The FTSE 100 closed up 174.53 points, or 1.7%, at 10,652.87 on Thursday, as weaker-than-expected US jobs figures dampened market worries of a near-term interest rate hike by the Federal Reserve. The FTSE 250 ended up 87.51 points, 0.4%, at 23,417.58, while the AIM All-Share rose 1.40 points, 0.2%, at 777.45.
European and US Markets Respond
In European equity markets, the Cac 40 in Paris ended up 1.7%, and the Dax 40 in Frankfurt gained 2.2%. In New York, the Dow Jones Industrial Average was up 0.7%, the S&P 500 eased 0.1%, and the Nasdaq Composite fell 0.8%.
“We’re in a ‘bad news is good news’ situation as weaker than expected US jobs data spurred a stock market rally,” said Dan Coatsworth, head of markets at AJ Bell. “Markets have interpreted the employment figures as making it less likely the Fed will raise interest rates,” he added.
US Jobs Data Details
According to the Bureau of Labour Statistics, total non-farm payroll employment rose by 57,000 in June, from 129,000 in May, falling short of the FXStreet cited consensus of 110,000. The May data saw a sharp downward revision from an initially reported 172,000, and the April reading was revised down to 148,000 from a previously reported 179,000. The jobless rate eased to 4.2% in June from 4.3% in May, where it had been expected to remain, according to FXStreet.
Analysts at TD Economics noted market odds for a July US rate hike were “completely pushed back” following the release, with a hike being 30% priced ahead of the payrolls report. All eyes now turn to June’s consumer price inflation release, scheduled for July 14. “While a hotter reading could swing odds back in favour of a summer hike, we still think the bar for policy tightening is high,” the broker said.
ING agreed, stating the figures have “taken the wind out the sails for calls for imminent rate hikes. A soft July CPI report should boost the case for a prolonged Fed pause.”
Bond Yields and Currency Movements
The US 10-year Treasury yield traded at 4.46% on Thursday, trimmed from 4.47% on Wednesday, and the US 30-year Treasury yield was flat at 4.97%. The pound traded at $1.3367 on Thursday afternoon, up from $1.3273 on Wednesday. Against the euro, sterling firmed to €1.1681 from €1.1657.
Bank of England Governor Comments
Comments from Bank of England Governor Andrew Bailey attracted attention. Bailey insisted the UK central bank is “not complacent” about bringing down UK inflation following warnings from its chief economist. He said he was “not happy” that the rate of consumer price index inflation was above the Bank’s 2% target.
Bailey told CNBC: “We’re not complacent. It’s perfectly reasonable for people to take different views. One of the strengths of our committee is that you do have quite different views that are expressed, and that’s good, I welcome that. Huw Pill does take a different view on that and he’s quite justified to take that position. Of course we’re concerned. We’re not complacent at all.”
Huw Pill, the Bank of England’s chief economist and member of its rate-setting committee, told the Press Association earlier this week that the Bank “should not be complacent” about the threat of CPI rising as a result of oil and gas prices surging amid the US-Israeli war with Iran.
Commodities and Sector Movers
Brent crude for September delivery traded lower at $70.76 a barrel on Thursday, down from $71.85 on Wednesday. On the FTSE 100, defence contractors Babcock International and BAE Systems both jumped 5.5%, leading the blue-chip risers, while on the FTSE 250 sector peer Qinetiq rose 7.1%. Drug stocks and index heavyweights AstraZeneca and GSK climbed 4.9% and 3.8%, while spirits seller and Guinness owner Diageo advanced 3.6%.
FTSE 250 Movers
On the FTSE 250, PPHE Hotel Group fell 4.2% after stating it is no longer in discussions with any party in relation to its possible sale “that the board considers to be deliverable”. Last month, Fattal Hotels Ltd said it was not proceeding with a possible £22 per share bid for the London-listed firm after PPHE major shareholder Euro Plaza Holdings expressed opposition. At the time, PPHE said it had “received an indicative proposal from another interested party”, but on Thursday PPHE said “it is not in receipt of any approach”.
Baltic Classifieds was also in the doldrums, down 5.8%, as guidance missed market expectations. The online classified ads portal provider in Lithuania, Estonia and Latvia expects revenue growth of around 10% in 2027, below company-compiled consensus of 13%. Peel Hunt analyst Jessica Pok agreed there will be “some disappointment” due to lower guidance than was expected, but she thinks ongoing buybacks should offset this, which “in our view will be significant going into FY27E, supporting EPS and share price growth”. Baltic Classifieds, which by mid-June had repurchased 10% of its issued share capital, intends to seek approval to repurchase up to a further 15% of its issued share capital.
Capricorn Energy jumped 20% as it accepted a $360 million offer from London-based oil and gas firm Genel Energy, which rose 7.0%. Capricorn said the cash offer values each share at $4.74, or 357 pence, comprising $3.75 in cash and an intended special dividend of $0.99. Capricorn said the bid was “a meaningfully superior proposal relative to other credible proposals received”.
FTSE 100 Biggest Risers and Fallers
The biggest risers on the FTSE 100 were Babcock International, up 55.50p at 1,056.50p; BAE Systems, up 102.50p at 1,982.50p; AstraZeneca, up 684.00p at 14,528.00p; Melrose Industries, up 23.40p at 498.70p; and St James’s Place, up 50.00p at 1,276.50p. The biggest fallers were Polar Capital Technology Trust, down 25.00p at 679.00p; Entain, down 11.80p at 540.00p; Computacenter, down 86.00p at 4,328.00p; JD Sports Fashion, down 1.12p at 83.10p; and Prudential, down 13.00p at 1,027.00p.
Outlook
Friday’s global economic calendar has a slew of composite PMI reports and industrial production data in France. US financial markets are closed for Independence Day. There are no significant events scheduled in Friday’s local corporate calendar.
– Contributed by Alliance News
