London close: Stocks finish firmer as investors await Brexit deal news
London stocks ended the week in the green on Friday, as investors mulled a solid reading on the UK construction sector and a report suggesting a negotiated trade deal between the EU and the UK was "imminent".
The FTSE 100 ended the session up 0.92% at 6,550.23, and the FTSE 250 was 0.25% firmer at 20,182.69.
Sterling was showing strength as well, last rising 0.19% on the dollar to $1.3475 and advancing 0.23% against the euro to €1.1102.
In fresh data out during the afternoon, US employment accelerated at a much weaker-than-expected clip in November, while the unemployment rate fell from 6.8% to 6.7% despite a surge in the number of new Covid-19 cases.
According to the Labor Department, nonfarm payrolls increased by 245,000, softer than the gain of 460,000 predicted by economists.
The labour force participation rate also slipped - down 0.2 points to 61.5%.
November's growth brought total payroll gains since May to roughly 12.2 million, but that figure still meant that nearly 10 million positions cut in March and April were still unfilled.
“The lacklustre US jobs report is helping risk and driving the move in yields with the 245,000 created in November well below consensus and betraying a slowdown in hiring as case counts rose across the country,” said Markets.com chief market analyst Neil Wilson.
“The soft employment report though is seen as a positive for stocks since it ought to incentivise Congress to pass a stimulus bill this year.”
Wilson said that, with almost 10 million fewer jobs since the pandemic hit, there was a strong desire for the economic recovery to develop at a faster rate, with the disappointing numbers underlining the urgency in getting stimulus to those who needed it to act as a bridge until vaccines were rolled out.
“With potentially 12 million to 13 million Americans set to lose their government unemployment benefits on 26 December, the case for action is crystal clear - the US economy is not creating jobs fast enough right now.
“Markets are happy to jump the shark for now and ride the reflation/reopening rollercoaster that drove November’s gains into December.”
On home shores, the pound began its climb earlier, after Reuters cited a eurozone official as saying that a Brexit deal was expected before the end of the weekend, barring last-minute breakdown in talks.
That official said the EU stood firm on its state aid demands.
However, the source dismissed as spin to force concessions comments by a UK government source who late on Thursday accused the 27-nation bloc of introducing last-minute demands in the negotiations.
According to Reuters, the official also said EU leaders might have a separate gathering on Brexit this month, most likely after a video conference meeting scheduled for 10-11 December.
Sentiment was also boosted by a survey showing UK construction order books rose at the fastest pace for more than six years in November as more houses were built.
The IHS Markit/CIPS purchasing managers' index rose to 54.7 from 53.1 in October with a score of 50 indicating no change.
November's reading beat the average analysts' estimate of 52.
Housebuilding was the strongest part of the industry in November with a reading of 59.2.
Civil engineering returned to growth with a score of 52.3 and commercial work had its lowest score for six months at 51.9.
In equity markets, a strong showing from BP and Shell helped to lift the top-flight index, with the oil majors rising 3.92% and 3.21%, respectively, after OPEC and Russia agreed to increase oil supply by 500,000 barrels a day from January.
“With BP and Shell both cutting dividends earlier in the year, they lost favour amongst much of the trading community,” said IG analyst Joshua Mahony.
“However, with crude on the rise, and the reinstatement of dividends coming into play, the catch-up trade is on for the oil majors.”
Mahony said that, while OPEC might have not managed to pass an entire six-month extension to the current production quotas, the tapered approach that would only see a change of 500,000 barrels per month did highlight that production would only rise as demand improves.
“With a trio of vaccines coming into play over the coming months, crude prices are already pushing higher in anticipation of renewed demand.”
Elsewhere, SSE gained 1.87% after saying it had sold a 10% stake in the first two phases of Dogger Bank Wind Farm to Eni for £202.5m, as it lifted guidance for the 2021 fiscal year.
Micro Focus surged 6.9% after Amazon said it was one of four partners pre-qualified for the Amazon Web Services Mainframe Migration Technology category.
Croda International pushed up 3.37% after a double-upgrade to ‘outperform’ at Credit Suisse.
On the downside, Berkeley Group was in the red by 1.83% after the housebuilder stuck to its targets for shareholder returns but reported a 16.6% fall in first-half profit caused by the Covid-19 crisis.
British Airways owner IAG reversed earlier gains to close down 0.26%, after Deutsche Bank upped its price target on the stock and said it was among its most preferred in the sector.
Cineworld Group shares tumbled 14.99% after Warner Brothers said it would be releasing next year's film slate straight to streaming, at the same time as releasing them to cinemas.
“While this only affects its content in the US, with the films being released to HBO Max, the direction of travel is clear, and could spell the end of some of its cinema real estate, as being unviable, particularly since it has over £6bn in debt already,” said CMC Markets analyst Michael Hewson.
“The news that AMC Entertainment, who own the Odeon cinema group has said it will need to raise extra cash in order to get through the winter hasn’t helped either.”
FTSE 100 - Risers
BP (BP.) 276.95p 3.92%
Flutter Entertainment (FLTR) 14,800.00p 3.50%
Royal Dutch Shell 'A' (RDSA) 1,402.40p 3.39%
Croda International (CRDA) 6,140.00p 3.37%
Evraz (EVR) 427.30p 3.29%
Royal Dutch Shell 'B' (RDSB) 1,351.40p 3.21%
Glencore (GLEN) 237.65p 3.10%
AstraZeneca (AZN) 7,958.00p 2.96%
British Land Company (BLND) 510.00p 2.82%
Prudential (PRU) 1,246.00p 2.72%
FTSE 100 - Fallers
Kingfisher (KGF) 267.40p -4.85%
GVC Holdings (GVC) 1,016.00p -3.97%
Pennon Group (PNN) 960.00p -3.58%
Taylor Wimpey (TW.) 161.10p -3.50%
United Utilities Group (UU.) 907.20p -3.49%
Hargreaves Lansdown (HL.) 1,438.50p -3.46%
Rolls-Royce Holdings (RR.) 130.25p -3.45%
Severn Trent (SVT) 2,292.00p -2.76%
Phoenix Group Holdings (PHNX) 724.80p -2.62%
Sainsbury (J) (SBRY) 213.50p -2.33%
FTSE 250 - Risers
Micro Focus International (MCRO) 430.00p 6.90%
Energean (ENOG) 796.70p 6.76%
Aston Martin Lagonda Global Holdings (AML) 79.80p 6.25%
Ferrexpo (FXPO) 261.60p 6.17%
BMO Commercial Property Trust Limited (BCPT) 86.00p 5.78%
Synthomer (SYNT) 450.00p 5.73%
Petrofac Ltd. (PFC) 169.70p 5.27%
Airtel Africa (AAF) 94.90p 4.91%
Rank Group (RNK) 160.60p 4.82%
Morgan Sindall Group (MGNS) 1,492.00p 4.63%
FTSE 250 - Fallers
Cineworld Group (CINE) 62.06p -14.99%
AJ Bell (AJB) 429.00p -4.97%
Hochschild Mining (HOC) 196.80p -4.93%
TBC Bank Group (TBCG) 1,188.00p -4.80%
888 Holdings (888) 276.50p -4.17%
Babcock International Group (BAB) 331.00p -4.03%
Pets at Home Group (PETS) 382.40p -3.97%
Mediclinic International (MDC) 278.60p -3.13%
Gamesys Group (GYS) 1,084.00p -3.05%
Avon Rubber (AVON) 4,110.00p -2.73%