87.89bn in December, according to the Census Bureau. Imports rose by 1.1%, driven by sales of capital goods and vehicles, while exports increased at a much slower rate of 0.2% amid declines in exports of industrial supplies, as well as foods, feeds and beverages.
Kroger and Novo Nordisk jump
Supermarket group Kroger surged 10% after smashing estimates with fourth-quarter profits, with adjusted earnings per share coming in at $1.34 against the $1.13 expected.
US shares in Novo Nordisk jumped after the Danish pharmaceutical firm detailed promising trial data for its experimental anti-obesity drug amycretin.
Victoria’s Secret slumped nearly 30% after the lingerie retailer disappointed the market with sales guidance for the first quarter and full year, while sector peer American Eagle Outfitters underwhelmed with a forecast-beating fourth quarter.
Friday newspaper round-up: Big banks, British savers, Bet365
Jeremy Hunt and Rachel Reeves are joined in a “conspiracy of silence” over tens of billions of pounds in tough tax and spending choices, with the next government likely to inherit the toughest outlook for the public finances in 80 years, Britain’s leading economics thinktank has warned. The Institute for Fiscal Studies said the chancellor’s budget on Wednesday had laid the ground for “staggeringly hard choices” due after the general election for whichever party forms the next government. – Guardian
Snaking queues outside Northern Rock have become the enduring image of Britain’s financial crisis. Now the ghost of the old lender threatens to haunt the country’s banks yet again. Nationwide’s proposed £2.9bn acquisition of Virgin Money, which includes the remnants of Northern Rock, threatens to reshape the financial services sector and challenge the dominance of Britain’s six biggest lenders. – Telegraph
The death of cash has raked in an extra £12bn for Jeremy Hunt as card and digital payments make it harder for people to dodge tax. Richard Hughes, chairman of the Office for Budget Responsibility (OBR), said the shift away from notes and coins had proven lucrative for the taxman because it was now harder to avoid value added tax (VAT). – Telegraph
British savers withdrew £24.3 billion from funds in what was only the second year of outflows, as investors sought to free up cash amid the cost of living crisis. Equity funds performed the worst, suffering £22 billion in outflows as British companies remained out of favour with investors, according to data from the Investment Association. – The Times
One of the world’s wealthiest women is facing a formal investigation of her Bet365 gambling empire over possible breaches of anti-money laundering and counter-terrorism financing laws. Bet365, founded by Denise Coates, 56, is being investigated by the Australian Transaction Reports and Analysis Centre, or Austrac, a financial crime watchdog, over allegations that the bookmaker breached the law. – The Times
