- FTSE 100 closes down 43 points
- US stocks mixed
- Airlines slide after traffic light report
5.15pm: FTSE closes lower
FTSE 100 closed in the red on Thursday, weighed down by travel and commodity groups.
The UK’s top share index finished the afternoon session down over 43 points, or 0.61%, at 7,064.
Midcap FTSE 250 was also lower, closing down over 180 points, or 0.57%, at 22,802.
Over on Wall Street, it was a mixed bag. The Dow Jones Industrial Average added over 35 points, but the S&P 500 and Nasdaq were lower, by eight points and 112 points respectively.
“Indices have looked wobbly for a few days, with the swift reversal from Tuesday’s peak showing that something was amiss with global risk appetite,” said Chris Beauchamp, chief market analyst at online trading group IG.
“Today has seen those concerns validated to an extent, with some notable losses for tech and other US growth stocks, even if losses are more contained elsewhere.”
The analyst added: “Travel and airline firms have taken the changes to the UK travel list predictably badly, and look to remain under pressure as the prospects for a summer holiday for millions begin to dim.”
4.02pm: US service sector surges
The strong US jobs data has rekindled investors’ concerns about inflationary pressures, and the idea that central banks might have to ease their support for the economy as a consequence. Which would mean, among other things, a rise in interest rates.
Adding to the signs of a strong US economy was the latest service sector survey.
The IHS Markit services purchasing managers index came in at 70.4 in May, up from 70.1. This is a huge advance on the 50 level which indicates the difference between contraction and expansion.
The report showed the fastest rise in business activity since data collection for the series began in October 2009.
And for those worried about inflation, IHS said: “The rate of input cost inflation accelerated to a series high amid ongoing supplier price hikes. In an effort to pass on greater costs, service providers raised their charges at an unprecedented pace.”
But Wall Street seems uncertain how to take the news, with the Dow Jones Industrial Average off its worst levels and down just 0.15%. The S&P 500 is less sanguine, down 0.46% while the tech heavy Nasdaq Composite has fallen 0.89%.
In the UK the FTSE100 seems to have stablised, down 44.61 points or 0.63% at 7063.40. Britain’s own service sector survey also showed strong growth.
Airlines remain under pressure after the disappointing news that Portugal was likely to be removed from the travel green list with no extra countries added.
British Airways owner International Consolidated Airlines PLC (LON:IAG) is down 5.21% to 198.5p while budget airline EasyJet PLC (EZJ) has fallen 6.26% to 947.2p.
The EasyJet fall has helped push the mid-cap FTSE 250 – which hit a new peak this week – down 0.63% to 22,789.
3.20pm: Half UK adults vaccinated
More good news on the vaccine front.
Half of all UK adults have now received two doses of a COVID-19 jab, the government has announced. This comes just a day after it was announced that 75% had received a first dose, and goes some way to hopefully getting things back to normal.
As if to celebrate, the FTSE 100 has recovered a little more, and is now down 48.4 points or 0.68% at 7059.6.
3.08pm: Proactive North America headlines:
Goldseek Resources Inc (CSE:GSK) (FRA:4KG) (OTCMKTS:GSKKF) kicks off exploration at four targets at Val D’Or North project, Quebec
Naturally Splendid Enterprises Ltd (CVE:NSP) (OTCPINK:NSPDF) (FRA:50N) inks LOI for Canadian manufacturing and distribution rights to Flexitarian Foods’ plant-based products
Marrone Bio Innovations Inc (NASDAQ: MBII) strikes partnership with ATP Nutrition to distribute Stargus Biofungicide on Canadian broad-acre crops
Albert Labs going public soon as ME Resource Corp (CSE:MEC) (OTC:MEEXF) submits listing statement to the Canadian Stock Exchange
Esports Entertainment Group Inc (NASDAQ:GMBL) closes on its acquisition of Helix eSports and ggCircuit
Los Andes Copper Ltd (CVE:LA) (OTCMKTS:LSANF) (FRA:L41A) closes US$5M convertible debenture investment from Queen’s Road Capital
Nano One Materials Corp (CVE:NNO) (OTCPINK:NNOMF) (FRA:LBMB) strengthens relationship with giant Johnson Matthey with joint development deal
2.43pm: Wall Street opens in the red despite upbeat jobs figures
The main indices on Wall Street were on the back foot in early deals on Thursday despite better than expected US jobs numbers.
Shortly after the opening bell, the Dow Jones Industrial Average was down 0.58% at 34,399 while the S&P 500 dropped 0.61% to 4,182 and the Nasdaq fell 0.73% to 13,655.
Back in London, the FTSE 100 had recovered some of its lost ground but was still down 53 points at 7,055 at around 2.40pm.
1.46pm: US employment news beats forecasts
More positive US jobs figures.
US weekly jobless claims fell below 400,000 for the first time since the start of the pandemic, according to the Department of Labor.
The number of Americans seeking unemployment benefit fell to 385,000 last week, slightly down on the forecasts of a figure of 387,000 and the lowest level since March 14 last year.
This compares to 405,000 the previous week, itself revised down by 1,000.
Earlier the latest report from payrolls operator ADP showed that 978,000 new private sector jobs were created in May, up from 742,000 the previous month and beating expectations of a figure of 650,000.
Nela Richardson, ADP’s chief economist, said: “Private payrolls showed a marked improvement from recent months and the strongest gain since the early days of the recovery.
“While goods producers grew at a steady pace, it is service providers that accounted for the lion’s share of the gains, far outpacing the monthly average in the last six months. Companies of all sizes experienced an uptick in job growth, reflecting the improving nature of the panemic and economy.”
What this signals for the non-farm payrolls on Friday, however, is anyone’s guess.
Worries about what it might mean for inflation mean Wall Street’s opening decline looks to be getting bigger.
The Dow Jones Industrial Average is the exception, forecast to open much the same as the previous prediction with a 0.57% fall. The S&P 500 is set for a 0.73% drop and the Nasdaq Composite 1.06%.
Meanwhile the FTSE 100 remains under pressure, down 74.08 points or 1.04% at 7033.92.
1.18pm: Travel shares fall
With no new countries reportedly added to the government’s green list (according to the BBC) and Portugal possibly moving from green to amber, airline shares are in decline.
There had been speculation that Greek and Spanish islands as well as Malta could be added to the green list, where you do not need to quarantine unless a COVID-19 is positive.
The FTSE 100 is now down 1.21% or 85.75 points at 7022.25.
12.32pm: Investors await US economic data
Wall Street is expected to open lower as investors focus on the latest US jobs data due shortly.
Ahead of Friday’s widely watched non-farm payroll numbers – which came in well below forecasts last month with a rise of only 266,000 – come the private payroll figures for May from ADP. They are expected to show an increase of 650,000, down from 742,000 in April. However last time round the survey gave little guidance as to the official figure.
Also due are the weekly jobless claims, which are expected to fall from 406,000 to a new post-pandemic low of 387,000. Deutsche Bank for one however is expecting a rise to 435,000.
So with investors torn between welcoming an economic recovery and worrying about inflation, the Dow Jones Industtial Average is forecast to open 198 points or 0.6% lower while the S&P 500 is set to fall 0.69% and the Nasdaq Composite 0.94%.
Back in the UK, and the FTSE 100 is close to its low for the day, down 70.14 points or 0.99% at 7037.6.
10.54am: Oil price hovers at two year highs
More signs of inflationary pressures come with the continuing rise in the oil price.
Brent crude hit its highest level since May 2019 earlier at $71.99 a barrel, although it has since come off the peak and now sits at $71.32, virtually unchanged from the overnight high.
This week the OPEC+ group agreed to continue slowly easing production cuts – the operative word being slowly – while also predicting higher demand as global economies continue to recover from the pandemic.
Indeed, US crude stocks fell more sharply than expected last week due to increased demand ahead of the peak driving season.
The strength in the crude price has not filtered through to oil companies, however, on what is proving to be a grumpy day for the market.
Overall the FTSE 100 is off 46.26 points or 0.65% at 7061.74.
9.51am: Boom boom Britain
And so to the UK, which has also beaten expectations in the latest IHS Markit/CIPS survey – but seen inflationary pressures hit a 24 year high.
The services PMI rose to 62.9 in May, up from 61.0 in April. This is the third month in a row the figure is above the 50 level signifying growth, and indicates the pent up demand which was unleashed when COVID-19 restrictions were eased.
The seasonally adjusted UK Composite Output Index rose from 60.7 in April to 62.9 in May, to signal the steepest rate of expansion since that series began in January 1998.
UK Markit/CIPS Services PMI May F: 62.9 (est 61.8; prev 61.8)
UK Markit/CIPS Composite PMI May F: 62.9 (est 62.0; prev 62.0)
— LiveSquawk (@LiveSquawk) June 3, 2021
But given the worries about pricing pressures, this is a key sentence from the report: “A combination of strong demand and rising operating expenses resulted in the steepest increase in prices charged by service providers since the survey began in 1996.”
Tim Moore, economics director at IHS Markit, said: “UK service providers reported the strongest rise in activity for nearly a quarter-century during May as the roll back of pandemic restrictions unleashed pent up business and consumer spending.
“The latest survey results set the scene for an eye-popping rate of UK GDP growth in the second quarter of 2021, led by the reopening of customer-facing parts of the economy after winter lockdowns…
“The successful vaccine roll out has generated a strong willingness to spend and fortified business optimism across the service economy.
“However, inflationary trends intensified in May as suppliers passed on higher transport bills, staff costs and raw material prices. Imbalanced demand and supply appears to have spread beyond the manufacturing sector, which contributed to the steepest rise in prices charged by service providers since the survey began in July 1996.”
The FTSE 100 seems to have taken things in its stride, off its worst levels and now down 44.9 points or 0.63% at 7063.1.
9.26am: Eurozone economy picks up
The Eurozone economy is picking up a little better than expected, to judge from the latest IHS Markit survey.
Both the services purchasing managers index and the composite one (which includes both services and manufacturing) for May have picked up the pace of recovery.
Eurozone Markit Services PMI May F: 55.2 (est 55.1; prev 55.1)
Eurozone Markit Composite PMI May F: 57.1 (est 56.9; prev 56.9)
— LiveSquawk (@LiveSquawk) June 3, 2021
It was the service sector that lead the way, said IHS: “May’s data indicated a second successive monthly rise in service sector output, and the best recorded for nearly three years. Nonetheless, despite seeing the slowest growth for three months, manufacturing output continued to a rise at a sharper rate than services activity.”
But for those worried about inflation, there were signs of cost pressures with input prices increasing by the most in over a decade and – with companies trying to pass these on – output prices rising at the strongest rate in the series history.
Chris Williamson, chief business economist at IHS Markit said: “A growing area of concern is capacity constraints, both in terms of supplier shortages and difficulties taking on new staff to meet the recent surge in demand. This is leading to a spike in price pressures, which should ease as supply conditions improve, but may remain an area of concern for some months, especially if labour shortages feed through to higher wages.”
Meanwhile, back in the UK, the FTSE 100 continues to decline ahead of the latest UK services data, down 50.02 points or 0.7% at 7057.98.
AJ Bell financial analyst Danni Hewson said: “The period earlier in the year when so-called ‘meme’ stocks were soaring wasn’t necessarily the happiest time for the markets overall and it’s notable that after shares in US cinema chain AMC Entertainment soared to a record high overnight the FTSE 100 fell out of bed on Thursday morning..
“There are still so many factors for investors to weigh, such as whether the economy will overheat or whether new COVID-19 variants could prompt a further economic downturn.
“There is also an element of having to second guess how central banks and governments will respond to the rapidly shifting backdrop.
“All of this uncertainty is making it tricky for the markets to make concerted progress as we move towards the halfway point of 2021.”
9.07am: Ex-divs help drag down market
Another factor dragging the leading index lower is the usual Thursday tradition of companies seeing their shares go ex-dividend.
Overall the decline in the FTSE 100 has accelerated as investors await key service sector data from the UK and jobs figures from the US.
These are likely to be scrutinised for any signs of inflationary pressures, still a current market obsession.
Meanwhile the leading index is down 46.65 points or 0.66% at 7061.35.
8.51am: Leading shares drift lower
The FTSE 100 bucked the wider global market trend and drifted lower in the opening exchange.
However, the scale of the decline and the lack of real volume behind it suggests the momentum could quickly shift later in the session, particularly if, as the stock futures suggest, Wall Street opens in positive territory.
“Markets are treading water ahead of more economic data points which will further inform the inflation debate,” said Richard Hunter, head of markets at Interactive Investor.
“One of the drivers of market jitters around inflationary pressures has been bottlenecks in the labour market, and over the next two days the jobless claims number and the non-farm payrolls reading will provide new evidence on the state of the nation.
“The oil price is another driver of concern as there does not seem to be any excess supply coming on stream for the moment from the major producing countries. The price is ahead by 39% in the year to date, partially driven by an anticipated spike in demand, and the effect of this inevitably puts further upward pressure on prices.”
Proving the old stock market adage that it’s better to travel than arrive, B&M European Value Retail (LON:BME) was marked down 4% in the early exchanges after what on the face of it was a solid set of results.
With the stock up 41% over the past year, some investors may be looking to book some profit on their investment. There was also a minor warning that trading continued to be volatile at a weekly and category level.
6.50 am: Front foot start predicted
The FTSE 100 is set to start Thursday on the front foot although through this shortened week markets are marking time somewhat.
CFD firm IG Markets sees the London benchmark up around 16 points, making a price of 7,113 to 7,116 with just over an hour to go until the open.
US employment stats – the first of which comes out tonight – are the main macro-focus along with European PMI data, also due later. The monthly stats come as inflation remains not very far from policy maker’s thinking, and the usual central bank second-guessing is bound to follow shortly after the respective prints.
The corporate diary is quite light again in this bank holiday week, albeit discount retailer B&M and water utility Pennon are among the notable names in the book for Thursday.
Last night saw a muted but slightly positive markets.
Wall Street finished Wednesday positively, albeit only slightly. The Dow Jones added just 25 points or 0.07% closing at 34,600, whilst the S&P 500 similarly gained just 0.14% to finish the day at 4,308.
The Nasdaq was up 19 points or 0.14% ending Wednesday at 13,756.
In Asia, trading was mixed. Japan’s Nikkei advanced 131 points or 0.45% to 29,076.
Hong Kong’s Hang Seng slipped 184 points or 0.6% lower to 29,121, whilst the Shanghai Composite edged slightly higher to trade at 3,606.
Around the markets
The pound: 1.4152, down 0.13%
Gold: US$1,901 per ounce, down 0.35%
Silver: US$27.99 per ounce, down 0.59%
Brent Crude: US$71.89 per barrel, up 2.3%
WTI Crude: US$69.34 per barrel, up 2.4%
Bitcoin: US$38,793, up 5.56%
6.50am: Early Markets – Asia / Australia
Stocks in the Asia-Pacific region were mostly higher on Thursday as Australia’s retail sales rose 1.1% month-on-month in April on a seasonally adjusted basis, according to the country’s Bureau of Statistics.
The Shanghai Composite in China lifted 0.24% but Hong Kong’s Hang Seng index fell 0.61%
In Japan, the Nikkei 225 gained 0.29% while South Korea’s Kospi rose 0.79%.
Shares in Australia lifted, with the S&P/ASX 200 trading 0.50% higher.
Proactive Australia news:
Predictive Discovery Ltd (ASX:PDI) has extended NE Bankan prospect at depth with strong gold grades of up to 5 metres at 2.4 g/t from 245 metres in diamond drilling at the Bankan Gold Project in Guinea.
Nova Minerals Ltd (OTCMKTS:NVAAF) (ASX:NVA) (FRA:QM3) has welcomed a resource update from the Thompson Brothers Lithium Project in Canada through its majority- owned subsidiary Snow Lake Resources Ltd.
Creso Pharma Ltd (ASX:CPH) (FRA:1X8) has traded higher on news that target acquisition company Halucenex Life Sciences Inc is looking to capitalise on recent regulatory shifts in the Californian healthcare market with its psychedelic products.
Strategic Elements Ltd (ASX:SOR) is to negotiate a new agreement with global Fortune 100 software-industrial company Honeywell International Inc (NASDAQ:HON) to further develop and commercialise the Autonomous Security Vehicle (ASV).
Lithium Australia NL (ASX:LIT) (OTCMKTS:LMMFF) (FRA:3MW) has received a standard patent ‘Certificate of Grant’ from IP Australia for its SiLeach(R) extraction technology for low-energy recovery of lithium from micas – potentially a short-cut in the production of lithium-ion batteries.
European Lithium “at forefront of Europe’s battle for white gold”, Spark Plus reports
European Lithium Ltd (ASX:EUR) (FRA:PF8) has welcomed a research report by Spark Plus Pte Ltd analyst Cyprus Sia who says the company is leading the charge to be among the first few electric vehicle (EV) battery-grade lithium suppliers within Europe by 2023.
Twenty Seven Co Ltd (ASX:TSC) has completed a 662 hole auger drilling campaign for 987 metres over the entire Yarbu tenement package, providing an unparallel geochemical insight into an underexplored part of the Marda-Diemals Greenstone Belt.
Shree Minerals Limited (ASX:SHH) has discovered new copper occurrences during its first site visit to the Edwards Creek Project in the Northern Territory and this comes at a time of very positive copper market fundamentals.