5th July 2013
Stronger than anticipated US employment numbers failed to cheer the FTSE 100 on Friday as fears over the end of QE tightened. But despite a week of high volatility the blue-chip index managed to put on almost 3 per cent writes Philip Scott.
The top-flight index closed the week at 6,375.52, 46.15 points down on the day but up by 2.58 per cent during a roller-coaster week.
Figures released on Friday show that the US economy is continuing to generate jobs but not at a rate fast enough to reduce unemployment. The widely followed non-farm payroll came in better than expected with an increase of 195,000 in June.
Schroders’ chief economist Keith Wade says: “The market had been looking for a gain of 165,000. When combined with upward revisions to April and May, the net result was a level of employment some 100,000 higher than expected. Job growth was concentrated in retail, leisure and hospitality, construction and healthcare while the government and manufacturing sectors lost workers.
“While this is clearly positive, other elements of the report highlighted the challenges facing the economy with the unemployment rate remaining at 7.6 per cent as the participation rate increased.”
On Thursday the FTSE 100 closed 3 per cent better alongside other European stock markets. It rallied after the Bank of England and the European Central Bank offered reassurance over interest rates.
But the blue-chip index endured a bruising session on Wednesday, at one point losing almost 2 per cent in early trading as poor numbers from China, and the political storm in Egypt sent investors running.
In China, the headline services Purchasing Managers Index figures dropped to a nine-month low of 53.9 in June, down from May’s number of 54.3 while the sub-index for construction fell to 59.3 from 62.2 in May further escalating concern over about a slowdown.
The miners, sensitive to any slowing in the world’s second largest economy, were the week’s steepest fallers, with Glencore Xstrata off 6 per cent at 256.85p and Anglo American down 4 per cent at 1,217p.
The week’s biggest riser was outsourcing giant Serco, up 9 per cent to 674p. News emerged that the firm, which manages London’s ‘Boris bike’ scheme, had landed a large US contract rumoured to be worth some $1.25bn. Elsewhere the London Stock Exchange Group after receiving a spate of positive broker comments surged just short of 9 per cent to close at 1,456p.
The banks enjoyed a week of gains too with Barclays and HSBC, despite a downgrade from Standard & Poor’s for the former, putting on 5 per cent each to close at 291.5p and 712.5p respectively. Standard Chartered added 3 per cent to 1,470p. Fellow taxpayer-backed banks, Lloyds Banking Group and Royal Bank of Scotland added 2 per cent at 64.63p and 1 per cent to 276.7p respectively.