London close: Stocks higher as investors focus on Brexit, US jobless claims
London stocks closed in positive territory on Thursday, following solid gains in the previous session, as jobless claims surprised in the US, while Brexit talks remained in focus as the end of December deadline loomed.
The FTSE 100 ended the session up 0.42% at 6,490.27, and the FTSE 250 added 1.28% to 20,132.44.
Sterling was stronger against its major trading pairs as well, last advancing 0.97% on the dollar to $1.3495, and gaining 0.65% against the euro to €1.1104.
“A thoroughly risk-on day has helped lift the tone across financial markets, with dollar weakness and value outperformance once again coming into play,” said IG senior market analyst Joshua Mahony.
“A welcome decline in US unemployment claims brought about the second-best figure since the pandemic began.
“Crucially, we have also seen a sharp decline in continuing jobless claims, with the figure of 5.5 million highlighting that there are roughly 78% less claimants compared with the May peak of 25 million.”
Mahony said the steady decline in US unemployment came in “stark contrast” to the “rampant path” of Covid-19 in the country, with daily cases or 200,000 and hospitalisation of 100,000 yesterday.
“The focus now shifts towards tomorrow’s US jobs report.
“While markets expect further downside for tomorrow’s non-farm payrolls figure, yesterday's ADP reading does highlight how markets are willing to ignore weaker data in anticipation of a vaccine-fuelled recovery through 2021.”
Fresh data from across the pond during the afternoon showed US jobless claims for the previous week surprising sharply to the downside.
According to the Department of Labor, initial unemployment claims for the week ended 28 November dropped by 75,000 to reach 712,000.
That was considerably better than the print of 760,000 that some economists had pencilled in.
However, Ian Shepherdson at Pantheon Macroeconomics put the drop down to the difficulty in adjusting the numbers to take into account the Thanksgiving holidays.
“The plunge in initial claims does not refute the idea that the trend is rising," Shepherdson added.
Brexit talks were also in focus, after France said it would push for a no-deal if the UK refused to give ground.
“France is starting to sabre rattle saying it could veto a deal if it doesn’t like the terms, a move that appears to be designed to exert pressure on Michel Barnier and EU negotiators not to give too much away, when it comes to fishing,” said CMC Markets analyst Michael Hewson.
“While some of this noise is no doubt designed for domestic consumption, the reality is if France were to veto a deal, French fishermen would lose legal access to UK waters completely in the event of no deal.
“A no deal would also rebound viciously back into northern France, an area that already has very high structural unemployment.”
Investors were also mulling over news the UK services sector eased in November, although optimism for the year ahead hit fresh highs as hopes grew that the pandemic would be soon brought under control.
The IHS Markit/CIPS UK services PMI business activity index for November eased to 47.6 from 51.4 in October, as lockdown measures were re-introduced across England.
A reading below 50.0 indicates contraction, while a reading above shows growth.
It marked the end of a four-month period of recovery in the services sector, although the decline was softer than the slump seen in the second quarter of 2020, and an improvement on the flash reading of 45.8.
It also beat forecasts of 45.8.
There was a "modest" fall in new business volumes, reflecting temporary closures across hospitality, travel and leisure businesses.
But looking ahead, the degree of confidence for the year ahead outlook was the highest since February, boosted by positive news on vaccines.
In equity markets, Rolls-Royce rallied 5.65% after the engine maker’s director of energy and technology told Bloomberg the coronavirus crisis may provide the company with space for development of critical new engine technologies, and a possible re-entry into the narrow-body jetliner market.
“Rolls-Royce has always managed to demonstrate a capacity to adapt to even the toughest times, and today’s announcement about a move back towards the narrow-body jetliner market has provided the spark the shares have been searching for in order to maintain their rebound from the November lows,” said IG analyst Chris Beauchamp.
“The shares have only recouped around a third of their losses from late October, and the bounce since the beginning of November is perhaps only the latest in a series of false dawns for a share price that has yet to find a low.”
J Sainsbury rose 4.14% after becoming the latest supermarket to bow to pressure and repay more than £400m in business rates relief received from the government to help cope with the pandemic.
Plumbing and heating products distributor Ferguson was boosted 0.61% by an upgrade to ‘outperform’ at Exane BNP Paribas.
Investment platform AJ Bell rallied 6.71% as it hiked its dividend and reported a jump in full-year profit and revenue after gaining a record number of customers.
On the downside, shares in Hochschild Mining plunged 12.58% after JPMorgan placed 61.7m shares in the gold miner at 200p each for Pelham Investment Corporation, which is owned by the company’s chairman, Eduardo Hochschild.
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 134.90p 15.55%
Flutter Entertainment (FLTR) 14,300.00p 7.00%
BT Group (BT.A) 134.45p 6.41%
Antofagasta (ANTO) 1,375.00p 4.84%
Sainsbury (J) (SBRY) 218.60p 4.14%
Anglo American (AAL) 2,477.50p 4.14%
Whitbread (WTB) 3,334.00p 4.02%
Glencore (GLEN) 230.50p 3.46%
Persimmon (PSN) 2,854.00p 3.29%
Intermediate Capital Group (ICP) 1,712.00p 3.07%
FTSE 100 - Fallers
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,776.00p -2.99%
Unilever (ULVR) 4,281.00p -2.64%
AstraZeneca (AZN) 7,729.00p -2.62%
Severn Trent (SVT) 2,357.00p -1.46%
Bunzl (BNZL) 2,335.00p -1.35%
GlaxoSmithKline (GSK) 1,374.80p -1.35%
Smurfit Kappa Group (SKG) 3,248.00p -1.28%
Croda International (CRDA) 5,940.00p -1.26%
Prudential (PRU) 1,213.00p -1.26%
Diageo (DGE) 2,895.00p -0.97%
FTSE 250 - Risers
Cineworld Group (CINE) 73.00p 14.49%
Micro Focus International (MCRO) 402.80p 10.69%
National Express Group (NEX) 258.60p 9.21%
Network International Holdings (NETW) 311.20p 9.12%
Airtel Africa (AAF) 91.10p 8.53%
BMO Commercial Property Trust Limited (BCPT) 81.40p 7.11%
AJ Bell (AJB) 453.00p 6.71%
4Imprint Group (FOUR) 2,800.00p 6.54%
Carnival (CCL) 1,475.50p 6.23%
Capita (CPI) 50.90p 6.17%
FTSE 250 - Fallers
Hochschild Mining (HOC) 207.00p -12.58%
TUI AG Reg Shs (DI) (TUI) 454.70p -5.75%
CMC Markets (CMCX) 368.00p -3.16%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,776.00p -2.99%
Genus (GNS) 4,050.00p -2.97%
Pets at Home Group (PETS) 398.20p -2.78%
Hipgnosis Songs Fund Limited C Shs NPV (SONC) 112.50p -2.17%
Virgin Money UK (VMUK) 135.65p -2.13%
Alternative Credit Investments (ACI) 866.00p -1.37%
Dechra Pharmaceuticals (DPH) 3,274.00p -1.27%