The FTSE 100 index is broadly unchanged as traders look ahead to the monthly release of US employment figures later.
A strong result will add to pressure on Federal Reserve policymakers to accelerate the tapering of pandemic support.
Oil prices are 3% higher and BP shares have risen after a City upgrade, but the FTSE 100 index lost an earlier 0.7% gain.
FTSE 100 Live Friday
US non-farm payroll numbers miss forecasts
Pound under pressure as BoE’s Saunders hints Omicron could delay rate rise
Sell-off on Wall Street sends FTSE into the red
BP shares higher after City upgrade
Nationwide hires TSB’s Debbie Crosbie for top job
FTSE ends lower — just
17:06 , Oscar Williams-Grut
Despite spending most of the day in the green, the FTSE 100 has ended the day marginally lower after a sell-off on Wall Street spooked investors.
London’s topflight index closed down 7 points at 7112 — that’s a loss of just 0.1%, but still a loss.
Things look much worse on Wall Street. The Nasdaq is now down almost 2%.
The big story in the market today was that heavy miss on US jobs numbers (see earlier in the blog). That hit sentiment in New York, which has bled across the pond.
That’s all from us today on the blog. Join us again next week.
Pound slips as BoE’s Saunders hints Omicron could delay rates rise
16:18 , Oscar Williams-Grut
The pound is under pressure this afternoon after comments from the Bank of England’s Michael Saunders.
Saunders, a member of the rate setting Monetary Policy Committee, said interest rate policy was not “on auto pilot” in a speech today.
“At the December meeting, a key consideration for me will be the possible economic effects of the new Omicron Covid variant, and the potential costs and benefits of waiting to see more data on this before – if necessary – adjusting policy,” he said.
“At present, given the new Omicron Covid variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy.”
Saunder’s comments suggest there could be longer odds of a rate rise on December 16 than the market had been pricing in. Sterling is down 0.6% against the dollar to $1.3217 and half a percent lower against the euro at €1.1704.
George Buckley, chief UK and European economist at Nomura, says: “Omicron is playing havoc with monetary policy expectations.
“For the Bank of England markets are now pricing in only around a 40% chance of a December 15bp hike, with one of the Bank’s supporters of tighter policy (external member Michael Saunders) now seeing “advantages” of waiting.
“The debate remains active about how Omicron will influence inflation, with Mr Saunders talking about the possibility of deferral of consumption on the one hand vs. increased goods (relative to services) consumption on the other – which could ‘reinforce global inflation pressures’.”
FTSE slips into the red
16:04 , Oscar Williams-Grut
The FTSE 100 has been hanging on to gains all day but, alas, it looks like it could close lower.
The bluechip index is down 10 points at typing time to 7119.
The retreat comes as investors eye a major sell-off on Wall Street. New York markets opened higher but have since sunk deeply into the red. The S&P 500 is down 1%, the Dow is 0.5% lower and the Nasdaq is a chunky 1.9% lower.
The slump comes after US job numbers came in at less than half of forecasts.
Hinesh Patel, portfolio manager at Quilter Investors, says: “There’s no denying it is a significant miss on expected job growth, coming in at a weighty 340,000 below consensus expectations. But that said, the underlying mix looks decent. The unemployment conundrum continues with a fall in the rate to 4.2%, which opens the door to the possibility of the Feb hiking rates into ‘full employment’, when year-on-year wage gains are at a ten-year high.
“Aggregate labour income is now back to pre-February/March 2020 trend levels. The income gap experienced during the pandemic has been filled by direct dollars to pockets, so the risk in the here and now is of overstimulating, meaning consumer expectations of income growth become anchored. The era of easy money is in the rear view mirror and now financial stability should now be a greater focus.”
Prime central London property market tipped to rebound
15:47 , Oscar Williams-Grut
Prime London real estate suffered during the pandemic as overseas buyers fled and some Londoners moved out of the capital. But international buyers are now returning, with booming demand in areas like Kensington and Chelsea.
Winkworth Chief Executive Dominic Agace said demand for prime central London properties was up 44% on pre-pandemic levels in the last quarter, compared to just 4% for suburban properties.
Red Hot Chili Peppers go green
15:29 , Oscar Williams-Grut
A climate fund backed by Red Hot Chili Peppers singer Anthony Kiedis is heading for an IPO in London.
i(x) Net Zero, founded in 2015, plans to raise £20 million in an IPO on Aim. The company backs sustainable and environmentally friendly businesses and has already invested in projects including a company that turns waste products into jet fuel and a firm capturing carbon in the atmosphere.
Wall Street opens higher
14:41 , Oscar Williams-Grut
Stock markets in New York have opened higher after mixed job numbers.
The Dow Jones Industrial Average is up 0.3% shortly after the open, while the S&P 500 is up 0.4%. The Nasdaq is up 0.1%.
Just over an hour ago labour market data showed US unemployment dropped more than expected last month even as job creation slowed.
On this side of the pond, the FTSE 100 is up half a percent. Developer Berkeley, which has half-year results next week, has overtaken BP at the top of the index.
BioNTech CEO optimistic about Omicron virus
14:37 , Oscar Williams-Grut
Investors will like this: the CEO of BioNTech, the German biotech firm that helped develop Pfizer’s Covid-19 vaccine, says he thinks his business will quickly be able to come up with a vaccine for the new Omicron virus.
Ugur Sahin said at a Reuters event he thought his company’s could be quickly adapted to treat the new variant. He said the existing vaccine should also provide protection against severe symptoms, even though it appears less effective at preventing infections.
Sahin said: “This variant might be able to infect vaccinated people. We anticipate that infected people who have been vaccinated will still be protected against severe disease.”
US job numbers miss forecasts
13:56 , Oscar Williams-Grut
US labour market data for November has just been published and it’s a miss. Non-farm payrolls show 210,000 new jobs were created in the US last month, much lower than the 550,000 forecast by economists and down from 546,000 in October.
Despite the slowdown in job creation, unemployment fell from 4.5% to 4.2%.
Richard Flynn, Managing Director at Charles Schwab UK, said: “The positive direction of low unemployment will be welcomed, but today’s lacklustre job numbers will no doubt heighten investor caution. The figure was a disappointment relative to expectations, driven in large part by ongoing global supply chain bottlenecks and labour shortages.”
Wall Street opens in just over half an hour. Nasdaq futures are up half a percent, while Dow and S&P 500 futures are both positive.
FTSE hangs on to early gains
12:31 , Oscar Williams-Grut
The FTSE 100 is higher at lunchtime, up about 30 points. It continues to benefit from higher oil prices, up BP at the top of the index and Shell not far behind.
Neil Wilson, chief market analyst at Markets.com, says: “The omicron variant is still the driving force with news flow around its spread and seriousness creating elevated near-term volatility. It’s a bit of a catchup to the US session we are seeing in Europe this morning after a soft close. US futures pointing to flat open after yesterday’s bounce. Fed watchers have the nonfarms today to look forward to but it’s all about inflation now.
“Investors are coming back into some oversold names, suggesting they are seeing some buying opportunities if omicron is not as bad as feared.”
Reopening of US travel brings international boost for UK services, PMIs show
11:11 , Naomi Ackerman
The US border reopening and general relaxing of travel restrictions led to British services firms seeing their sharpest jump in new international business since 2017 last month, according to new figures.
This was mainly due to increased travel bookings and higher levels of spending by overseas visitors. Some firms said a rebound in international business travel also led to growing export sales.
Despite companies facing rising inflation, the PMI survey - a score of economic health - recorded a reading of 58.5 last month, dipping from 59.1 in October. Any score above 50 is considered to show growth.
There are growing worries that the Omicron variant will end the boom and even reverse gains, however. The new variant has already prompted governments around the world to tighten travel restrictions - increasing testing regimes and banning flights to countries including South Africa, where it was sequenced.
Read the full story here
FTSE 100 loses momentum despite oil gains
10:35 , Graeme Evans
The FTSE 100 index has given up initial gains to stand broadly unchanged from last night’s 7129, despite a strong session for energy stocks on the back of higher oil prices and a big City upgrade for BP.
Brent crude futures, which dipped as low as $66 a barrel yesterday, were back above $71 after the Opec oil cartel left the door ajar to further changes in production.
Deutsche Bank's oil team said today: “Omicron-inspired skittishness and concerns over potential 2022 oil over-supply are understandable, but we feel the $12 a barrel fall in Brent over the last week will prove an overreaction in due course.”
They note that crude inventories are below five year averages and that several Opec members have struggled to meet their quotas.
Deutsche Bank now rates BP as a “buy” after lifting its price target by 26% to 404p, sending shares up 5.35p to 341.95p at the top of the FTSE 100 index. Royal Dutch Shell lifted by 15p to 1644.2p, compared with the bank's 2038p target.
Other risers included British Airways owner IAG, which moved further from Tuesday's low of 127.5p by adding 1.6p to 133.9p. It had been 154.3p prior to the discovery of the variant.
The FTSE 100 index rose 9.53 points to 7138.60, but had been at 7196 earlier in the session. The domestic-focused FTSE 250 index rose 114.37 points to 22,799.37, with holidays company TUI trading 3% higher.
Home improvement chain Wickes jumped 10% as it upgraded profits guidance on the back of continued strong demand for its Do It For Me services. Shares improved 22.2p to 237.2p but analysts at Liberum believe they are worth 450p.
Nationwide poaches TSB boss for top job
09:50 , Oscar Williams-Grut
Debbie Crosbie today landed the top job at Nationwide Building Society, becoming responsible for the stewardship of one of the most important financial institutions in Britain.
As the biggest mutual, owned by its members, Nationwide exists as a permanent counter balance to the banks.
It says, with some evidence, that because it does not have shareholders it can offer better deals on savings and mortgages.
It is the second biggest mortgage lender in the UK.
Losses rise at David Beckham-backed Cellular Goods
08:39 , Oscar Williams-Grut
Cellular Goods, which IPO’d in London in February, lost £3.3 million in the 12 months to the end of August. The company, which only recently launched its first product, made no revenue. The business raised £13 million from its listing and still has just over £9 million in the bank.
Losses were much higher than the £330,000 recorded in 2019. The jump was driven by IPO costs, investment in business set-up, and a one-off £900,000 charge linked to a share-based bonus scheme for management and staff.
IAG shares continue recovery
08:34 , Graeme Evans
The FTSE 100 index is up 0.7% or 52.89 points to 7182.10, still some way short of the 7310 seen prior to the Omicron volatility.
Oil stocks drove today's rebound as Brent crude quickly recovered the ground lost in the wake of Thursday's Opec meeting.
BP also benefited from an upgrade by Deutsche Bank to lift 2% or 7.85p to 344.45p, while Royal Dutch Shell added 22.6p to 1651.80p.
British Airways owner IAG continued its recent improvement, up 2.68p to 135p. The shares were 154.3p prior to the discovery of the variant and closed as low as 127.5p on Tuesday.
The FTSE 250 index improved 150.48 points to 22,835.32, with easyJet 2% higher.
Brent rallies, BP shares upgraded
08:11 , Graeme Evans
Brent crude futures dipped to below $66 a barrel at one point yesterday after Opec and its allies stuck by existing production plans.
The respite only proved temporary, however, as the price is today back above $71 after the cartel left the door ajar for further action pending developments in the pandemic.
Deutsche Bank's oil team said: “Omicron-inspired skittishness and concerns over potential 2022 oil oversupply are understandable, but we feel the $12 a barrel fall in Brent over the last week will prove an over reaction in due course.”
They note that crude inventories remain below five year averages and that several Opec members are struggling to meet their quotas.
On the back of these expectations, the City bank has upgraded price targets on several European oil majors. Deutsche Bank now rates BP as a “buy” with a price target 26% higher at 404p, while the forecast for Royal Dutch Shell “A” shares is 8.9% higher at 2038p .
Improving trend for US jobs market
07:55 , Graeme Evans
Today's US jobs report for November comes less than two weeks’ away from the Federal Reserve's next meeting, where policymakers will decide whether to accelerate the pace of tapering economic support.
Deutsche Bank's US economists are looking for non-farm payrolls to grow by 600,000, which would be the fastest pace since July and take the unemployment rate down to a post-pandemic low of 4.4%.
Further signs of encouragement came in last night's weekly claims report, with the number a better-than-expected 222,000.
The Federal Reserve is reducing its level of bond buying by $10 billion in treasuries and $5 bilion a month in mortgage-backed securities, but chairman Jerome Powell this week signalled a quicker pace may be needed amid concerns over inflation.
Oil prices higher and FTSE 100 lifted
07:42 , Graeme Evans
A rollercoaster week for stock markets as they fluctuate in response to developments around the Omicron variant is poised to end on a high today.
CMC Markets has forecast that the FTSE 100 index will rise 34 points to 7163, with sentiment boosted by a strong rebound for US markets last night after weekly jobless claims pointed to continued resilience in the labour market.
The monthly non-farm payrolls figure is due to be released later today, with a strong figure likely to increase pressure on the Federal Reserve to accelerate the tapering of its massive bond-buying programme.
Stock market confidence will also be tested later by the release of figures in the UK and Europe covering activity levels in the services sector.
Oil prices, meanwhile, have crept back up after Opec and its allies yesterday agreed to stick by existing production plans for an extra 400,000 barrels a day in January.
The move follows calls from world leaders to do more to curb inflationary pressures.
Uncertainty over the demand impact from the Omicron variant has already wiped more than $10 a barrel from the oil price and Opec has made it clear it is ready to make “immediate adjustments” should the global economy slow.
That pledge contributed to today's 2% rise in Brent crude futures to $70.87 and for West Texas Intermediate (WTI) to $67.73 a barrel.
Oanda's markets commentator Jeffrey Halley said: “Unless we get a major Omicron escalation, I will stick my neck out and say that this week’s lows for Brent and WTI likely represent the lows for the medium-term.”