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LONDON MARKET CLOSE: Surprise US jobs report lifts market mood

5th May 2023 17:03

(Alliance News) - Stocks in London were higher at the close on Friday, ahead of a long bank holiday weekend, as the latest US jobs report made a recession across the Atlantic appear less likely.

The FTSE 100 index closed up 75.74 points, or 1.0% at 7,778.38 on Friday, though the index ended the week as a whole 0.7% lower.

The FTSE 250 ended up 207.59 points, or 1.1%, at 19,452.50. The AIM All-Share closed up 3.81 points, or 0.5%, at 828.79.

The Cboe UK 100 ended up 1.0% at 778.28, the Cboe UK 250 closed up 1.1% at 17,054.88, and the Cboe Small Companies ended up 1.0% at 13,628.91.

The pound was quoted at USD1.2628 at the London equities close on Friday, up from USD1.2565 at the close on Thursday.

Earlier on Friday, sterling hit a one-year high of USD1.2634. The pound climbed as trouble in the US banking sector weighed on the greenback before the strong upward momentum was stemmed by a bullish US jobs report.

Fresh data revealed surprise growth in the US employment rate on Friday. According to the Bureau of Labor Statistics, nonfarm payroll employment rose by 253,000 in April, picking up from 165,000 in March.

March's number was downwardly revised by 71,000 from 236,000. February's outcome was downwardly revised by 78,000 to 248,000 from 326,000.

The US economy had been expected to have added 179,000 jobs in April, according to FXStreet cited consensus, so Friday's figure came in markedly ahead of the forecast.

Chris Beauchamp, chief market analysts at IG, said: "Few would have put 'market rally' as the result of a strong payrolls report this afternoon, but that is where we are. 13 successive payrolls reports have come in better than expected, and markets are taking this report as a clear sign of US economic strength."

Stocks in New York were sharply higher at the London equities close, with the Dow Jones Industrial Average up 1.3%, the S&P 500 index up 1.5%, and the Nasdaq Composite up 1.8%.

Against the yen, the dollar was trading at JPY134.88, higher compared to JPY133.94 late Thursday.

In London, BP was the best blue-chip performer, finishing 3.3% higher.

Earlier in the week, the oil major swung to a profit in the first quarter of 2023, as revenue ticked up and impairments were significantly reduced. This led the firm to declare a higher dividend and announce a USD1.75 billion share buyback.

InterContinental Hotels dropped 1.7% despite the hotel operator reporting its revenue per available room in the first quarter of 2023 was up by a third against the year prior.

Compared to the first quarter of 2019, the last pre-pandemic, group RevPAR was up 6.8%

"We've seen a good start to the year, with continued strong trading in both the Americas and Europe, Middle East, Africa & Asia, and an excellent rebound in demand in Greater China since the lifting of travel restrictions," said outgoing Chief Executive Keith Barr.

Barr's final day as CEO will be June 30, IHG announced on Friday. Elie Maalouf will take up the role as group CEO on July 1, after eight years serving as the firm's Americas CEO.

International Consolidated Airlines climbed 1.7%.

The British Airways parent reported a narrowed first quarter loss, alongside strong revenue, and noted its capacity was recovering towards pre-pandemic levels.

IAG said pretax loss for the first three months of 2023 narrowed substantially to EUR121 million from EUR916 million a year prior. Revenue was EUR5.89 billion, up 74% from EUR3.44 billion the year before.

Liberum's Gerald Khoo said the results were "surprisingly strong", with IAG benefitting from both a strong unit revenue environment and lower fuel prices. Khoo added that this was "impressive" for the "seasonally weakest quarter."

In the FTSE 250, RHI Magnesita climbed 2.3% as it reported lower refractory sales volumes in the first quarter of the year, in line with management expectations and overall market demand.

Looking ahead, the company said order book trends suggest the potential for a gradual recovery in steel customer demand in the short term, though it warned that the outlook for end markets and customer volumes remains uncertain and a significant recovery in volumes is not expected.

Nonetheless, RHI Magnesita added that it is confident it will achieve its current guidance for 2023.

Elsewhere in London, Aptamer plunged 51% after it announced it expects "significantly lower" revenue for the financial year ending June 30.

Aptamer said revenue for the ten months ended April 30 was approximately GBP1.4 million, with its pipeline taking "longer than expected to convert". As a result, the life sciences company now anticipates revenues for the current financial year to be "materially below" the GBP4.0 million reported last year.

In European equities on Friday, the CAC 40 in Paris ended up 1.3%, while the DAX 40 in Frankfurt ended 1.4% higher.

The euro stood at USD1.1016 at the European equities close on Friday, higher against USD1.1002 at the same time on Thursday.

Commerzbank Analyst Ulrich Leuchtmann said that the market viewed Thursday's European Central Bank rate decision and the subsequent press conference with President Christine Lagarde to be mostly "EUR-negative".

Lagarde on Thursday said a slowdown in the pace of the Frankfurt-based institution's rate hikes is not a sign that a pause in monetary policy tightening is looming.

She said she believes the ECB still has "more ground to cover" in the fight against inflation, adding that the central bank is yet to see enough transmission from previous hikes to the "real activity" part of the economy.

Brent oil was quoted at USD74.94 a barrel at the London equities close on Friday, up from USD72.38 late Thursday. Gold was quoted at USD2,013.19 an ounce, lower against USD2,049.92 at the close on Thursday.

In the economic calendar next week, financial markets in the UK are closed on Monday for the coronation of King Charles III. On Thursday, the Bank of England will announce its interest rate decision.

By Heather Rydings, Alliance News senior economics reporter

Comments and questions to [email protected]

Copyright 2023 Alliance News Ltd. All Rights Reserved.

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