LONDON MARKET CLOSE: FTSE Edges Up After Better-Than-Forecast US Jobs

(Alliance News) - London's blue-chip index just about managed to end Friday's session on a positive note, with better-than-expected jobs data out the US helping to offset jitters over rising US-China tensions.

The FTSE 100 index of large-caps was also lifted by share price gains from Hikma Pharmaceuticals and Rightmove.

The FTSE 100 index closed up 5.24 points, or 0.1%, at 6,032.18 - ending the week up 2.3%.

The FTSE 250 ended up 143.55 points, or 0.8%, at 17,622.93 - ending up 4.1% for the week - and the AIM All-Share closed up 15.62 points, or 1.7%, at 932.92, ending the week up 5.4%.

The Cboe UK 100 ended down 0.2% at 599.70, the Cboe UK 250 closed up 0.8% at 14,983.50, and the Cboe Small Companies ended up 0.6% at 9,264.58.

In European equities on Friday, the CAC 40 in Paris ended up 0.1%, while the DAX 30 in Frankfurt ended up 0.7%.

European indices managed to make "some headway" in the wake of better-than-anticipated US jobs data, said Chris Beauchamp, chief market analyst at IG.

The US economy added 1.8 million jobs in July, easing from a record 4.8 million added in June, as a resurgence in Covid-19 cases hindered the labour market recovery. The figure beat consensus estimates, cited by FXStreet, for 1.6 million jobs to be added.

The US unemployment rate fell to 10.2% in July, down from 11.1% in June. The reading bettered the market consensus of 10.5%.

Markets had been braced for a disappointment on Friday after payroll processor ADP earlier in the week said the number of US private sector jobs slowed sharply in July from the prior month, as the resurgence in Covid-19 cases halted the reopening of businesses in a number of states.

According to ADP, private-sector employment increased by 167,000 in July from June, on a seasonally adjusted basis. The reading was well below the 1.5 million consensus estimate.

However, the solid jobs data was tempered by flaring US-China tensions.

The US on Friday slapped sanctions on Hong Kong's leader Carrie Lam and ten senior figures, in a major new step against China's clampdown in the semi-autonomous city.

"The US stands with the people of Hong Kong and we will use our tools and authorities to target those undermining their autonomy," Treasury Secretary Steven Mnuchin said in a statement.

Meanwhile, Beijing has accused the US of "arbitrary political manipulation and suppression" after President Donald Trump ordered sweeping restrictions against Chinese social media giants TikTok and WeChat.

Trump on Thursday ordered sweeping restrictions against Chinese-owned social media giants TikTok and WeChat that could strangle their ability to operate in the US. The executive order, which takes effect in 45 days, bars anyone under US jurisdiction from doing business with the owners of TikTok or WeChat.

Edward Moya, senior market analyst at Oanda, commented: "President Trump's decision to sign executive orders to ban TikTok and WeChat from the US in 45 days sent a clear message that investors will see heightened geopolitical tensions leading up to the election in November."

Stocks in New York were lower at the London equities close, with the DJIA down 0.3%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.

Focus remains on Capitol Hill with no sign yet of agreement between Republicans and Democrats on a fresh round of US stimulus.

Congress has spent weeks tussling over an approximately USD1 trillion proposal from the Republican-controlled Senate and a more than USD3 billion package put forward by the Democrats in the House of Representatives.

Trump on Thursday said he is ready to invoke executive powers to bypass a squabbling Congress and maintain emergency assistance for Americans suffering from coronavirus-induced economic pain.

On Wednesday, Trump's chief of staff, Mark Meadows, said Trump would act as early as Friday "if we haven't made significant progress and we're just too far apart."

Trump is proposing to use his presidential authority to extend both the temporary evictions protections and the extra money for the unemployed that were provided in an earlier stimulus package, known as the CARES Act. Both items have now expired. It is not clear how much authority Trump has, with Congress controlling the budget, but the president is keen to ramp up his use of executive orders ahead of the November election.

The dollar was higher after the nonfarm data.

The euro fell to USD1.1789 at the European equities close Friday from USD1.1845 at the same time on Thursday.

Against the yen, the dollar was trading at JPY105.86, up compared to JPY105.51 late Thursday.

The pound was quoted at USD1.3050 at the London equities close Friday, lower compared to USD1.3137 at the close on Thursday.

UK Chancellor of the Exchequer Rishi Sunak is resisting calls to extend the furlough scheme with targeted measures to stave off widespread job losses, saying the support cannot go on "indefinitely".

The scheme that has so far cost GBP33.8 billion supporting the payrolls of 9.6 million workers during the coronavirus crisis has begun tapering off before ending completely in October. But opposition parties are calling for the government to extend it for the hardest-hit sectors and those plunged into local lockdown, warning the end to the scheme is a "grave mistake".

The chancellor warned "there is hardship ahead for many people" as he again ruled out extending the jobs retention scheme.

Brent oil was quoted at US44.60 a barrel at the London equities close Friday, down from USD45.37 late Thursday. Gold was quoted at USD2,032.40 an ounce at the London equities close Friday, down against USD2,052.10 at the close on Thursday.

In London, Hikma Pharmaceuticals surged 11% to end at the top of the FTSE 100. The drugmaker reported higher first-half profit, as hospitals stocked up on essential medicines during the Covid-19 pandemic.

Hikma said for the six months ended June 30 attributable profit rose 16% to USD212 million year-on-year from USD185 million, while revenue climbed 7.6% to USD1.13 billion from USD1.05 billion a year prior. Operating margin was 25%, improved from 24%.

The generic drug maker also raised its annual sales outlook for its two main units, the Injectables business and Generics division.

Meanwhile, property portal Rightmove rose 9.1% despite seeing first-half profit slump and opting against a dividend after the Covid-19 crisis prompted the property portal to offer discounts to its customers.

However, Emilie Stevens, equity analyst at Hargreaves Lansdown, said the discount appears to be "doing the job".

"Most agency and new home customers kept their packages over lockdown, and since the property market has reopened, have upped their spending," said Stevens.

Pretax profit for the half year ended June 30 dropped to GBP61.6 million from GBP108.1 million last year, while revenue fell nearly 50% to GBP94.8 million from GBP143.9 million. Also, average revenue per advertiser was down by 34% to GBP712 per month from GBP1,077 last year.

However, membership numbers were only down 3.3% since the start of the year, to 19,158 from 19,809 a year prior, the company said.

Rightmove did not declare an interim dividend, having paid out 2.8 pence per share last year. The company also cancelled its final dividend of 4.4p per share for the year ended December 31, given the uncertainties presented by Covid-19.

In the FTSE 250, TP ICAP ended down 7.7% as interim profit fell and the interdealer broker noted a slowdown in trading activity at the beginning of the second half.

TP ICAP said pretax profit for the six months to June 30 was GBP78 million, down 6.0% year-on-year from GBP83 million. This was despite revenue rising 7.4% to GBP990 million from GBP922 million as higher volatility and volumes in February and March increased earnings in its Energy & Commodities, Institutional Services and some Global Broking asset classes.

However, profit was hurt by higher business reorganisation costs due to the proposed group redomiciliation, a GBP10 million expense due to an increase in unused annual leave as at June 30, and an Asia Pacific goodwill impairment.

Baker Greggs ended up 4.5% after Jefferies started the stock at Buy.

Monday's UK corporate calendar has half-year results from shipping broker Clarkson and power generation firm ContourGlobal. As the week progresses, there are earnings from the likes of Prudential, InterContinental Hotels Group, M&G and TUI.

The economic calendar on Monday has Chinese inflation at 0230 BST. Later in the week, on Tuesday, is UK unemployment followed by the first estimate of second quarter GDP on Wednesday. Chinese industrial production is due on Friday as well as eurozone GDP.

By Lucy Heming; lucyheming@alliancenews.com

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