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London close: Stocks finish red as US jobs data beats expectations

By Josh White

Date: Friday 05 Jul 2019

London close: Stocks finish red as US jobs data beats expectations

(Sharecast News) - London stocks finished Friday's session in the red, as investors digested better-than-expected US non-farm payrolls data, with miners and housebuilders under pressure.
The FTSE 100 ended the day down 0.66% at 7,553.14, and the FTSE 250 fell 0.72% to 19,655.27.

In currencies, sterling was last 0.59% weaker against the dollar at $1.2505, and 0.04% stronger on the euro at €1.1151.

Hiring in the US picked up by a greater-than-expected 224,000 in June, leading some economists to question whether the US Federal Reserve would cut short-term interest rates when it next meets at the end of July.

That compared to forecast rise of 158,000, and followed a downwardly-revised gain of 72,000 during May and an average 183,000 increase over the previous three-month stretch.

"The continued tightening of the labour market points to a gradual upward trend ahead [in wage growth], but nothing that will stop the Fed operating its policy of responding to tighter financial conditions with jawboning, dot manipulation, and, ultimately, lower rates," said Ian Shepherdson at Pantheon Macroeconomics.

"The economy does not need the Fed to ease, but the market continues to scream for action on July 31."

CMC Markets analyst Michael Hewson earlier wrote that the payrolls report had the potential to "upset the apple cart" over the prospect of a Fed rate cut, and whether it would be 25 or 50 basis points.

"Currently market pricing is at a 100% certainty that we will get some form of move from the FOMC when they meet at the end of this month, despite data that while by and large is a little softer, isn't screaming economic slowdown," Hewson said.

On home turf, the latest survey from Halifax showed that house prices fell slightly in June but the annual trend strengthened.

Prices dipped 0.3% last month to an average of £237,110 following a 0.4% increase in May.

For the three months to June, prices were up 5.7% from a year earlier after rising 5.2% in the three months to May.

Halifax said the 5.7% annual growth figure was affected by particularly low growth a year earlier, with house prices 2.4% higher in the three months to June than in the preceding three months.

The figures appeared to show property prices holding up reasonably well amid political and economic uncertainty.

But other surveys had been weaker, including rival lender Nationwide's figures, which showed an annual percentage rise of just 0.6%.

"Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average," said Russell Galley, Halifax's managing director.

But Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the Halifax figures made little sense.

"Halifax's data remain implausibly strong and irreconcilable with all other measures of house price growth.

"The housing market has little momentum, though a modest revival later this year is likely if lenders reduce mortgage rates in response to the recent fall in their funding costs."

In equity markets, miners were under the cosh amid falling iron ore and copper prices, with iron prices hit by the news that China's top mills had formed a group to investigate whether "non-market factors" were causing a surge in prices.

It was reported they had called on the government to maintain market stability.

Rio Tinto was down 3.83%, Anglo American fell 2.46%, Antofagasta was 2.93% weaker, Glencore slipped 1.16%, and BHP was off 2.75%.

Building materials supplier SIG was down 5.29% after it said weak construction markets in the UK and Ireland led to a 3.8% fall in first half like-for-like sales.

Housebuilders took a knock following SIG's update, with Persimmon down 2.11%, Taylor Wimpey off 1.15% and Berkeley Group falling 1.85%.

Ferrexpo was also in the red, sliding 4.61% even after it reported a 5% increase in first-half iron pellet production and reiterated its full-year guidance.

Spectris shares were down 5.89% after Bank of America Merrill Lynch double-downgraded its recommendation to 'underperform'.

Wood Group went the other way, rising 2.88% after it was boosted by an upgrade to 'buy' from 'hold' at Berenberg.

Outside the FTSE 350, aviation services business John Menzies saw its shares tumble 9.83% after it warned over its full-year earnings, pointing to challenges in the wider aviation market such as weak cargo volumes and flight reductions.

Shares of Funding Circle racked up healthy gains of 5.39%, having slumped earlier in the week after the lender halved its forecast for 2019 revenue growth.

Market Movers

FTSE 100 (UKX) 7,553.14 -0.66%
FTSE 250 (MCX) 19,655.27 -0.72%
techMARK (TASX) 3,710.26 -1.08%

FTSE 100 - Risers

Just Eat (JE.) 642.20p 2.78%
Sainsbury (J) (SBRY) 205.30p 2.39%
TUI AG Reg Shs (DI) (TUI) 802.00p 1.37%
Vodafone Group (VOD) 134.64p 1.29%
Fresnillo (FRES) 880.40p 1.13%
Tesco (TSCO) 237.30p 1.02%
NMC Health (NMC) 2,484.00p 0.98%
Barclays (BARC) 157.22p 0.81%
Kingfisher (KGF) 221.70p 0.77%
Royal Bank of Scotland Group (RBS) 226.10p 0.71%

FTSE 100 - Fallers

Rio Tinto (RIO) 4,723.50p -3.83%
Evraz (EVR) 629.00p -3.68%
Aveva Group (AVV) 3,930.00p -3.25%
Antofagasta (ANTO) 882.80p -2.93%
Experian (EXPN) 2,365.00p -2.91%
Micro Focus International (MCRO) 2,099.50p -2.80%
BHP Group (BHP) 1,955.60p -2.75%
Anglo American (AAL) 2,137.50p -2.46%
Spirax-Sarco Engineering (SPX) 9,040.00p -2.22%
London Stock Exchange Group (LSE) 5,656.00p -2.21%

FTSE 250 - Risers

Funding Circle Holdings (FCH) 136.80p 5.39%
Bank of Georgia Group (BGEO) 1,535.00p 4.14%
Energean Oil & Gas (ENOG) 993.00p 3.98%
Rank Group (RNK) 164.60p 2.87%
Wood Group (John) (WG.) 487.40p 2.87%
Drax Group (DRX) 276.60p 2.83%
Pantheon International (PIN) 2,250.00p 2.74%
Vivo Energy (VVO) 126.20p 2.60%
IP Group (IPO) 75.10p 2.32%
Intu Properties (INTU) 78.04p 2.20%

FTSE 250 - Fallers

Victrex plc (VCT) 1,995.00p -7.89%
Renishaw (RSW) 4,026.00p -5.93%
Spectris (SXS) 2,720.00p -5.78%
Ferrexpo (FXPO) 258.00p -4.90%
SIG (SHI) 126.10p -4.76%
Kaz Minerals (KAZ) 555.40p -3.68%
Polypipe Group (PLP) 435.80p -3.54%
Lancashire Holdings Limited (LRE) 703.50p -3.03%
Aston Martin Lagonda Global Holdings (AML) 1,036.80p -2.83%
Balfour Beatty (BBY) 242.20p -2.73%

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