9th Nov 2015 12:16
LONDON (Alliance News) - UK stocks were slightly higher Monday, with investors still digesting last Friday's robust US jobs report and its consequences for expectations of a December US interest rate hike.
The report on Friday from the US Labor Department said non-farm payroll employment jumped by 271,000 jobs in October following a downwardly revised increase of 137,000 jobs in September. Economists had expected an increase of about 185,000 jobs compared to the addition of 142,000 jobs originally reported for the previous month.
The strong job growth helped push the US unemployment rate down to 5.0% in October from 5.1% in September, matching economist estimates, and reinvigorated expectations of a December interest rate hike by the US Federal Reserve.
Connor Campbell, financial analyst at Spreadex, said 70% of analysts are now expecting a December "lift-off" following the data, while Jasper Lawler, market analyst at CMC Markets, said the higher prospects of a US rate hike was supporting shares of UK-listed lenders as investors expect better lending margins once rates rise.
Barclays shares were up 1.7%, and HSBC Holdings was up 1.5%.
Together with Barclays, fellow Asia-focused financial companies Aberdeen Asset Management and Standard Chartered were up 3.2% and 2.2%, respectively, after a resilient response in Asian equity markets on Monday to the greater prospect of a 2015 US rate hike. The Shanghai Composite index ended up 1.6%, and the Japanese Nikkei 225 index closed up 2.0%, while the Hang Seng in Hong Kong finished down 0.7%.
Asian stocks were helped by renewed hopes for further monetary stimulus from the People's Bank of China after a poor set of trade figures from the world's second largest economy over the weekend. Data published by the General Administration of Customs on Sunday showed China's exports fell for the fourth straight month in October, while imports plunged on weak domestic demand.
In addition, a number of press reports stated that China's securities regulator said on Friday it will allow the resumption of initial public offerings of shares in China, lifting a suspension put into effect in July as authorities desperately tried to slow falling stock prices.
The China Securities Regulatory Commission said that 28 companies which had seen their already-approved listings halted by the freeze would be the first out of the gate, adding they have two weeks to prepare for the resumption, with the first batch of 10 companies launching after November 20.
On the London Stock Exchange at midday, the FTSE 100 index was up 0.1% at 6,357.52 points, the FTSE 250 index was up 0.2% at 17,203.28, while the AIM All-Share was down 0.1% at 745.83.
European equities were trading in the red, however, with the CAC 40 index in Paris down 0.6% and the DAX 30 in Frankfurt was down 0.4%.
US stock futures pointed to a mixed open on Wall Street. The Dow 30 index was indicated down 0.3%, while the S&P 500 and Nasdaq 100 were both flat.
London's relative outperformance against other European stock markets was mainly due to a rebound in its commodities sector. In the FTSE 100, Anglo American, up 2.4%, Rio Tinto, up 2.1% and BP, up 1.2% were amongst the best performers. The leading stock gainers in the midcap index were Tullow Oil, up 17%, and Premier Oil, up 13%.
InterContinental Hotels Group led the fallers in the FTSE 100, down 3.8% after the hotel operator said that it was not considering a potential sale or merger of the company, following recent market speculation.
On Friday, Bloomberg reported that IHG was exploring strategic options including a potential sale or merger after attracting interest amid a boom in hotel sector deals. IHG previously had been linked to the US's Starwood Hotels & Resorts Worldwide.
In the FTSE 250, Aggreko was up 7.7%. The temporary power provider maintained its pretax profit guidance for the year despite the tough conditions which have hit the company in 2015 continuing in the third quarter.
The company said it continues to expect its pretax profit for the full year to be GBP250.0 million to GBP270.0 million, down from GBP289.0 million in 2014. The group said its revenue for the third quarter to the end of September was down 6.0% on a year before and was down 7.0% on an underlying basis.
Serco Group shares traded up 6.8% after it reached a deal with the Australian government to amend the terms of its existing contract providing in-service support for Armidale Class Patrol Boats, which will result in the group booking significantly smaller provisions against losses from the contract in the future.
The outsourcer said the amendments made to the contract mean the deal will now end in 2017 rather than in 2022. Serco will provide maintenance and remediation work on an agreed cost recovery basis, which will be subject to strict cost caps and audit processes, it said.
TalkTalk Telecom Group was the worst performer in the FTSE 250, down 5.2%, after HSBC cut it to Hold from Buy.
On the AIM market, Red24 was down 19%. The crisis assistance company said pretax profit and revenue both fell in the first half, primarily due to the loss of work from a key customer and lower activity in its response business.
The company said its pretax profit for the half to the end of September was GBP346,000, down from GBP487,000 a year earlier primarily due to the lack of revenue from its identity theft service contract with bank HSBC. Revenue declined to GBP3.0 million from GBP3.3 million, mainly due to the loss of the HSBC contract and lower activity in its crisis response business, which had been boosted a year earlier by an evacuation event in Libya. About 75% of the HSBC revenue lost was replaced by new travel assistance customers, the group said.
Gold miner Patagonia Gold, up 15%, said it has signed a letter of intent with Trilogy Mining which will lead the company to acquire stakes in gold projects in Uruguay in return for staged investments.
Patagonia can acquire up to 100% of Trilogy's Carreta Quemada and Chamizo gold projects in Uruguay, and is expecting the deal to be finalised before the end of 2015. Under the terms, Patagonia will earn its first 15% stake in the projects by funding USD500,000 of work over an 18 month period, and this will rise to 51% if it funds USD1.5 million of work in the same period.
Still in the data calendar Monday, the US Labor Market Conditions Index for October is expected at 1500 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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