(Alliance News) - Stocks in London ended sharply higher on Friday after a surprising US jobs report for May buoyed hopes for the world's largest economy to come back from the brink.
The FTSE 100 index closed up 142.86 points, or 2.3%, at 6,484.30, and ended the week up 4.3%.
The FTSE 250 closed up 403.36 points, or 2.3%, at 18,229.32, ending the week up 5.1%. The AIM All-Share closed up 6.99 points, or 0.8%, at 903.77, ending the week up 3.2%.
The Cboe UK 100 ended up 2.4% at 10,977.45, the Cboe UK 250 closed up 2.4% at 15,744.25 and the Cboe Small Companies ended up 1.9% at 9,794.25.
In Paris the CAC 40 ended up 3.5%, while the DAX 30 in Frankfurt ended up 3.4%.
IG Group's Chris Beauchamp said: "2020 continues to provide surprises for investors, with this afternoon's 'best ever' jobs report perhaps being one of the strangest twists of the year so far. Markets had been braced for bad news (although better than last month), but it is probably safe to say that no one in their right mind expected a huge rebound in US employment.
"Investors had been scratching their heads at the resilience of the stock market to bad data, and now it is the turn of the economists to pause in awe; trying to guess economic data has been a fool's errand for weeks now, and it doesn't look like it will get any easier".
Stocks in New York were sharply higher at the London equities close as a surprisingly positive US jobs report for defied doomsday market expectations to add jobs in May.
The DJIA was up 3.1%, the S&P 500 index up 2.5% and the Nasdaq Composite up 1.7%.
The Department of Labor jobs report defied even the most optimistic expectations among economists, who had been expecting job losses of more than eight million and a jobless rate of 20% or higher.
Instead, unemployment fell to 13.3%.
The report attributed the improvements to "a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus pandemic and efforts to contain it".
In addition, the US economy unexpectedly gained 2.5 million jobs in May after record losses the prior month as states began allowing businesses shuttered by the coronavirus to reopen and many returned to work.
The nonfarm payrolls figure for May defied market expectations for a loss of eight million jobs.
The strong figures caught analysts off guard after weeks of reports showing spikes in US jobless claims and large amounts of other mostly poor data on consumer confidence and business investment.
US President Donald Trump immediately cheered the data on Twitter - once again violating the government rule that prohibits comment on economic data until one hour after release.
Robert Alster, head of Investment Services at Close Brothers Asset Management, said: "These figures have quite simply caught everyone off guard. To add more than two and a half million jobs is, quite frankly, a stunning result and seems, certainly on the face of things, to back-up the economic justification for an early 'un-lockdown'.
"From a political standpoint the White House will see these job numbers as a welcome distraction from the recent US-wide protests. With November's election fast approaching, President Trump will likely seek to use this as the key turning point in the economic fight against Covid-19. The reality is that the scale of these figures will make other countries sit up and take notice of the tactics that have been used in the US. The only fly in the ointment now would be a serious secondary outbreak in the US which could derail the jobs-market recovery".
On the London Stock Exchange, travel stocks ended among the blue-chip risers, with International Consolidated Airlines, up 13%, Carnival, up 20% and easyJet up 7%.
In addition, IAG said it is considering legal action over the UK government's mandatory two-week quarantine for travellers arriving in the country from June 8.
"The optimism in relation to economies reopening has boosted beleaguered tourist trade. Carnival, the cruise operator, and airlines such as Air France, easyJet. Lufthansa and Wizz Air are higher today. BA's parent, IAG, is considering taking legal action against the UK government's decision to make new arrivals in the UK self-isolate for 14 days. Such was move would greatly hamper the aviation industry, but on the other-hand, Westminster are more interested in suppressing the virus than the probability of the travel sector," said CMC Markets analyst David Madden.
At the other end of the large-cap index, gold miners Polymetal International and Fresnillo ended the worst performers, down 5.5% and 5.2% respectively, tracking spot gold prices lower.
Gold was quoted at USD1,677.02 an ounce at the London equities close, down sharply from USD1,713.66 late Thursday, as demand for the safe-haven asset waned.
The pound was quoted at USD1.2714 at the London equities close, sharply higher from USD1.2592 at the London equities close on Thursday. Sterling hit an intraday high of USD1.2732 in afternoon trade versus the greenback - its highest level in three months.
The pound appreciated after Bank of England Executive Director for Markets Andrew Hauser on Thursday said negative UK interest rates won't happen in the near-term, shrugging off negative Brexit headlines from Brussels.
On Friday, EU chief negotiator Michel Barnier said there has been no real progress made in post-Brexit trade talks and accused the UK of backtracking on a key commitment.
Barnier said at the end of the fourth round of negotiations that the UK team had continually sought "to distance themselves" from the political declaration agreed by Boris Johnson.
David Frost - Barnier's counterpart - acknowledged there had been only "limited" progress in the talks, which were the final ones before a potentially make-or-break high-level summit later this month.
Barnier said "the door is still open" for the UK to seek an extension to the current transition period before the end of June to allow more time for discussions, but Prime Minister Boris Johnson has vowed not to extend this.
Analysts at OFX said: "The pound has gained over 1.5% against the US Dollar since Thursday's European open. Global risk appetite is improving, and investors are looking for assets outside of the dollar in order to take advantage of rallies in markets affected by the global fallout".
The euro stood at USD1.1307 at the European equities close, marginally lower from USD1.1333 late Thursday
Against the yen, the dollar was trading at JPY109.75, up from JPY108.98 late Thursday.
Brent oil was quoted at USD42.16 a barrel at the London close, up sharply from USD39.28 at the close Thursday, rising above the USD41 mark for the first time since early March.
Major oil producing countries will meet via video conference on Saturday instead of next week, a source close to OPEC said Friday, to assess their current agreement on output cuts, as oil prices recovered somewhat on easing coronavirus lockdowns.
OPEC's 13 members led by Saudi Arabia, and their 10 allies that include Russia, had originally been due to meet June 9 and 10.
But Algeria, which currently chairs the Vienna-based organisation, proposed a change of date intended, according to analysts, to better synchronise the decisions of oil producers with the timing of transactions on the oil market.
Friday's news boosted oil prices as producers appeared to move towards agreement on extending their huge output cuts, which are aimed at soaking up surplus crude.
The countries are discussing a deal agreed in April to cut output aimed at boosting oil prices, which have plummeted due to falling demand as countries around the world have imposed strict lockdowns to stop the spread of the new coronavirus.
OPEC and the so-called OPEC+ have pledged to cut output by 9.7 million barrels per day from May 1 until the end of June.
"The oil price rally went into overdrive after a surprisingly robust US labor market report. The economic recovery is already happening and that could do wonders for crude consumption. Earlier crude was climbing higher after OPEC+ signaled everyone is on board with extending supply quotas, with the cheaters promising they will make up their part in the coming months," said OANDA analyst Edward Moya.
The economic events calendar on Monday has Japan GDP readings overnight and Germany industrial production numbers at 0700 BST.
The UK corporate calendar on Monday has a trading statement from Frontier Developments.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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International Airlines (IAG)
Carnival (CCL)
Fresnillo (FRES)
easyJet (EZJ)