8th Nov 2013 17:38
LONDON (Alliance News) - The FTSE 100 closed a touch higher Friday after a volatile 24 hours marked by surprisingly positive US data and the European Central Bank's rate cut, but the index is down for the week for the first time in over a month as markets again price in an early move by the Federal Reserve to start reducing the flow of cheap money to the economy.
The blue-chip index was down for most of the day amid a global equities selloff that was prompted Thursday afternoon when US GDP data came in well above expectations. It fell further after US employment data also came in way above expectations Friday. However, it tracked US markets higher late in the day to close up 0.2% on the day at 6,708.42, breaking a three-day losing streak.
The miner heavy FTSE 250 couldn't retrace all its losses, closing down 0.3% at 15,342.03, while the AIM All-Share closed down 0.3% at 811.14. The FTSE 100 was down 0.4% for the week. After the European market close, US equities were higher. The DJIA was up 0.5%, the S&P up 0.8% and the Nasdaq Composite up 1.1%.
"We seem to have returned to some form of market normality where a very positive piece of macro data, in this case a better than expected non-farm payrolls number, has led to the markets being better bid as we finish a tumulus week on a high", says CMC Senior Trader Alex Young.
Until now, strong US data has been pushing stocks lower as investors think it will prompt the Fed to start reducing its asset-buying programme soon. That's deemed bad for stocks because it will reduce the flow of cheap central bank money that has been lifting the economy and companies.
The US non-farm payroll report showed the US economy added 204,000 jobs, way above the consensus expectation of 125,000. Both of the last two monthly readings were also revised higher, August to 238,000 from 193,000, and September to 163,000 from 148,000. The headline rate of unemployment increased to 7.3%, up from 7.2%, as expected.
There was a wide range of expectations for the payroll number as economists tried to determine how the 16-day US government shutdown might impact the figure. However the actual number came in higher than even the highest of estimates.
In the last significant economic reading of the week, the Reuters/Michigan Consumer Sentiment Index dropped to 72.0 for November, down from 73.2 in October and missing economists expectations of 74.5.
Major European markets did close lower, dragged down by the sovereign rating downgrade by S&P on France this morning, to AA from AA+. The CAC40 has closed down 0.5% and the DAX just marginally lower.
The dollar has gained across the board on the back of the strong US employment report, while gold has slipped. At close of the UK stock market, the pound is quoted at USD1.5992, the euro at USD1.3355 and gold at USD1,285.70 per ounce, down more than 1.5% over the day.
At the stock level, International Consolidated Airlines Group was the biggest gainer on the FTSE 100. IAG shares closed up 6.9% after the parent company of British Airways and Spain's Iberia reported a jump in profits and revenues for the first nine months of the year, buoyed by its acquisition of Spanish carrier Vueling, and as its turnaround of Iberia started paying off.
At the other end of the spectrum, Aberdeen Asset Management was the biggest blue chip faller, down 4.5%. It has jumped 6% since announcing two weeks ago that it is in talks with Lloyds Banking Group over the possible acquisition of the bank's Scottish Widows Investment Partnership. However, Jefferies expressed skepticism of any potential deal Friday, saying Aberdeen's past success has been "despite its acquisitions rather than because of them".
Rolls-Royce drove Aerospace and Defense to be the biggest gaining FTSE 350 sector index. The sector closed up 2.8% and Rolls-Royce 3.3% after the UK engine group released a statement that showed the company is trading in line with expectations.
In an IPO on a slightly smaller scale than that of Twitter, Merlin Entertainments said Friday its initial public offering priced at 315 pence per share, giving the theme-park operator a market capitalisation of GBP3.19 billion. Merlin ended the day up 5.5%
For the record, Twitter is trading down 1.8% at USD44.10 after the European markets closed, after the 73% increase they posted Thursday.
A much quieter start to the week is expected on Monday, both in terms of the UK corporate calendar and macro data. A raft of Chinese economic data released over the weekend is likely to provide the early driver. Data including CPI, PPI, industrial production and retail sales is all released on Saturday. France is closed Monday for Armistice Day and the US is out for Veterans Day.
By Jon Darby; [email protected]; @jondarby100
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