London market stepped up after the
Bank of England said the UK showed ‘no
clear signs’ of a sharp economic
slowdown following the Brexit vote.
The FTSE 100 Index closed above the
6,700 mark, up 31.62 points to 6728.99,
after a report by the Bank’s agents said
there was little sign of employment and
investment being hit in the short term by
Britain’s exit from the European Union,
but added that uncertainty had ‘risen
markedly’.
The rise on London’s top flight came as
sterling regained some ground thanks to
a strong set of employment figures for
the UK.
The pound was 0.5 per cent higher
against the dollar at 1.317 US dollars
following another fall in unemployment
and a record number of people in work.
The employment rate reached a record
high of 74.4 per cent, with 31.7million
people in work in the three months to
May – 176,000 more than the previous
quarter.
A total of 1.65million people are
unemployed, a fall of 54,000 over the
quarter and 201,000 compared with a
year ago, giving a jobless rate of 4.9 per
cent.
But the claimant count, including those
on Jobseeker’s Allowance, increased by
400 last month to 759,100, the fourth
consecutive monthly rise.
The pound also rose against the euro,
up 0.6 per cent to 1.196 euros.
European markets were enjoying a
strong session, with Germany’s Dax
surging 1.6 per cent and the Cac 40 in
France lifting 1.1 per cent ahead of the
European Central Bank’s meeting on
Thursday.
The price of oil was up 0.8 per cent to
47.05 US dollars a barrel after the
American government reported declines
in crude inventory for the ninth week in
a row.
In stocks, financial firms and
housebuilders made gains after taking a
battering in the aftermath of the
referendum result.
Standard Chartered was up two per cent
or 15.7p to 617.5p and Charles Church
builder Persimmon rallied 39p higher to
1650p.
However, miners were left languishing in
the red after Anglo American slashed its
guidance for copper and iron ore output
in an update for the second quarter.
The London-listed firm was at the top of
the biggest fallers, with shares down
four per cent or 39.2p to 774.4p, while
Glencore slipped 3.7p to 176.2p and
BHP Billiton dropped 22.1p to 926.4p.
Away from the top tier, TalkTalk slid
three per cent or 6.7p to 216p after
saying its broadband customer base
remains 9,000 lower despite halting the
exodus from the firm following last
year’s cyber attack.
The FTSE 250 company said revenues
held largely firm, edging 0.4 per cent
lower in its first quarter, as it continued
to cut costs and grew its corporate
business to help offset the impact of the
hack last October, which resulted in the
personal data of nearly 160,000 people
being accessed.
Travel stocks were under pressure after
budget airline Wizz Air became the latest
firm to reveal a blow from the Brexit-hit
pound as it cut plans to expand flights
from Britain.
The Eastern and Central European
carrier, which is listed in London, had
aimed to boost its routes from the UK
with more services, but said it would
now halve these growth plans due to the
recent plunge in the value of the pound.
Shares in Wizz Air were down 18p to
1525p, while British Airways-owner IAG
slipped 2.8p to 420.7p.
The biggest risers on the FTSE 100
Index were St James’s Place up 39p to
898p, Legal & General up 5.9p to
197.3p, Sage Group up 20.5p to 697p,
Admiral Group up 58p to 2103p.
The biggest fallers were Anglo American
down 39.2p to 774.4p, Fresnillo down
58p to 1819p, Randgold Resources
down 230p to 8710p, BHP Billiton down
22.1p to 926.4p.
15.10 : The Footsie was just about
holding onto gains by late afternoon
after Wall Street extended its record-
setting rally.
With just over an hour to go, the FTSE
100 was up only 3 points at 6,701.8
after miners took their toll on the index.
On Wall Street, the Dow Jones rose 0.2
per cent to 18,601, the S&P 500 climbed
by the same percentage to 2,167, while
the Nasdaq advanced 0.4 per cent to
5,056.
The Nasdaq lead the charge encouraged
by stronger earnings from Microsoft,
which was up by 5.3 per cent.
Microsoft’s cloud business is going from
strength to strength, offsetting the tech
company’s attachment to the declining
PC market.
Meanwhile Morgan Stanley rose 2.8 per
cent on the back of a quarterly beat.
The bank fanned hopes that a shake-up
of its trading division could lead to
significantly better profits, boosted by
cost cuts and a surge in M&A.
But its equities division did worse than
the previous year, with revenues of
$2.1billion down about 9 per cent from
an exceptionally strong second quarter
in 2015.
Overall, revenues were down 7 per cent
at $8.9billion, better than analysts’
forecasts of $8.31billion.
West Texas Intermediate, the US oil
marker, was down 1.9 per cent to
$43.80 a barrel ahead of an inventories
report due from the American
government.
12.20: The Footsie and the pound both
held firm at lunchtime after the UK
jobless rate hit its lowest since 2005 in
the run-up to the EU referendum, and
after the Bank of England said although
business uncertainty had ‘risen
markedly’, there was ‘no clear evidence’
of a sharp economic slowdown since.
By mid session, the FTSE 100 index was
up 16.1 points, or 0.2 per cent at
6,713.5, albeit drifting below the day’s
peak of 6,736.57 which was close to
last week’s 11 month highs.
European markets were stronger, with
the CAC 40 index in Paris ahead 1.1 per
cent and Frankfurt’s Dax 30 index
gaining 1.4 per cent as investors
awaited tomorrow’s key European
Central Bank policy meeting, although
further stimulus moves are unlikely.
US stock index futures were also higher,
putting the Dow Jones Industrial
Average on track for a seventh straight
day in record territory, with software
giant Microsoft strong after-hours
yesterday following better-than-
expected earnings.
In the absence of any US economic data
today, earnings will again dominate with
investment banking group Morgan
Stanley due to report ahead of the Wall
Street opening bell, while tech firms Intel
and ebay will report after the US close.
On currency markets, sterling held gains
made following today’s robust UK
unemployment report, adding 0.6 per
cent versus the dollar to $1.3174, and
also up 0.6 per cent against the euro at
€1.1960.
The Office for National Statistics said a
total of 1.65 million people were
registered as unemployed in the three
months to May, a fall of 54,000 over the
quarter and down 201,000 compared
with a year ago, giving a jobless rate of
4.9 per cent, down from 5 per cent in
the previous month.
Sterling also got a boost after the Bank
of England said that although business
uncertainty had ‘risen markedly’ since
the Brexit vote, there was ‘no clear
evidence’ of a sharp economic
slowdown.
The Bank’s regional agents, which are in
regular contact with companies across
the UK, said a third of contacts
predicted employment and investment
would come under pressure within the
year, but expected little impact in the
short term.
The update comes after the Bank took
markets by surprise last week by
holding back from cutting interest rates
this month – although they signalled a
rate cut could come in August.
The Bank said its agents had increased
the intensity of their intelligence
gathering’ since Britain voted to leave
the EU, and for many businesses the
referendum result had come as a shock.
Jasper Lawler, Market Analyst at CMC
Markets, said: ‘The positive labour
market data surprise coupled with the
Bank of England saying it sees ‘no
evidence of a sharp slowing of activity’
after the referendum triggered gains in
the British pound.
‘The ONS was careful to point out that
data was collected before the vote was
known, but it now seems undeniable
that there was no slowdown in
economic activity as a result of
uncertainty before the referendum.
‘The question that remains unanswered
is whether the economy has begun to
slow afterwards. Still, based on
available data, the Bank of England has
scant evidence to justify a big easing of
monetary policy.’
Among equities, motor insurer Admiral
remained the top FTSE 100 gainer, up
2.3 per cent, or 45p at 2,090p after
Swiss broker UBS upped its rating for
the stock to buy from ‘neutral, with an
increased target price of 2,339p.
But the same broker downgraded its
rating on Barclays to neutral from buy,
sending the bank’s shares 0.1p lower to
150.3p.
Prices delayed by 15 minutes.
And downgrades from JPMorgan to
neutral from overnight hit blue chip
airlines IAG and easyJet.
British Airways and Iberia-owner IAG
shed 5.1p at 418.4p, while budget
carrier easyJet fell 4p to 1,112p.
easyJet issues a third quarter trading
update tomorrow.
Falls from heavyweight miners also
remained a drag on the blue chips as
metal prices dropped and following dull
production updates from a number of
player.
Anglo American was the biggest FTSE
100 faller, dropping 6.9 per cent or
56.1p to 757.5p after cutting its full
year iron ore and copper production
guidance.
Analysts at broker Liberum Capital
called Anglo’s production update ‘fairly
weak’.
Meanwhile BHP Billiton shed 2.5 per
cent, or 23.8p at 924.7p after its iron
ore production guidance for 2016 fell
short of forecasts.
10.20: Footsie extended its gains and
the pound rallied as the morning
session progressed after data showed
the UK unemployment rate hit its lowest
since 2005 in the run-up to the EU
referendum, although worries about
economic prospects since the Brexit
vote remain.
By mid morning, the FTSE 100 index
was up 29.6 points, or 0.4 per cent at
6,727.0, just below an earlier peak of
6,736.57 which was close to 11 month
highs, having closed 1.95 points higher
yesterday.
European markets were also firmer, with
the CAC 40 index in Paris and
Frankfurt’s Dax 30 index both gaining
around 1.0 per cent as investors
awaited tomorrow’s key European
Central Bank policy meeting for any
further stimulus moves.
On currency markets, having been lower
ahead of the UK data, the pound turned
higher against the dollar, up 0.4 per
cent to $1.31.54, and extended its gains
versus the euro to 0.5 per cent at
€1.1956.
The Office for National Statistics said a
total of 1.65 million people were
registered as unemployed in the three
months to May, a fall of 54,000 over the
quarter and 201,000 compared with a
year ago, giving a jobless rate of 4.9 per
cent.
The jobless total was the lowest for eight
years, while the unemployment rate was
the lowest since the summer of 2005
and was better than expectations for it
to hold steady at 5 per cent.
Meanwhile, claimant count
unemployment, including those on
Jobseeker’s Allowance, increased by
400 last month to 759,100, the fourth
consecutive monthly rise, but less than
forecast.
And wages continued to increase ahead
of the referendum, as expected, with pay
including bonuses rising 2.3 per cent in
the three months to May – the biggest
increase since October 2015.
Ben Brettell, Senior Economist,
Hargreaves Lansdown, said ‘Today’s
unemployment and wage growth
numbers from the ONS cover the three
months to the end of May. As such they
reflect pre-referendum conditions and
can be taken with a large pinch of salt.’
But, he added: ‘In an interesting quirk of
the data, the ‘claimant count’ figure
released today is from June, so is a little
more up-to date. An increase of 4,000
people claiming unemployment benefit
was forecast, so the actual figure of 400
comes as something of a positive
surprise.’
And he concluded: ‘As such the current
unemployment rate of 4.9 per cent could
be the lowest we see for a while, but if
the forecast downturn in the labour
market does materialise, at least we
start from a position of relative
strength.’
Illustrating the worries for the future, a
survey also published today showed
pessimism among British households
about their financial prospects hit a two-
and-a-half-year high after last month’s
vote to leave the European Union.
Markit’s Household Finance Index fell to
47.0 in July, down from 49.3 in June,
the lowest level since January 2014.
Among equities, strength in energy
majors provided the main support for
the blue chips as oil prices bounced
modestly higher after falling more than
1 per cent yesterday, with Brent crude
up 0.3 per cent at $46.81 a barrel. BP
gained 0.5p at 453.3p and Royal Dutch
Shell rose 6.5p to 2,137p.
Blue chip platinum and chemicals
company Johnson Matthey added 4p at
3,151p after it affirmed its full year
expectations following a robust first
quarter trading performance.
Drugmaker Hikma Pharmaceuticals
gained 45p at 2,596p after launching its
generic Xeloda cancer treatment tablets
in the US
Motor insurer Admiral was the top FTSE
100 gainer, up 2.3 per cent, or 46p at
2,091p after Swiss broker UBS upped
its rating for the stock to buy from
‘neutral, with an increased target price
of 2,339p.
But the same broker downgraded its
rating on Barclays to neutral from buy,
sending the bank’s shares 0.9p to
149.5p.
And downgrades from JPMorgan to
neutral from overnight hit blue chip
airlines IAG and easyjet. British
Airways-owner IAG shed 6.5p at
417.0p and easyjet fell 9p to 1,107p.
Footsie’s gains were also weighed by
falls from heavyweight miners as metal
prices dropped and following dull
production updates from a number of
player.
Anglo American was the biggest FTSE
100 faller, losing 6.6 per cent or 53.9p
at 759.7p after cutting its full year iron
ore and copper production guidance.
Analysts at broker Liberum Capital
called Anglo’s production update ‘fairly
weak’.
Meanwhile BHP Billiton shed 3 per cent,
or 28.2p at 920.3p after its iron ore
production guidance for 2016 fell short
of forecasts.
But conversely, Mexico-focused miner
Fresnillo said production of gold, silver,
lead and zinc all rose in the first half of
2016, leading the firm to significantly
raise its production guidance for the
year. Fresnillo shares gained 2p at
1,879p.
On the second line, Man Group was the
biggest FTSE 250 faller, dropping 4 per
cent or 5.0p to 117.3p after revealing
that its chief executive, Manny Roman is
quitting to join US bonds giant PIMCO
as its new boss on November 1. Luke
Ellis will succeed Roman as Man
Group’s CEO.
But TalkTalk Telecom was the biggest
mid-cap gainer, up 3.7 per cent or 8.3p
at 231.0p as the company reported a
small decline in revenue in the first
quarter of its financial year, but said it
expects things to pick up in the second
half and reiterated its full-year
guidance.
Talktalk said revenue was down a slight
0.4 per cent in the three months ended
June 30 from a year before, with on-net
revenue down by 2.0 per cent as
expected due to a smaller average on-
net base in the quarter.
08.15: Footsie pushed higher in opening
deals helped by a firmer oil price and
after US blue chips reached fresh record
highs overnight thanks to some upbeat
corporate earnings, but the overall
mood remained cautious ahead of the
latest UK unemployment report today.
In opening deals, the FTSE 100 index
was up 18.2 points, or 0.3 per cent at
6,715.6, having closed 1.95 points
higher yesterday after the City took in
its stride the IMF’s move to slash its UK
growth outlook following last month’s
Brexit vote.
European markets were mixed, however,
with the CAC 40 index in Paris gaining
0.5 per cent, but Frankfurt’s Dax 30
index dropping 0.8 per cent as German
producer prices rose 0.4 per cent in
June, the same as in May and equaling
the strongest pace of gains for two year.
US blue chips modestly extended their
record highs overnight, but overall Wall
Street was mixed as were Asian stocks
today. Shares rose in Hong Kong,
Australia, India and much of Southeast
Asia, but retreated in South Korea and
China.
Tony Cross, Market Analyst at Trustnet
Direct, said: ‘We are seeing some
modest gains in early London trade for
blue chip stocks with the market
seemingly still finding positives to take
from yesterday’s IMF assessment over
UK economic growth prospects.
‘We are now trading above 6,700,
although this level has clearly become
something of a psychological barrier for
the market, but with UK employment
data due to be released shortly, positive
news here could well help consolidate
these gains.’
He added: ‘Later in the session we can
expect the US oil inventory readings to
come under scrutiny – crude prices are
under a degree of pressure so anything
that points towards an uptick in demand
would be widely welcomed and could
well translate into broader support for
the market.’
Oil prices bounced modestly higher this
morning after falling more than 1 per
cent yesterday, with Brent crude up 0.3
per cent at $46.81 a barrel.
On currency markets, sterling was 0.2
per cent lower against the dollar at
$1.3082, but added 0.1 per cent versus
the euro at €1.1907, cautiously awaiting
the UK labour market data.
Stocks in focus in London include:
TALKTALK – The broadband provider
that was hit by hackers last year said it
had lost 9,000 broadband customers in
the first quarter compared with a year
ago, resulting in a 0.4 per cent dip in
revenue.
WIZZ AIR – The Eastern European-
focused budget airline slashed its UK
growth plans as a result of Britain’s vote
to leave the EU and the weaker pound,
and said it would redeploy planes to
non-UK routes.
BHP BILLITON – The world’s biggest
miner said it aims to boost its iron ore
output by up to seven per cent this year
as it works its existing mines harder,
after narrowly missing its target for
fiscal 2016 due to the Samarco disaster
in Brazil.
ANGLO AMERICAN – The FTSE 100-
listed miner has lowered its full year
guidance for Brazilian iron ore to 15-17
million tonnes from 15-18 million
tonnes, while reporting a mixed picture
for second quarter production for
diamonds, platinum and copper.
FRESNILLO – The Mexico-based
precious metals miner said production
of gold, silver, lead and zinc all rose in
the first half of 2016, leading the FTSE
100-listed firm to significantly raise its
production guidance for the year.
MAN GROUP – The chief executive of the
world’s biggest listed hedge fund,
Manny Roman will join PIMCO as its
new CEO on November 1 2016, with
Luke Ellis taking over as Man Group
boss.
UNILEVER – The consumer products
giant has agreed to buy razor-maker
Dollar Shave Club for an undisclosed
sum.
JOHNSON MATTHEY – The platinum
and chemicals company affirmed
expectations for its financial year to the
end of March 2017 following a robust
trading performance in the first quarter.
SEVERN TRENT – The water company
said there has been no material change
to current year business performance or
outlook since its full year results and it
expects to deliver a trading performance
consistent with its previous guidance.
QINETIQ – The defence technology
company said trading in its first quarter
to the end of June was in line with its
expectations.

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