Footsie resigned as US jobs grow
THE Footsie ended the week on a muted note, with morning gains tempered by mixed US data in which unemployment fell to 5.8pc in October, the lowest level since 2008.
US non-farm payrolls showed that 214,000 jobs were added to the US economy in October, which was slightly lower than analysts had expected, and pushed out the likelihood of a US rate rise in the near future.
Chris Williamson, chief economist at Markit, said: ‘The sustained impressive rate of job creation has corresponded with a strong run of economic growth, which looks to have persisted into the fourth quarter, albeit with some signs of the pace of expansion easing.
‘The extent of any further slowdown in the pace of economic growth and job creation will be of key importance to policy-makers weighing up when the US economy is ready to withstand higher interest rates.’
The FTSE 100 ended the session 16.09 points higher at 6567.24 while the Dow Jones Industrial Average was flat at the time of the UK close.
A brace of positive corporate results in Europe put mining and insurance stocks under the spotlight, after steel giant ArcelorMittal and German insurance group Allianz announced third-quarter results.
ArcelorMittal reported forecast-busting third- quarter results and issued an unexpectedly optimistic outlook for the US steel market. The world’s biggest steel company said that strong demand in its key European and US markets helped to offset the impact of sharply lower iron ore prices.
Still, the group, which accounts for around 6pc of global steel production, said that the slowdown in China, Brazil and Russia would reduce global steel consumption growth to 2.25-2.75pc from 3.0-3.5pc.
The list of blue chip risers was led by Fresnillo, 34.5p higher at 734p, while BHP Bil- liton was up 48p to 1676p, Anglo American added 35.5p to 1364.5p and Rio Tinto gained 71.5p to 3039p. FTSE 250 miner Lonmin added 13.3p to 187.4p. Commodity stocks bounced back from sharp recent losses, helped by a weakening of the dollar and a strengthening in the price of gold.
‘There has been a small rally in oil prices too, helped along by the overall optimistic tone from non-farm payrolls,’ Chris Beauchamp, IG market analyst, said.
He added: ‘Even so, with the supply situation still pointing towards more losses, we should still see Brent [crude oil] touching $80 in coming weeks.’
Among oil stocks, Petrofac gained 30p to 1118p, shrugging off a price target cut to 1200p from 1300p by analysts at Deutsche Bank, albeit with a reiterated ‘buy’ stance.
Royal Dutch Shell advanced by 55p to 2326p after it announced plans to spend C$8bn (£4.46bn) on a liquified natural gas project in Canada’s British Columbia. The Dutch- based group’s price target was upgraded by Credit Suisse.
Small cap minnow Salamander Energy was up 3.25p at 101p.
Elsewhere in Europe, German insurance group Allianz was well bid after announcing strong third-quarter results and lifting the divi paid to shareholders. However the news failed to inspire the UK sector, with Admiral Group leading the list of blue chip fallers, down 44p at 1215p. Admiral, owner of the Confused.com website, blamed increased competition for a drop in third-quarter sales, prompting analysts at Canaccord to slash their rating to a ‘sell,’ while Deutsche Bank cut the price target to 500p.
Competitor RSA was also under pressure, losing 13.9p to 446.2p and Direct Line Insurance group shed 5.8p to 271.2p. Second line competitor Moneysupermarket.com was 6.60p off at 196.2p.
Among Small Cap stocks, Brammer plunged by more than 13pc after the company issued a profits warning citing lower spending by some of its large customers in Europe and the UK.
Brammer, which distributes industrial maintenance products, lowered full-year pretax profit guidance to £35m-£36m, compared with analyst expectations of £39m-£40m.
‘The update is more about soft end markets than the group getting it wrong,’ Andy Brown, analyst at N1 Singer said. ‘Its large European and industrial exposure makes Brammer a fascinating stock to consider when recovery takes place in the region.’ Shares in the group were down 44p at 293p.
Vectura ended the week 1.25p higher at 123.75p after its VR 315, a generic version of GlaxoSmithKline’s Advair asthma drug, reached a milestone in the US, triggering a payment of nearly £1m. Since August 2011, the UK biotech has received $19m (£12m) in fees and milestone payments, as well as undisclosed royalties, with a further $26m (£16.4m) contingent on milestones to come.
Keith Redpath, analyst at FinnCap, rates the stock a ‘buy’ with a 202p price target. ÷ SHARES in AIM-listed Cluff Natural Resources jumped by 23pc after the group was awarded 11 ‘promote’ licences in the North Sea, close to the Breagh gas field. The Department of Energy and Climate Change awarded the licences as part of the 28th offshore licensing round. The shares closed 0.88p higher at 4.62p.