London Markets: FTSE 100 powers to fresh record as Dow 25,000 inspires European stock rally

U.K. stocks headed for fresh records on Friday, driving higher after another round of all-time highs in the U.S. in the previous session. Traders were focused on the closely watched U.S. nonfarm-payrolls report due later, which could influence the Federal Reserve’s path for interest rates.

On the downside, retail stocks were coming under pressure Friday morning, after an industry body’s report showed store prices fell during the key Christmas shopping season.

What is the market doing: The FTSE 100 index UKX, +0.18%  added 0.1% to 7,706.03, on track for a 0.3% weekly gain.

The pound GBPUSD, -0.1550%  traded at $1.3551, compared with $1.3552 late Thursday in New York.

What is driving the market: Friday saw a continuation of the positive trading mood that has boosted global equity markets this week, after U.S. stocks ended at records again on Thursday. The Dow Jones Industrial Average DJIA, +0.61%  rallied to close above 25,000 for the first time ever, and U.S. stock futures indicated another upbeat day for Wall Street lies ahead.

A key release that could influence investor sentiment later Friday is the top-tier U.S. jobs report, one of the most important sets of data to come out each month. Economists polled by MarketWatch expect 195,000 jobs were added to the American economy in December, slightly down from 228,000 in November.

A strong reading on jobs and wage growth would bolster the case for the Federal Reserve to hike interest rates. As the dollar typically rises when rates go up, that has implications for the multinationals listed in the U.K., as they do business in the U.S. and take payments in U.S. currency.

The nonfarm payrolls report come out at 1:30 p.m. London time, or 8:30 a.m. Eastern Time.

Retail pain: Closer to home, retail stocks were in focus again. A report from the British Retail Consortium out Friday showed U.K. store prices fell 0.6% in December year-on-year, as retailers offered discounts at the beginning of the Christmas month.

The downbeat update — a signal that consumers are keeping a tighter grip on wallets — comes a day after department store chain Debenhams issued a profit warning.

“With consumer confidence wavering and unpredictable levels of demand, many nonfood retailers have been keeping prices low to stimulate spending, which will undoubtedly have come at a cost to margins,” said Mike Watkins, head of retailer and business insight at Nielsen, in a BRC statement..

Stock movers: Among retailers and supermarkets in Friday’s trade, shares of Marks & Spencer Group PLC MKS, +0.65% MAKSY, -4.15%  shed 0.6%, and Tesco PLC TSCO, -0.24% TSCDY, +0.77%  dropped 0.2%.

Off the FTSE 100, Debenhams PLC DEB, -3.43%  slid 2.1%, building on the 15% plunge from Thursday after its sales update.

EasyJet PLC EZJ, +0.46%  added 0.4% after the discount airline said passenger traffic rose 5.5% in December.

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