- ADP employment report surprises to the upside
- Traders brace for Friday's US jobs report
- Sage races ahead
The FTSE ended the session slightly lower after the latest US ADP payrolls number came in ahead of forecasts, which pushed long-term bond yields higher both Stateside and in the UK, thus effectively caping any upward momentum in stocks.
Private sector payrolls expanded by 215,000 last month, according to ADP, coming in comfortably ahead of the 170,000 forecast by economists, while October´s figures were revised up modestly. Nevertheless, and as Barclays Research points out, the above data series is volatile and revision prone. As well, it is not very useful when trying to anticipate the official non-farm payrolls data from one month to the next.
Even so, investors were wary that a stronger-than-expected increase in non-farm payrolls could prompt the Federal Reserve to begin scaling back stimulus even as soon at its next meeting on December 17-18th or in January.
The median (not average) expectation from economists polled by Bloomberg continues to be for Fed tapering beginning in March, but traders are still a tad nervous and equities have come a very long way year-to-date.
Very much worth noting, as far as UK gilts are concerned, speaking in the afternoon ratings agency Standard&Poor´s (S&P) chief rating officer, Moritz Kraemer, indicated that S&P will be analysing the sustanability of UK growth.
In particular, they want to determine if the current pattern of growth would warrant a rating action one way or another. Strikingly, he said that: "we observe that some of the growth is similar to the growth before the crisis, which was in many people´s minds linked to a very buoyant property market."
Acting as a backdrop, in the morning investors were treated to some rather worrisome data on the Eurozone´s service sector, which according to survey compiler Markit points to France heading back into recession in quarter four and Italy about to register a "staggering" [Markit dixit] tenth consecutive quarter of economic contraction.
Overnight the latest Chinese service sector figures revealed slowing growth momentum, HSBC anounced.
A modestly lower-than-expected UK service sector purchasing managers´ survey managed to knock cable off its perch atop the 1.64 level.
The Markit/CIPS UK purchasing managers´index (PMI) came in at 60 for November, compared to 62.5 a month earlier and the consensus estimate for a reading of 62.
The Fed´s Beige Book is due out this evening.
Sage Group gave the top tier index a boost with a near 7% rise in its share price on the back of a divi raise and predicted revenue growth of six per cent for 2015.
However, gains were limited by a raft of stocks going ex-dividend, including the Aberdeen Asset Management, London Stock Exchange, National Grid, Severn Trent and Tate&Lyle.
In other macro news, the government is set to later today unveil its two-year infrastructure spending plan, which is expected to include £375bn-worth of investment in energy, transport, communications, and water projects. The insurance sector is also widely predicted to be planning an investment of £25bn.
The government is also due to significantly alter its policy of renewable energy subsidising, according to the BBC, with plans to scale back its contributions to both onshore wind and solar energy, while increasing its support to offshore wind power. Overall spending is not expected to differ.
Sage Group races to the top of the leaderboard
Although Sage Group's annual pre-tax profit was broadly flat at £164.1m, this was a reflection of the cost of non-core disposals, with revenue for the period rising 4% to £1.26bn, driven by growth in premium support contract upselling and renewals, software subscriptions and payment services. The firm proposed a final ordinary dividend of 7.44p per share, bringing the total ordinary dividend to 11.32p per share, up 6% on the prior year.
ended the day slightly lower after the company posted a disappointing result for the third quarter. The supermarket chain said like-for-like sales in the period had fallen 1.5% due to a grocery market that had become more difficult since the summer due to pressure on consumer finances. Analysts at Credit Suisse, however, had this to say: "[Tesco] has today reported negative like-for-like in every country for the second consecutive quarter. But, the outlook appears robust and we think this shows Tesco is more on top of its business than perhaps some give it credit for.
Randgold Resources rose strongly after Investec upgraded the stock to 'buy' with a 5,095p target price.
Meanwhile, Standard Chartered fell heavily after saying a "challenging year" has resulted in a "significant impact" on its performance in the second half and as such income for the full year is expected to be broadly flat on 2012. Nevertheless, Investec highlighted that it is the cheapest British bank on a fundamental basis, something which it sees as an "anomaly."
FTSE 100 - Risers
Sage Group (SGE) 372.90p +7.34%
Tullow Oil (TLW) 876.00p +2.58%
Melrose Industries (MRO) 287.40p +2.53%
Rio Tinto (RIO) 3,262.50p +1.95%
Antofagasta (ANTO) 767.00p +1.72%
easyJet (EZJ) 1,407.00p +1.52%
BAE Systems (BA.) 420.70p +1.06%
Aggreko (AGK) 1,600.00p +0.95%
BHP Billiton (BLT) 1,818.50p +0.94%
WPP (WPP) 1,329.00p +0.91%
FTSE 100 - Fallers
Standard Chartered (STAN) 1,338.50p -6.46%
Aberdeen Asset Management (ADN) 461.40p -4.61%
Pearson (PSON) 1,295.00p -2.78%
Severn Trent (SVT) 1,663.00p -2.35%
Bunzl (BNZL) 1,340.00p -2.26%
National Grid (NG.) 748.50p -2.03%
Experian (EXPN) 1,077.00p -1.82%
Centrica (CNA) 331.30p -1.69%
Lloyds Banking Group (LLOY) 76.76p -1.59%
Reed Elsevier (REL) 859.50p -1.38%
FTSE 250 - Risers
Drax Group (DRX) 743.00p +8.63%
RPC Group (RPC) 528.00p +4.35%
St. Modwen Properties (SMP) 364.20p +3.44%
Computacenter (CCC) 659.50p +3.05%
Interserve (IRV) 653.00p +2.83%
TalkTalk Telecom Group (TALK) 269.80p +2.31%
Balfour Beatty (BBY) 263.70p +2.29%
Ladbrokes (LAD) 171.90p +2.26%
Telecom Plus (TEP) 1,810.00p +2.20%
Home Retail Group (HOME) 191.00p +2.03%
FTSE 250 - Fallers
BBA Aviation (BBA) 314.00p -3.83%
Electrocomponents (ECM) 270.30p -3.67%
Ashmore Group (ASHM) 371.00p -3.64%
Direct Line Insurance Group (DLG) 221.40p -3.28%
Premier Farnell (PFL) 206.00p -3.24%
Synthomer (SYNT) 222.30p -3.05%
Kenmare Resources (KMR) 19.32p -3.01%
De La Rue (DLAR) 886.00p -2.96%
LondonMetric Property (LMP) 127.30p -2.68%
Dunelm Group (DNLM) 868.00p -2.64%
FTSE TechMARK - Risers
Torotrak (TRK) 24.12p +20.62%
Gresham Computing (GHT) 133.00p +5.77%
NCC Group (NCC) 179.50p +4.21%
SDL (SDL) 281.00p +3.40%
Optos (OPTS) 181.00p +2.84%
Skyepharma (SKP) 112.50p +2.27%
Kofax (KFX) 398.25p +2.12%
Ricardo (RCDO) 600.00p +2.04%
XP Power Ltd. (DI) (XPP) 1,510.00p +2.03%
Oxford Biomedica (OXB) 2.29p +1.33%
FTSE TechMARK - Fallers
Phoenix IT Group (PNX) 128.50p -3.02%
Anite (AIE) 87.50p -2.23%
Wolfson Microelectronics (WLF) 143.50p -2.05%
Vislink (VLK) 44.50p -1.93%
RM (RM.) 110.00p -1.35%
Vectura Group (VEC) 114.50p -0.87%
Gov Bond 7-10YR UCITS ETF (IEGM) € 178.66 -0.55%