5th Oct 2018 17:03
LONDON (Alliance News) - Stocks in London followed Europe to close lower Friday due to the relatively high US government bond yields scaring investors away from emerging markets and dragging FTSE 100 miners down.The FTSE 100 index finished down 1.3%, or 96.57 points at 7,321.44. The FTSE 250 ended down 0.7%, or 149.07 points, at 19,939.63, and the AIM All-Share closed 1.0% down, or 11.19 points, at 1,070.23.The Cboe UK 100 ended 1.3% lower at 12,428.65, the Cboe 250 closed down 0.8% at 18,086.85, and the Cboe Small Companies ended 0.6% lower at 12,016.92."The lowest US unemployment level since 1969 will go down well in the White House, as a useful distraction from the confirmation hearings in Congress, but the strong level of job creation has provided the basis for a rise in US Treasury yields, putting fresh pressure on equities, particularly in Europe. While the FTSE and other continue to drop sharply, the move on Wall Street is small by comparison," said Chris Beauchamp, chief market analyst at IG.He added: "Investors continue to flee emerging markets, moving towards the calmer waters of US bond markets, but attractiveness of US equities will get a boost from next Friday when third quarter earnings get underway and the health of the US corporate world is once again made plain."Stocks in New York were struggling at the London equities close due to mixed monthly employment data released by the US government.The DJIA was down 0.6%, the S&P 500 index was 0.5% lower and the Nasdaq Composite down 1.1%.In the US, Brett Kavanaugh has cleared the first hurdle in his bid for a life-long post to the Supreme Court, advancing toward a final US Senate vote expected to take place on Saturday.After a week-long delay to allow the FBI to investigate allegations of sexual misconduct against him, the vote to advance the process indicates Kavanaugh is likely to be confirmed.Psychology professor Christine Blasey Ford testified at a Senate judiciary hearing last month that Kavanaugh had drunkenly attempted to rape her when they were both in high school. Two other women have also come forward with allegations against Kavanaugh.US President Donald Trump tweeted that he was "very proud" of the senate for advancing the nomination.Reflecting an increase in imports and a decrease in exports, the US Commerce Department released a report showing the US trade deficit widened in the month of August.The US Commerce Department said the trade deficit widened to USD53.2 billion in August from a revised USD50.0 billion in July.Economists had expected the trade deficit to widen to USD53.5 billion from the USD50.1 billion originally reported for the previous month.The wider trade deficit came as the value of imports climbed by 0.6% to USD262.7 billion, while the value of exports slid by 0.8% to USD209.4 billion.The report showed notable increases in imports of automotive vehicles, parts, and engines and cell phones and other household goods.Meanwhile, significant decreases in exports of soybeans, crude oil and other petroleum products were partly offset by increases in exports of drugs and artwork, antiques, stamps, and other collectibles.Additional economic data showed employment in the US rose by much less than expected in the month of September.The US Labor Department said non-farm payroll employment climbed by 134,000 jobs in September, while economists had expected an increase of about 185,000 jobs.However, the report also showed a significant upward revision to the pace of job growth in August, with employment spiking by 270,000 jobs compared to the originally reported jump of 201,000 jobs.The increase in employment in September partly reflected notable job gains in professional and business services, healthcare, and transportation and warehousing.The report showed decreases in employment in the retail and leisure and hospitality industries, partly reflecting evacuations related to Hurricane Florence.Despite the weaker than expected job growth, the US Labor Department said the unemployment rate fell to 3.7% in September from 3.9% in August. The unemployment rate had been expected to edge down to 3.8%.With the bigger than expected decrease, the unemployment rate fell to its lowest level since hitting 3.5% in December of 1969.The drop in the unemployment rate came as the household survey measure of employment showed a jump of 420,000 persons compared to the 150-person increase in the size of the labor force.The report also said average hourly employee earnings rose by USD0.08 or 0.3% to USD27.24 in September. The year-over-year growth slowed to 2.8% from 2.9%.Stocks on the London Stock Exchange reacted poorly to the news.Anchored at the bottom of the FTSE 100 were mining giants Antofagasta, down 5.4%, Anglo American, down 4.3%, Rio Tinto, down 4.0%, BHP Billiton, down 3.9% and Evraz, down 3.0%. The drop signifies a spillover from investors moving away from emerging economies, which will drag London's export-heavy top index.Royal Mail lost 2.6% on the day as Citigroup cut its rating to Sell from Neutral.At the other end of the blue chip index, supermarket chain Tesco ended the day 0.7% higher.Berenberg described Tesco as the "top pick in the sector" Friday after the UK supermarket chain posted a 12% increase in interim revenue last week.Berenberg made "no major" changes to its forecasts for Tesco, increasing its full-year revenue expectations by 1.1% to GBP64.81 billion from GBP64.10 billion.The broker kept its price target unchanged at 295 pence each, which implies a 40% upside. Tesco shares were trading up 0.3% at 214.13 pence each on Friday.Berenberg kept Tesco's stock rating at Buy.In the FTSE 250, Intu Properties finished the day up 27%, comfortably the best performer, on news major shareholder Peel Group, alongside Olayan and Brookfield Property, are considering a possible cash offer for the remaining shares in Intu they do not already own.Peel and Olayan currently hold just shy of 30% of Intu's shares, they said, with Brookfield holding none. Peel's Executive Chairman John Whittaker is also deputy chairman of Intu. Intu has formed a committee, made up of all directors, except Whittaker, to consider any approach.Property developer Hammerson finished the day 2.8% higher as it agreed to sell its 50% stake in the Highcross shopping centre in Leicester for GBP236 million, reflecting a net initial yield of 5.5%.The deal with also create a GBP472 million joint venture with an Asian investor introduced by M&G Real Estate, within which Hammerson will manage the centre. Dragging the FTSE 250 down was gold miner Centamin, down 16%. The firm reported a 27% quarter-on-quarter increase in gold output in the three months to September to 117,720 ounces.On a year-on-year basis, gold production fell 25%. The Egyptian miner, which operates the Sukari mine, said September was a strong month but operational improvements "have taken longer than planned to materialise".Looking to the last quarter of the year, Centamin expects improvements to continue and for production for the three months to December to be around 145,000 ounces of gold. This would give annual production of 480,000 ounces, versus 544,658 ounces in 2017.CYBG closed down 3.4% as Societe Generale initiated the bank with a Sell rating.The pound was quoted at USD1.3096 at the London equities close, compared to USD1.3024 at the same time on Thursday. UK house prices dropped unexpectedly in September, data from the Lloyds bank subsidiary Halifax and IHS Markit showed.House prices decreased 1.4% in September from August, confounding expectations for an increase of 0.2%. This was also much bigger than the 0.2% drop posted in August.In three months to September, house price growth eased to 2.5% annually from 3.7% in three months to August.On a quarterly basis, house prices gained 1.8% in July to September period.In Paris the CAC 40 ended 1.0% lower, while the DAX 30 in Frankfurt ended 1.1% down. The euro stood at USD1.1509 at the European equities close, against USD1.1515 the prior day.Italy's populist government released debt and deficit plans for the next three years - one week after they were due to be published.The plans foresee an increase in the deficit for next year, flouting EU budget discipline rules. This has spooked the EU and financial markets.In a document posted overnight on the Economy Ministry website, the government justified the move by saying Italy needs "a profound change in economic and budget policy" to revive a stagnant economy.The document included calculations for the structural deficit - the government deficit after cyclical factors and one-off measures have been taken into account.Whereas the European Commission expected a proposed improvement in the structural deficit, Rome authorities said it would remain at 1.7% of gross domestic product through 2021.Germany's factory orders rebounded in August as the decline in domestic demand was fully offset by robust foreign demand.Factory orders grew a more-than-expected 2% month-on-month in August, reversing a 0.9% drop in July, figures published by Destatis revealed Friday. Orders were forecast to rise 0.8%.Domestic orders fell 2.9%, while foreign orders increased 5.8% in August on the previous month.Brent oil was quoted at USD84.69 a barrel at the equities close from USD85.56 at the same time the prior day. Gold was quoted at USD1,201.70 an ounce at the London equities close against USD1,200.79 on Thursday.The economic calendar for Monday has Caixan China Services PMI at 0245 BST, China Foreign Exchange Reserves For September and German Industrial Production for August at 0700 BST. The Tokyo Stock Exchange is closed as the country is celebrating Health-Sports Day. The UK corporate calendar will see ICG Enterprise Trust reporting half year results and trading statements from RPC Group, Reach, City of London Investment and XP Power.Related Shares:
TescoAnglo AmericanRio TintoBHP Billiton PLCCentamin PLCBodycoteEvrazHammersonINTU.LAntofagastaRMG.LCYBGAntofag.5%pr