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(Alliance News) - Stocks in London ended sharply higher on Friday following a stellar US jobs report and positive comments from the US in the seemingly endless soap opera that is the US-China trade war.
In the latest twist, a partial trade pact with China remains close at hand, a top White House economic aide said Friday, days before another round of US tariffs is due to take effect.
"The deal is still close," National Economic Council Director Larry Kudlow told CNBC. "It is probably even a wee bit closer than when I first made that statement in November". He described the talks underway with Beijing as "intense," adding that they occur almost daily.
The FTSE 100 index closed up 101.81 points, or 1.4% at 7,239.66, ending the week down 1.5%. The FTSE 250 ended up 225.70 points, or 1.1% at 20,933.03, ending the week up 0.6%, and the AIM All-Share closed up 2.34 points, or 0.3% at 908.39, ending the week down 1.6%.
The Cboe UK 100 index finished up 1.4% at 12,275.55. The Cboe UK 250 closed up 1.2% at 18,850.53 and the Cboe UK Small Companies ended up 0.2% at 11,421.44.
In Paris the CAC 40 ended up 1.2%, while the DAX 30 in Frankfurt ended up 0.9%.
"Once again, stocks have been handed the economic news to power the rally higher. Trade war headlines are the volatility-provoking noise, but it is the drumbeat of good US economic figures and decent earnings that have been the real engine for the S&P 500. The concerns of Monday and Tuesday have been banished, as the equity market rebounds once again," IG Group's Chris Beauchamp said.
Stocks in New York were sharply higher at the London equities close, with the DJIA up 1.1%, the S&P 500 index up 1.0% and the Nasdaq Composite up 0.9%.
Employment in the US increased significantly ahead of expectations in November, the US Bureau of Labor Statistics reported.
Total non-farm payroll employment rose by 266,000 in November, with the unemployment rate unchanged at 3.5%. FXStreet said consensus had forecast 180,000 new jobs and a 3.6% unemployment rate.
September's original figure of 180,000 more jobs was revised upwards, the Bureau said, to 193,000, and October was revised up to 156,000 from 128,000.
Economists had begun to worry that US hiring was waning, as some signs pointed to slackening demand for labour as well as a dwindling supply of workers.
However, the continued hiring surge should bolster the case for the US Federal Reserve to keep the benchmark interest rate stable at its meeting next week, after three cuts this year.
"This report, along with recent economic data, won't lead to a 'material reassessment' of the Fed's outlook ahead of next week's FOMC meeting. As such, we see the Fed staying 'on hold' for now. However, factoring our sub-potential GDP growth forecast at 1.6% in 2020, and our expectation for a persistent undershoot of the Fed's 2% inflation target, we foresee a Fed rate cut in March 2020," said analysts at Oxford Economics.
In the FTSE 100, WPP closed up 2.6% after the advertising agency late on Thursday confirmed a shareholder return following its Kantar stake sale will come via a buyback. The initial tranche will be GBP250 million, out of a GBP950 million total.
Phoenix Group ended up 0.2% after the life insurer said it will acquire its biggest rival, ReAssure, from Swiss Re.
Phoenix is paying GBP3.25 billion for ReAssure. Of this GBP1.2 billion will be in cash to Swiss Re, and then shares to both Swiss Re and other ReAssure major shareholder MS&AD Insurance Group.
Following that, the two will hold 28% of Phoenix. Swiss Re will hold 13% to 17% and MS&AD between 11% and 15%, depending on Phoenix's share price at deal closure.
ReAssure is the UK insurance unit of the Swiss giant which in July had suspended plans for a London IPO of ReAssure, citing a poor global economic outlook and fears of a no-deal Brexit.
Phoenix said on Friday the new deal will make it Europe's largest life and pensions consolidator - taking the assets under management in the company's Heritage unit to GBP329 billion from 14.1 million policies.
Berkeley Group closed up 0.2% after the housebuilder reported a 31% fall in half-year profit but said the profit drop was expected and simply represented profitability returning to normal levels.
For the six months to September 30, FTSE 100-listed company posted pretax profit of GBP276.7 million, down from GBP401.2 million in the year-ago period. Revenue fell 44% year-on-year to GBP930.9 million from GBP1.65 billion.
The earnings decline was mainly attributed to the completion of a number of major central London projects.
Hargreaves Lansdown's Mick Hyett said: "Berkeley is moving on from several one-off, opportunistic developments in Central London that boosted revenues and profits. This is behind the recent 31% fall in pretax profit and means average selling prices are lower, although the group still operates at the high end of the market.
"This is one of the group's unique selling points. It has a reputation for taking on difficult projects and producing more bespoke homes, which supports higher margins than most of its peers."
The pound was quoted at USD1.3105 at the London equities close, down from USD1.3150 at the close Thursday, amid strength in the greenback.
With under a week to go until the UK general election, Prime Minister Boris Johnson labelled Labour claims his Brexit deal would lead to customs checks between Great Britain and Northern Ireland as "complete nonsense".
Jeremy Corbyn said he had obtained a confidential government report which "drives a coach and horses" through the PM's claim that there will be no border in the Irish Sea under his plan.
But Johnson insisted voters should believe him when he says there will be no checks on goods going between Great Britain and Northern Ireland.
Asked about the Labour leader's claims, Johnson said: "I haven't seen the document you're referring to but that's complete nonsense, and what I can tell you is that with the deal that we have we can come out as one whole UK."
Corbyn said the PM's Brexit deal would be "disastrous for businesses and jobs all across the UK" and claimed the confidential report "confirms this".
The issues are likely to feature when Johnson and Corbyn square off again during a televised debate on Friday evening.
The euro stood at USD1.1045 at the European equities close, down from USD1.1096 a day before.
Against the yen, the dollar was trading at JPY108.71, unchanged from late Thursday.
Brent oil was quoted at USD64.15 a barrel at the London equities close, up from USD63.72 at the close Thursday, after OPEC struck a deal with Russia to cut crude oil production.
Following two-day OPEC's meeting at their plush headquarters in Vienna, the cartel and its allies agreed to a production cut of 500,000 barrels per day in addition to their current agreement.
OPEC ministers "decided for an additional adjustment of 500 (thousand barrels per day)", effective as of January 1, 2020, according to a statement issued after the meeting.
This would bring production 1.7 million barrels per day below October 2018 levels.
However, the cartel said "in addition, several participating countries, mainly Saudi Arabia, will continue their additional voluntary contributions," meaning the overall production cut would be 2.1 million barrels per day.
The statement also said OPEC and its partners in the so-called OPEC+ grouping would convene for a special meeting on March 6.
OPEC members had been aiming for a cut in order to stem pressure on prices from abundant reserves and weak global economic growth.
"OPEC might look at a crude oil chart and kid themselves that their cuts, which were admittedly deeper than forecast, occasioned the surge in oil prices, but it is the hope of more economic growth that will provide the real bull case for oil into 2020. As PMIs around the globe begin to turn higher, supported by looser central bank policies, we should see demand for oil pick up as GDP growth accelerates," Beauchamp noted.
Gold was quoted at USD1,459.85 an ounce at the London equities close, down from USD1,477.30 late Thursday, as the dollar strengthened following the positive US jobs numbers.
The economic events calendar on Monday has China trade data at 0700 GMT and Japan GDP figures at 2350 GMT.
The UK corporate calendar on Monday has interim results from Gore Street Energy Storage Fund.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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