London close: Stocks rally on US debt deal, payrolls report

(Sharecast News) - London stocks racked up strong gains on Friday after the US Senate passed a bi-partisan agreement to raise the debt ceiling, and following the release of a stronger-than-expected non-farm payrolls report. The FTSE 100 closed up 1.6% at 7,607.28.

Data released earlier by the Bureau of Labor Statistics showed that the US economy created far more jobs than expected in May, although analysts suggested that a moderation in wage growth could allow the Federal Reserve to pass on a rate hike this month.

Non-farm payrolls rose by 339,000 from April, comfortably beating expectations for a 190,00 increase. In addition, the change for April was revised up by 41,000 to a 294,000 jump.

The unemployment rate ticked up to 3.7% in May from 3.4% a month earlier, versus expectations for 3.5%, while annual wage growth eased to 4.3% from 4.4%.

Paul Ashworth, chief North America economist at Capital Economics, said: "As labour market conditions come into slightly better balance, the upward pressure on wage growth is easing.

"Despite a 0.3% m/m increase in May, the annual rate of average hourly earnings growth dropped back to 4.3%, from 4.4%. The upshot is that the Fed can still afford to skip a rate hike in June."

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said: "This is a nightmare report. Do they stick to incoming VC Jefferson's clear signal of a June pause, just a couple days ago, or do they rewrite the script?

"With no more voting speakers scheduled before the meeting, we're assuming no change in rates is still the most likely outcome, but if Chair Powell and his colleagues want to change the signal, they can do so via their usual channel - the WSJ - over the next few days."

In equity markets, heavily-weighted rallied as copper prices rose, with Antofagasta, Anglo American, Glencore and Rio all up.

Prudential was the standout gainer on the top-flight index, however, after JPMorgan Cazenove placed the overweight-rated shares on 'positive catalyst watch' into first-half results. It said the company was on track to beat consensus for new business sales/profits by 5%/13% in 2023.

Dechra Pharmaceuticals surged after it agreed to be taken private in a £4.5bn deal. The veterinary medicine firm said it had accepted an all-cash offer of 3,875p per share from Swedish private equity firm EQT and Luxinva, a subsidiary of the Abu Dhabi Investment Authority.

Elsewhere, JD Sports was a high riser as US sportswear retailer Lululemon lifted its full-year outlook.

On the downside, BT Group slumped. CMC Markets analyst Michael Hewson said this could be on the back of reports that Amazon is in talks to offer a mobile phone service to its US Prime customers "in a move that if successful could see them try and offer a similar service in Europe".

Market Movers

FTSE 100 (UKX) 7,607.28 1.56% FTSE 250 (MCX) 19,149.31 1.71% techMARK (TASX) 4,589.87 0.53%

FTSE 100 - Risers

Prudential (PRU) 1,153.00p 5.68% Antofagasta (ANTO) 1,456.50p 5.54% Anglo American (AAL) 2,418.00p 5.15% Glencore (GLEN) 433.90p 4.08% Weir Group (WEIR) 1,782.50p 3.91% Rio Tinto (RIO) 5,070.00p 3.77% Scottish Mortgage Inv Trust (SMT) 697.60p 3.69% Standard Chartered (STAN) 664.00p 3.49% Smurfit Kappa Group (CDI) (SKG) 2,970.00p 3.41% Ashtead Group (AHT) 5,112.00p 3.29%

FTSE 100 - Fallers

BT Group (BT.A) 143.65p -3.36% Vodafone Group (VOD) 75.63p -0.66% SSE (SSE) 1,868.00p -0.64% Hiscox Limited (DI) (HSX) 1,169.00p -0.43% Compass Group (CPG) 2,207.00p -0.32% BAE Systems (BA.) 942.40p -0.25% Convatec Group (CTEC) 208.60p -0.19% Endeavour Mining (EDV) 2,178.00p -0.09% National Grid (NG.) 1,055.00p -0.05% Severn Trent (SVT) 2,706.00p -0.04%

FTSE 250 - Risers

Ferrexpo (FXPO) 100.20p 9.03% Dechra Pharmaceuticals (DPH) 3,632.00p 7.65% PureTech Health (PRTC) 230.50p 6.22% UK Commercial Property Reit Limited (UKCM) 56.80p 5.77% Tullow Oil (TLW) 25.78p 5.66% Carnival (CCL) 859.20p 5.60% TR Property Inv Trust (TRY) 294.50p 4.80% Ascential (ASCL) 236.40p 4.79% National Express Group (NEX) 111.90p 4.78% Fidelity China Special Situations (FCSS) 219.00p 4.53%

FTSE 250 - Fallers

Bodycote (BOY) 625.00p -3.10% Drax Group (DRX) 542.00p -2.13% Pennon Group (PNN) 768.50p -1.85% Wizz Air Holdings (WIZZ) 2,756.00p -1.36% Wood Group (John) (WG.) 139.90p -1.27% NB Private Equity Partners Ltd. (NBPE) 1,550.00p -1.02% ICG Enterprise Trust (ICGT) 1,150.00p -0.86% Cranswick (CWK) 3,312.00p -0.78% BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 145.00p -0.68% Centamin (DI) (CEY) 101.10p -0.49%