London close: Investors cheer US jobs and Chinese manufacturing data
London stocks jumped at the end of the week as investors mulled better-than-expected US non-farm payrolls data and Chinese manufacturing figures.
There were also some positive headlines around US-China trade talks in the background, with US Trade Representative, Robert Lighthizer, saying the two countries had a "constructive" call on Friday with progress having been made in a variety of areas.
In parallel, China's Ministry of Commerce said that Washinton and Beijing had achieved a consensus in principle and discussed the next step in the ongoing trade consultations.
Against that backdrop, the FTSE 100 jumped 0.75% to 7,302.42, while the pound was down by 0.09% against the US dollar to 1.2930 and by 0.19% versus the euro at 1.1583, respectively.
"It is never wise to underestimate the US economy. This month’s jobs report came in ahead of expectations, proving that there is still plenty of strength in the world’s largest economy, and US financial markets have responded with a will to the news," said IG's Chris Beauchamp.
"[...] Of course, trade wars could knock the rally off course, but with earnings season coming in nicely ahead of expectations there is a firm foundation for a new move higher in this bull market."
According to the Department of Commerce, US non-farm payrolls rose by 128,000 in October (consensus: 85,000) and the readings for the preceding two months were revised up by a combined 98,000, leaving the trend for the past three months at approximately 170,000 if the impact of a strike at GM in October was stripped out.
Data out of China earlier helped to underpin sentiment as it showed manufacturing activity expanded at its fastest pace in nearly three years in October.
The Caixin/Markit purchasing managers' index for the sector printed at 51.7 in October compared to 51.4 in September, beating expectations for a reading of 51.0.
"While "surpising", the data appeared to show that "the trade truce seems to have boosted confidence, where the official gauge remained oblivious," said Freya Beamish at Pantheon Macroeconomics.
On home shores, the latest survey from Markit/CIPS showed that the decline in UK manufacturing activity slowed in October amid a rush to stockpile ahead of the Brexit deadline, but the sector remained on course for a recession.
The manufacturing purchasing managers' index ticked up to 49.6 in October month from 48.3 in September, beating expectations for a reading of 48.1 and hitting a six-month high. However, even with the boost from stockpiling, the PMI remained below the 50.0 mark that separates contraction from expansion for the sixth consecutive month - the longest run in contraction territory since 2012.
Ruth Gregory, senior UK economist at Capital Economics, pointed out that even after October’s increase, the PMI is still pointing to fairly steep falls in manufacturing output of around 0.7% quarter-on-quarter at the start of the fourth quarter.
In corporate news, TP ICAP was a high riser as it posted a 17% jump in third-quarter revenues to £478m and backed its guidance for the year, while Rentokil Initial ticked up after announcing the acquisition of Florida Pest Control.
Homeserve rallied on the back of an upgrade to 'add' at Peel Hunt, while Morgan Advanced Materials was boosted by an upgrade to 'buy' at Citi.
On the downside, Rightmove was hit by a downgrade to 'sell' from 'hold' at Shore Capital, while housebuilder Crest Nicholson was in the red again after a profit warning on Thursday, as UBS downgraded its rating on the stock to 'neutral' from 'buy' arguing that there is not sufficient value in absolute and relative terms.
Car dealership Inchcape and car marketplace Auto Trader were both weaker after Lookers warned that annual profit was set to fall sharply - its second profit warning in less than four months.
FTSE 100 - Risers
Rio Tinto (RIO) 4,168.00p 3.84%
Glencore (GLEN) 240.95p 3.57%
Evraz (EVR) 379.60p 3.38%
Johnson Matthey (JMAT) 3,160.00p 3.32%
Flutter Entertainment (FLTR) 8,210.00p 3.17%
Anglo American (AAL) 2,043.50p 3.12%
Antofagasta (ANTO) 890.20p 2.65%
Smurfit Kappa Group (SKG) 2,640.00p 2.49%
BHP Group (BHP) 1,673.40p 2.36%
Melrose Industries (MRO) 217.60p 2.30%
FTSE 100 - Fallers
Auto Trader Group (AUTO) 544.20p -3.20%
Hargreaves Lansdown (HL.) 1,737.00p -1.98%
Centrica (CNA) 71.28p -1.76%
Rightmove (RMV) 588.40p -1.70%
British Land Company (BLND) 611.60p -1.45%
Hiscox Limited (DI) (HSX) 1,475.00p -0.94%
Compass Group (CPG) 2,037.00p -0.92%
Land Securities Group (LAND) 932.20p -0.83%
Reckitt Benckiser Group (RB.) 5,903.00p -0.72%
BT Group (BT.A) 203.35p -0.66%
FTSE 250 - Risers
IP Group (IPO) 60.20p 7.50%
TP ICAP (TCAP) 365.00p 6.45%
Watches of Switzerland Group (WOSG) 306.00p 6.07%
Riverstone Energy Limited (RSE) 460.50p 5.21%
Kainos Group (KNOS) 532.00p 5.12%
Sanne Group (SNN) 552.00p 4.92%
Sirius Minerals (SXX) 3.01p 4.73%
Homeserve (HSV) 1,212.00p 4.57%
Contour Global (GLO) 223.00p 4.51%
Ferrexpo (FXPO) 131.40p 4.33%
FTSE 250 - Fallers
Euromoney Institutional Investor (ERM) 1,358.00p -3.82%
Micro Focus International (MCRO) 1,022.40p -3.55%
Dixons Carphone (DC.) 127.25p -3.05%
Future (FUTR) 1,470.00p -2.91%
Inchcape (INCH) 625.50p -2.71%
Domino's Pizza Group (DOM) 278.30p -2.66%
Bakkavor Group (BAKK) 115.40p -2.53%
Babcock International Group (BAB) 540.40p -2.45%
Crest Nicholson Holdings (CRST) 378.80p -2.16%
Pets at Home Group (PETS) 201.80p -2.13%