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FTSE 100 Live 7 June: Index closes week down as hot US jobs report dims rate cut hope

FTSE 100 Live 7 June: Index closes week down as hot US jobs report dims rate cut hope

The FTSE 100 closed lower today as another blowout US jobs report dimmed hopes that the country’s Federal Reserve will follow the central banks of Europe and Canada in cutting interest rates soon.

Upheaval at Magners business C&C provided the corporate focus after its boss stood down amid the need for prior year accounting adjustments.

Elsewhere, new data from Halifax shows house prices were steady in May.

FTSE 100 Live Friday

  • C&C shares sink as boss quits

  • Rate cuts in focus ahead of US jobs report

  • Bellway ups average sale price guidance

FTSE 100 closes week down

16:42 , Daniel O'Boyle

The FTSE 100 has closed the week at 8,245.37.

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That’s down 0.5% for the day and down 0.4% from where it started on Monday.

Convatec and Compass were the day’s big risers, while Fresnillo and Prudential were the top fallers.

'Strong US jobs report supports cautious Fed approach'

15:12 , Daniel O'Boyle

Matthew Ryan, Head of Market Strategy at global financial services firm Ebury, says: “Today’s resoundingly strong nonfarm payrolls report will undoubtedly support the Fed’s cautious approach to lower US rates. Net job creation came in well above the consensus of economists, while wages are also accelerated again, with three-month earnings growth rising back above 1%. This will do little to improve the Fed’s confidence in achieving its 2% inflation target, which appears an increasingly challenging task by the day.”

Are Fed rate cuts off the table for the year?

13:49 , Daniel O'Boyle

Richard Carter, head of fixed interest research at Quilter Cheviot, thinks that the latest blowout US jobs report could take Fed cuts off the table for this year.

Carter says: “Just as economic data was pointing to some signs of softening in the US economy, the latest employment figures show an economy that exhibits no sign of pulling back just yet. Indeed, with average hourly earnings also continuing to trend upwards in the US, this data has the potential to take any rate cut by the Federal Reserve this year off the table.

“The Federal Reserve is in somewhat of a bind at the moment. The level of interest rates feels restrictive enough that it should be having an impact on economic activity, however, while the unemployment rate has ticked up, US businesses show little appetite to slow down. This is causing inflation to be stickier than hoped for, and with a ceiling seemingly reached on rates, there is not a lot more than can be done until the data begins to roll over.

“As a result, markets will not like this outcome, particularly given interest rates in Europe have now started to come down. As we head into pressure cooker of the presidential election campaign, the Fed will not want to be seen to being political in any way. Today’s data suggests the Fed is going to have to sit tight and wait a while longer before that first cut can be considered.”

US jobs beat expectations again, but unemployment ticks up to 4%

13:32 , Daniel O'Boyle

The United States added 272,000 jobs in May, flying past expectations again.

However, the unemployment rate ticked up to 4%, after 27 consecutive months below that threshold.

Earnings continue to outpace inflation, growing by 4.1%/

Economic data in recent weeks has shown signs of the world’s largest economy cooling amid high interest rates. But the latest figures suggest that the labour market conitnues to be unscathed.

Waitrose expands into meal kits with Dishpatch takeover

12:44 , Daniel O'Boyle

Waitrose has snapped up restaurant meal kit brand Dishpatch, expanding the retailer’s direct-to-consumer business.

The finish-at-home meal kit business was founded in 2020 and offers customers meals designed by celebrity chefs including Angela Hartnett, Michel Roux Jr and Rick Stein.

Waitrose – the grocery arm of the John Lewis Partnership – said it sees “significant opportunities” for Dishpatch following the deal.

Read more here

Housing market 'primed to surge' after election as interest rate cuts come into view

12:03 , Daniel O'Boyle

The UK’s prospective home buyers and sellers are in ‘wait-and-see’ mode as house prices held steady in May amid uncertainty about the general election and interest rates outlook, new figures show.

But experts predicted a surge in demand could be on the way soon, once the general election is out of the way and interest rates start falling.

The latest House Price Index from the country’s biggest mortgage lender Halifax shows that the average house price across the UK ticked down by just £170 in May. A number of estate agents reported quieter activity in what is traditionally a busy month for property moves.

Read more here

UK growth outlook brighter as consumer spending set to rebound, says CBI

11:54 , Daniel O'Boyle

Britain’s economy will see faster-than-expected growth this year and next as the outlook brightens after a tough 2023, according to the CBI.

The business group has upped its forecasts for UK growth to 1% in 2024 and 1.9% in 2025 thanks to an expected pick-up in consumer spending as inflation falls back and wages remain robust.

It marks a upgrade on the CBI’s December predictions for expansion of 0.8% in 2024 and 1.6% in 2025 and comes after the UK eked out growth of a paltry 0.1% in 2023, having slipped into a technical recession at the end of last year.

Read more here

End of Issa brothers' close partnership as Zuber Issa exits Asda, quits as EG Group Co-CEO

11:01 , Daniel O'Boyle

Billionaire Zuber Issa has exited Asda and quit as Co-CEO of EG Group after selling his stake in the supermarket to existing owners private equity firm TDR Capital, the firm said today.

The deal brings the ownership of Asda to 67.5% by TDR Capital, 22.5% by Mohsin Issa, and 10% by Walmart Inc. The transaction is set to complete in Q3 2024.

Read more here

City Comment: The City needs its own Clarkson's Farm

10:36

Jeremy Clarkson’s Farm TV series has done wonders for the standing of farmers. Farming is clearly brutally hard, even allowing for his desire to make it seem so, even when the entertainment factor is more important than the point he is making.

At the end of the most recent series, he could have done something similar for the City of London, though you can understand why he didn’t, and that’s a different show altogether anyway.

Read more here

Entain and National Grid higher in weak FTSE 100, Diageo shares fall

10:17 , Graeme Evans

National Grid shares today rallied 7.2p to 871.2p as the FTSE 100 power firm nears next week’s completion of its £7 billion rights issue.

The top flight retreated 26.37 points to 8258.97, driven by uncertainty over when the US and UK will follow this week’s rate-cutting lead of central banks in Europe and Canada.

Lloyds Banking Group and NatWest were among the stocks out of favour, while JD Sports Fashion weakened 1.95p to 126.2p.

Guinness and Smirnoff firm Diageo dropped 12.5p to 2700p after Deutsche Bank tightened its “Sell” stance with a lower target price of 2300p.

The risers board included Entain, up another 11.2p to 733.2p after this week’s disclosure that an activist investor had built a near 6% stake in the Ladbrokes owner.

Medical products firm Convatec lifted 3.6p to 254p and retailer Next added another 64p to a near record of 9346p.

The FTSE 250 index mirrored the top flight performance, drifting 85.29 points to 20,630.59.

Safestay shares jump on Brighton expansion

10:03 , Simon Hunt

Hostel chain Safestay today marked the latest step on its expansion after it acquired a freehold property in central Brighton.

The firm snapped up the site from the University of East Sussex for £2.3 million and said the grade II listed building would cost an extra £1 million to convert into a 220-bed hostel.

The deal marks the latest step on Safestay’s rapid expansion after its acquisition last month of a 100 bed hostel in Cordoba, Spain, and the signing of a management contract to run the resort-based 120 bed Calpe Seafront Hostel in Spain in April.

Chairman Larry Lipman said, "Brighton has an excellent reputation in the UK as both a seaside getaway and a lively cultural hub, and there is growing demand for affordable tourist accommodation in the city. Safestay will help fill this gap.”

Safestay shares rose 8% to 21.5p.

Bellway ups average sale price guidance

09:54 , Daniel O'Boyle

One of the UK’s largest housebuilders is confident demand for properties will gather pace in the second half of the year, as Bellway said today its average sale price for the year is now expected to hit £305,000.

Bellway increased its guidance on prices from £295,000, though it noted the rise was also partly due to the completion of more high-end homes.

The FTSE 250 builder said: “The long-term housing market fundamentals remain positive, and we are hopeful these will be bolstered by greater clarity over planning and housing policy beyond the upcoming general election.”

Bellway’s order book rose from 4,441 on 1 February to 5,346 on 2 June.

Shares edged up by 18.5p to 2800p.

C&C shares sink as boss suddenly quits

09:26 , Simon Hunt

Problems at Magners owner C&C today took a new turn as the firm said its boss would be quitting with immediate effect.

Patrick McMahon is set to depart as CEO of the firm, which also owns Bulmers and Tennetts, after only one year in the role as C&C said it had found failures in the company’s accounting practices.

Last week C&C revealed it  took a £17 million hit from a botched software upgrade at one of its subsidiaries.

Mr McMahon “acknowledges that the relevant shortcomings occurred at a time when he had overall responsibility for the group’s finance function”, and it is therefore “in the best interests of the group” for him to step down, C&C said.

C&C shares sunk 8% to 156p.

C&C Group is behind Magners cider (C&C)
C&C Group is behind Magners cider (C&C)

FTSE 100 lower, C&C shares down 8% in FTSE 250

08:57 , Graeme Evans

The FTSE 100 dropped by 0.2% or 16.07 points to 8,269.27 as traders opted to stay on the sidelines until the release of US jobs market figures.

Ladbrokes owner Entain and the medical products business Convatec were the only stocks up by more than 1%.

The biggest fallers included NatWest, which dropped 3.4p to 315.4p, and JD Sports Fashion with a decline of 1.7p to 126.45p.

The FTSE 250 index fell 45.59 points to 20,670.29, led by a retreat of 8% or 14.2p to 155p for Magners drinks business C&C.

Amid a series of prior year accounting adjustments, it said chief executive Patrick McMahon had stepped down.

House prices edge down in May

07:24 , Daniel O'Boyle

UK house prices edged down 0.1% month-on-month in May, in a sign of the housing market stabilising.

It leaves the average house price at £288,688, up 1.5% from this time last year.

Annual growth was slower in London at 0.2%.

Amanda Bryden, Head of Mortgages at Halifax, said: “Market activity remained resilient throughout the spring months, supported by strong nominal wage growth and some evidence of an improvement in confidence about the economic outlook. This has been reflected in a broadly stable picture in terms of property price movements, with the average cost of a property little changed over the last three months.”

Rate cuts in focus ahead of US jobs report, FTSE 100 seen higher

07:19 , Graeme Evans

The FTSE 100 index is set for a steady start to the session as the focus stays on the monetary policy outlook ahead of today’s US jobs market report.

Deutsche Bank’s US economists are looking for a 200,000 increase in non-farm payrolls, an uptick from April’s six-month low of 175,000.

They also see the unemployment rate holding steady at 3.9% alongside a slight increase in average hourly earnings.

The figures come ahead of next week’s Federal Reserve meeting, when traders will be looking for guidance on potential US rate cuts later this year.

Europe’s central bank made its first downward move yesterday but with persistent inflation pressures causing it to rule out a turn in the policy cycle.

The FTSE 100 is forecast to open about 12 points higher at 8298, reflecting the handover from a mixed session on Wall Street.

Recap: Yesterday's top headlines

06:53 , Simon Hunt

Good morning from the Standard City desk.

As Shein seemingly gets closer to a blockbuster London listing that would end the City’s IPO drought, critics have understandably raised concerns, especially around its labour practices.

Alicia Kearns of the Commons foreign affairs committee said “there are grave concerns” over the fashion giant’s factory working conditions and in 2022 Shein admitted workers in two factories were working excessive hours. The environmental impact of its clothes has come under fire as well.

In a blog post, tax campaigner Richard Murphy asked, “Has the London Stock Exchange heard of business ethics?” Well has Richard Murphy heard of the London Stock Exchange? Take a look at the FTSE 100. Shein’s practices might be worse than most of its peers in the fashion sector, but this is the big leagues of evil companies — i.e. a major global stock index.

Mining, oil, big banks and tobacco make up a hefty chunk of London’s top flight. A big City bank was alleged to have laundered $100 billion for terrorist groups just this week (it denies the claims). If Shein lists in London, does it make the top five most harmful companies here?

~

Here’s a summary of our top headlines from yesterday:

  • Has the summer of rate cuts begun? Bank of Canada cut interest rates on Wednesday with the ECB following yesterday. Bank of England cuts could be on the agenda soon.

  • US software giant Salesforce has chosen London for its first AI center in latest sign the capital is emerging as Europe's premier destination for artificial intelligence

  • Apple pipped to the post as world's second-most valuable company by chipmaker Nvidia, as demand for AI tech sends its market value to over $3 trillion, behind Microsoft in first place, also powered by AI, comes as top US competition rules chief pledges an urgent probe into how a few firms control AI

  • Jacamo and Simply Be owner N Brown returns to profit despite lower revenue

  • Mixers for rum and vodka boost Fevertree ahead of key summer period

  • Mitie Group breaks revenue record: Facilities management firm brings in £4.5 billion -- bloglines coming