LONDON MARKET CLOSE: Colossal US jobs miss rocks European markets

(Alliance News) - Equity prices in Europe ended in negative territory on Friday, as stocks struggled to keep their composure after numbers showed US nonfarm payrolls increased at the slowest pace since January.

The US economy added 235,000 jobs in August, down sharply from a revised 1.1 million additions in July and massively missing forecasts of 750,000. While London's blue chip index initially regained some poise following the release, a tough start to the New York session saw the FTSE 100 slump. US equities have since recovered somewhat, however.

"That hissing noise you hear is the air being let out of the market's tires after an epically disappointing August jobs report. The Delta variant seems to be sinking its teeth into the economy, taking a massive bite into the jobs picture," TD Ameritrade analyst JJ Kinahan commented.

The FTSE 100 index ended down 25.55 points, or 0.4%, at 7,138.35. For the whole of this week, the large-cap index lost 0.1%.

The FTSE 250 index posted a weekly gain, despite ending in the red on Friday. The mid-cap index closed down 31.66 points, or 0.1%, at 24,194.61. It added 0.6% this week, having achieved record closing highs on both Tuesday and Wednesday.

The AIM All-Share index extended its win streak to five sessions. It closed up 2.48 points, or 0.2%, at 11,310.15, adding 2.3% this week.

The Cboe UK 100 index closed down 0.4% at 710.10. The Cboe 250 lost 0.1% at 21,997.38, and the Cboe Small Companies ended down 0.4% at 15,518.41.

In mainland Europe, the CAC 40 stock index in Paris slumped 1.1%, while the DAX 30 in Frankfurt shed 0.4%.

In New York, the Dow Jones Industrial Average was down 0.2% at the time of the European equities close. The S&P 500 was 0.1% lower, though the Nasdaq Composite was up 0.2%.

The Dow was down 0.5% earlier in the session, and the S&P 500 recovered from being 0.3% lower. The Nasdaq has seen slightly less choppy trade so far, with tech stocks popular in the wake of the US data.

Analysts at Oxford Economics commented: "While the Delta variant is driving renewed virus fear, the labour market recovery seems unlikely to go into reverse. Still, a slower pace of hiring amid a rapidly spreading Delta variant will warrant a patient tapering approach from the Fed. We believe the FOMC will opt to wait until the November meeting to make a formal tapering announcement, and start reducing asset purchases in December or January, depending on employment and inflation developments."

Fresnillo and Polymetal International rose 3.5% and 1.7% in London on Friday, the gold miners benefitted as bullion prices surged in the wake of the US jobs report.

Gold was trading at USD1,831.95 an ounce late Friday, up from USD1,812.03 on Thursday.

"In terms of the price action, the dollar index has plunged, and this has boosted the gold price. It is clear that the dominant trend for the gold price is going to the upside," Avatrade analyst Naeem Aslam commented, in the wake of the US jobs report.

The pound was quoted at USD1.3866 at the London equities close on Friday, up from USD1.3836 on Thursday. The euro was priced at USD1.1883, up from USD1.1862. Against the yen, the dollar was trading at JPY109.64, lower from JPY109.98.

Back in London, Melrose Industries closed 2.3% higher, the industrial turnaround firm added to its gains from Thursday's session.

CMC Markets analyst Michael Hewson said: "Basic resource stocks are also higher as the weaker US dollar keeps a floor under copper and silver prices, with Glencore and Anglo American higher on the day."

Glencore rose 1.2%, while Anglo American added 0.5%.

Among mid-caps, Hochschild Mining and Centamin surged 9.2% and 4.1%, also benefitting from stronger gold prices.

Ashmore Group fell 4.1%. The emerging markets-focused asset manager said it made significant progress against its strategic objectives over the past year.

For the financial year ended June 30, net revenue fell to GBP291.7 million from GBP330.5 million last year and pretax profit rose to GBP282.5 million from GBP221.5 million.

Assets under management rose 13% to USD94.4 billion as at June 30 from USD83.6 billion at the same time a year ago. However, adjusted earnings before interest, tax, depreciation and amortisation was GBP195.7 million, down 12% from GBP222.5 million last year. The figure also just missed consensus forecasts of GBP196 million.

Among AIM stocks, Falcon Oil & Gas shares more than doubled after the Australia and South Africa-focused exploration and development firm shared promising results from a log test at its Amungee NW-1H well.

Results at the Australian well, located in the Beetaloo sub-basin, showed a normalised gas flow rate equivalent to between 5.2 million and 5.8 million standard cubic feet a day per 1,000 metres of horizontal section.

Chief Executive Philip O'Quigley noted gas flows greater than three standard cubic feet per day are needed to demonstrate the commercial potential of the Beetaloo asset.

Falcon Oil shares closed at 10.34 pence on Friday, up sharply from 4.91p on Thursday.

Brent oil was quoted at USD72.96 a barrel late Friday, up from USD73.34 late Thursday.

On Monday, financial markets in the US are closed to observe Labor Day. German manufacturing orders are posted at 0700 BST, before the latest UK construction PMI at 0930 BST.

As the week progresses, central banks will be in focus. The European Central Bank reports its latest interest rate decision on Thursday, after the Bank of Canada on Wednesday and Reserve Bank of Australia on Tuesday. Inflation data from China is reported overnight on Thursday, before UK gross domestic product data on Friday morning.

Monday's corporate calendar has full-year results from Dechra Pharmaceuticals and platinum group metals producer Sylvania Platinum. Investment firm HgCapital reports interim results.

By Eric Cunha; ericcunha@alliancenews.com

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