- Markets upbeat ahead of US jobs data
- UK trade deficit at highest level since November
- ECB still in focus
- M&A speculation surrounds Smith & Nephew, Centrica
techMARK 2,844.51 +0.70%
FTSE 100 6,831.30 +0.26%
FTSE 250 16,137.01 +0.88%
A worse-than-expected increase in the UK trade deficit couldn't deter investors on Friday as London stocks bounced off their worst levels in two and a half weeks ahead of the all-important US jobs report later on.
The FTSE 100 was trading at around 6,831 by midday, 0.3% higher than Thursday's close of 6,813.49, its lowest finish since May 20th.
UK investors were underwhelmed yesterday by a string of new measures announced by the European Central Bank (ECB) yesterday in an attempt to stave off deflation and boost growth. However, US stocks performed well with the S&P 500
and Dow Jones Industrial both rising to all-time highs.
In an unprecedented move for any major central bank, ECB President Mario Draghi dropped the deposit facility rate into negative territory, effectively charging banks to keep their money at the ECB. Draghi also unveiled a string of new measures, including a 10 basis-point cut in the main refinancing rate to 0.15% and a package of up to €400bn of cheap loans to banks to encourage lending.
"The initial reaction to Mario Draghi yesterday was indecisive at best, but UK [stocks] have taken their cue from yet another strong finish in the US and are making decent gains," said David Madden, Market Analyst at IG. "Compared to the US, London's performance has been sluggish at best, but a strong reading on today's US numbers would act as an excellent accompaniment to Mr Draghi yesterday, helping to put us back on track for 6,900."
Analysts expect data to show a 215,000 increase in non-farm payrolls in May, down from the particularly strong reading of 288,00 the month before. The unemployment rate is forecast to rise to 6.4% from 6.3%.
Economic data this morning showed that Britain racked up its largest trade deficit since November in April, casting doubt over government efforts to re-balance the economy towards exports. The UK's seasonally adjusted deficit on trade in goods and services was estimated to have been £2.5bn in April, compared with £1.1bn in March, according to the Office for National Statistics. Analysts had expected the deficit to only widen to £1.5bn.
Howard Archer, Chief European & UK Economist at IHS Global Insight, said: "The initial indications are that net trade is unlikely to contribute significantly to [economic] growth in the second quarter and could even be a modest drag."
Bid targets Smith & Nephew and Centrica in focus
Medical devices maker Smith & Nephew retreated slightly as investors paused for breath after the stock's strong run over the last few weeks amid speculation about a potential offer from three rumoured bidders: Johnson & Johnson, Stryker and Medtronic. The stock, down 1% today, is still 18% higher than a month ago.
British Gas owner Centrica was on the rise amid reports in the Daily Mail that it has attracted interest from Qatari investors.
Temporary power and temperature control group Aggreko was making gains after Jefferies maintained a 'buy' recommendation, saying that it sees "plenty of exciting opportunities" to grow the business after an analyst visit this week. "Faced with a less buoyant power projects market, Aggreko is getting on the front foot and creating completely new markets for itself," the broker said.
Financial stocks were in demand today with Schroders, RSA Insurance and Aberdeen Asset Management. Consumer staples stocks such as Unilever, Diageo, Reckitt Benckiser and Imperial Tobacco were out of favour.
Communication services group KCOM gained after saying that after a recent re-financing and with underlying cash flow strong, it is looking for investment opportunities to strengthen its position in target markets.
International healthcare services group Synergy Health impressed after it announced a multi-year contract with medical device manufacturer Sterilmed. Canaccord Genuity upgraded the stock from 'sell' to 'hold' today and hiked its target price.
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 412.20p +2.11%
Aggreko (AGK) 1,689.00p +1.99%
Schroders (SDR) 2,662.00p +1.99%
RSA Insurance Group (RSA) 488.80p +1.88%
Aberdeen Asset Management (ADN) 454.20p +1.84%
Melrose Industries (MRO) 285.20p +1.78%
Travis Perkins (TPK) 1,713.00p +1.66%
Mondi (MNDI) 1,115.00p +1.64%
Hargreaves Lansdown (HL.) 1,288.00p +1.58%
Sports Direct International (SPD) 810.00p +1.57%
FTSE 100 - Fallers
Unilever (ULVR) 2,634.00p -1.57%
Diageo (DGE) 1,876.50p -1.50%
Reckitt Benckiser Group (RB.) 5,050.00p -1.27%
Fresnillo (FRES) 782.50p -1.20%
Imperial Tobacco Group (IMT) 2,610.00p -1.17%
SABMiller (SAB) 3,223.50p -1.03%
Burberry Group (BRBY) 1,480.00p -1.00%
British Sky Broadcasting Group (BSY) 863.50p -0.97%
Smith & Nephew (SN.) 1,078.00p -0.92%
Randgold Resources Ltd. (RRS) 4,372.00p -0.79%
FTSE 250 - Risers
Supergroup (SGP) 1,162.00p +5.83%
Synergy Health (SYR) 1,368.00p +4.43%
CSR (CSR) 628.50p +3.37%
RPC Group (RPC) 669.50p +3.24%
Fisher (James) & Sons (FSJ) 1,352.00p +3.21%
Amec (AMEC) 1,260.00p +3.19%
Ashmore Group (ASHM) 366.40p +3.12%
International Personal Finance (IPF) 628.00p +3.04%
KCOM Group (KCOM) 93.60p +3.03%
Berkeley Group Holdings (The) (BKG) 2,329.00p +2.83%
FTSE 250 - Fallers
Lonmin (LMI) 248.30p -2.59%
Wood Group (John) (WG.) 789.00p -1.00%
Kazakhmys (KAZ) 277.30p -0.96%
Rathbone Brothers (RAT) 2,147.00p -0.88%
Cairn Energy (CNE) 199.20p -0.80%
JD Sports Fashion (JD.) 1,629.00p -0.73%
Tullett Prebon (TLPR) 277.80p -0.64%
esure Group (ESUR) 258.50p -0.58%
BH Macro Ltd. EUR Shares (BHME) € 18.75 -0.53%
Cranswick (CWK) 1,279.00p -0.47%