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Jobs boost in US prompts one-year high for London shares

Published 05/08/2016

Events across the Atlantic prompted a good day for London traders
Events across the Atlantic prompted a good day for London traders

London's premier index surged to a one-year high as investors cheered better-than-expected employment data from the United States.

The FTSE 100 Index briefly broke through the 6,800 mark to hit 6,800.96 - its highest level since July 2015 - before paring back to a rise of 53.3 points to 6793.47.

It continued to make gains off the back of Thursday's post-Brexit stimulus package from the Bank of England, which cut interest rates to 0.25% and promised emergency measures worth up to £170 billion to ward off recession.

But it was a positive employment update from the US which drove the market higher towards the end of the session, with employers across the Atlantic adding a healthy 255,000 jobs in July, keeping the US unemployment rate at a low 4.9%.

The figures showed employers brushed aside concerns over Britain's vote to quit the European Union and remained untroubled by lacklustre growth from the US economy, which came in last week at a lower-than-expected rise of 1.2% in the three months to June

European markets were also feeling the benefit of the jobs data, with Germany's Dax up 1.36% and the Cac 40 in France hitting 1.38%.

But the US jobs update sent the pound plunging, with sterling slipping below 1.305 US dollars for the first time in more than three weeks, before reducing its fall to 1.306 US dollars.

The pound also took a tumble against the euro to 1.175 euro, before rallying back to a marginal rise to 1.178 euro.

In stocks, the Royal Bank of Scotland was the biggest faller, down more than 7% or 13.8p to 178.2p, as it reported a £2.04 billion loss for the first half of the year after racking up £1.3 billion worth of PPI and other legal costs.

The state-backed lender, 73% owned by the taxpayer, has put aside £450 million to cover payment protection insurance (PPI) claims after the Financial Conduct Authority extended the deadline to 2019 earlier this week.

The bank also abandoned plans to separate the Williams & Glyn branch network because of the complexities and costs associated with creating a new banking platform. However, RBS remains committed to selling Williams & Glyn, with Santander understood to be interested in picking it up.

Shares in betting giant William Hill were on the up as p rofits were boosted by a strong Euro 2016 in the first half of the year, helping offset a dire Cheltenham Festival.

The bookmaker, which is the subject of a three-way merger attempt by its rivals, said pre-tax profits for the period rose 28% to £100.7 million on revenues of £814.4 million.

Last month, online operator 888 and casino giant Rank came clean over their interest in a £3 billion three-way merger with William Hill.

Shares were up more than 1% or 3.7p to 317p.

The biggest risers on the FTSE 100 Index were HIKMA Pharmaceuticals up 175p to 2395p, Paddy Power Betfair up 320p to 9150p, Hargreaves Lansdown up 41p to 1322p, BHP BiIliton up 31.1p to 1014p.

The biggest fallers were Royal Bank of Scotland down 13.8p to 178.2p, Fresnillo down 70p to 1884p, Randgold Resources down 260p to 8375p, Pearson down 11p to 882.5p.

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