LONDON (Alliance News) - Stocks across the globe ended higher on Friday as a sharp slowdown in US job growth in May fuelled speculation that the Federal Reserve could cut interest rates sooner rather than later.The FTSE 100 index closed up 72.09 points, or 1.0% at 7,331.94, ending the week up 2.4%.The FTSE 250 index closed up 166.87 points, or 0.9% at 19,232.39, ending the week up 1.4% and the AIM All-Share closed up 2.84 points, or 0.3% at 938.43, ending the week down 2.4%.The Cboe UK 100 ended up 0.9% at 12,428.81, the Cboe UK 250 closed up 0.6% at 17,229.28, while the Cboe Small Companies ended up 0.1% at 11,731.31."Investors continue to pile into equities, with the jobs report and subsequent stock rally capping a very good week for equity markets. The headline figure provided reason for concern, although it was still higher than the ADP shocker of earlier in the week, but it is still towards the lower bound of results, which usually tend to oscillate between 100,000 and 300,000. This number won't spook the Fed into cutting rates any time soon, but it perhaps gets filed away in 'things to monitor', along with the slight drop in wage growth. Stocks have been sold off over the past few weeks amid the ongoing US-China trade spat and after US President Donald Trump added Mexico to his tariff hit list. "Having recouped some of May's losses, equities look primed for more upside, especially if some of the money that has gushed out of equity funds over the past few weeks starts to come back. Investors once again look to have panicked too early, taking flight at a perfectly normal pullback, and one that came right after a relentless 20% rally in the first four months of the year," said IG Group's Chris Beuachamp. Markets were given an additional boost after Mexico and the US reported progress in their talks on illegal migration, but Washington said it was not yet sufficient to prevent Trump from slapping a tariff on all Mexican imports."According to the futures market there is now a 98% probability the US central bank will cut theirs by the end of the year. This lifted the equity market as the week went along which got a boost from news that the imposition of tariffs on Mexican imports is likely to be delayed with encouraging talks between the two sides," said the Share Centre. Stocks in New York were sharply higher at the London equities close amid optimism that disappointing US jobs data could prompt the Federal Reserve to lower interest rates in the near future.The DJIA was up 1.2%, the S&P 500 index up 1.3% and the Nasdaq Composite up 1.7%.The Labor Department's closely watched monthly jobs report released before the start of trading showed a substantial slowdown in the pace of US job growth in the month of May.The report said non-farm payroll employment rose by 75,000 jobs in May after soaring by a downwardly revised 224,000 jobs in April.Economists had expected employment to increase by about 185,000 jobs compared to the jump of 263,000 jobs originally reported for the previous month."The soft 75,000 gain in non-farm payrolls in May wasn't quite as bad as the dismal ADP employment reading earlier this week but, along with the downward revisions to previous months, it is another sign that economic growth is slowing," said Andrew Hunter, Senior US Economist at Capital Economics.Meanwhile, the unemployment rate came in at 3.6% in May, unchanged from the previous month and in line with economist estimates.Rupert Thompson, head of research at Kingswood, said: "These figures follow a larger than expected decline in manufacturing business confidence reported earlier in the week and appear to confirm a loss of momentum in the economy. Indeed, GDP growth in the second quarter looks likely to be no more than a sluggish 1.5% or so, down from 3.1% in the first quarter. With Fed officials this week confirming that the Fed was ready to act if downside risks to the growth materialise, these numbers can only reinforce market expectations that the Fed may end up cutting rates twice or even three times later this year."In the FTSE 100, Hargreaves Lansdown found some respite, closing up 2.1.The fund supermarket's shares were down 14% for the week after high profile fund manager Neiil Woodford suspended trading in his flagship investment fund due to investor exodus Monday. Hargreaves is among the biggest backers of Woodford Equity Income Fund, run by Woodford.At the other end of the large cap index, Rio Tinto closed down 0.6% after Barclays cut the miner to Underweight from Equal Weight. In the FTSE 250, Millennium & Copthorne Hotels ended as the star performer, up 36% at 680.00 pence after Singapore-based real estate group City Developments made a final 685p per share cash takeover offer for the London-listed hotel operator.The offer represents a premium of 37% to M&C's closing share price of 500p on Thursday, valuing the company at about GBP2.23 billion. City Development's previous takeover offer was rebuffed earlier this year. At the other end of the midcap index, Woodford Patient Capital Trust closed down 3.4%, ending the week 18% lower. This week, things went from bad to worse for Woodford after FTSE 100-listed wealth manager St James's Place removed Woodford as manager of certain funds to ensure "clients' investments continue to be managed effectively." The pound was quoted at USD1.2760 at the London equities close, higher than USD1.2721 at the close Thursday, as the dollar fell following the disappointing nonfarms figures. In Paris the CAC 40 ended up 1.6%, while the DAX 30 in Frankfurt ended up 0.8%. The euro stood at USD1.1328 at the European equities close, up from USD1.1292 late Thursday.Brent oil was quoted at USD62.55 a barrel at the equities close, up from USD60.52 at the close Thursday. Gold was quoted at USD1,345.51 an ounce at the London equities close, higher than USD1,335.70 late Thursday, amid dollar weakness. "Gold has had a stellar week on the back of rate cut speculation. The precious metal was up another 0.5% as it heads into the weekend 3.3% higher, its third straight week of gains. Expectations that the Fed will loosen policy potentially as soon as July, is driving flows towards non-yielding gold," said City Index analyst Fiona Cincotta. The economic events calendar on Monday has Japan GDP readings at 0050 BST, China trade figures at 0300 BST and UK industrial and manufacturing production data at 0930 BST. Financial markets in China and Hong Kong reopen after being closed for the Dragon Boat festival on Friday. The UK corporate calendar on Friday has third-quarter results from plumbing and heating products supplier Ferguson, and annual results from video game developer Codemasters Group.
19 Feb 2016 08:34
