London close: FTSE ends flat after stronger-than-expected payrolls report

(Sharecast News) - London stocks ended flat on Friday as a much stronger-than-forecast US non-farm payrolls report boosted expectations of a September rate hike by the Federal Reserve, although much will hinge on next week's inflation reading.

The FTSE 100 closed steady at 10,831.09, while Brent crude was up 0.1% at $95.60 a barrel and West Texas Intermediate was 0.4% lower at $90.97.

Figures released earlier by the Bureau of Labor Statistics showed the US economy added 162,000 jobs in August, coming in well above consensus expectations for a 55,000 increase. The data also showed an additional 55,000 of upward revisions to June and July.

The unemployment rate was steady at 4.1%, as expected, while wage growth was benign, rising 3.1% on the year.

ING analyst James Knightley said: "Unsurprisingly, the market has moved to price 16bp of a 25bp rate hike, up from 12.5bp yesterday after Fed Governor Waller's relatively dovish comments whereby he suggested a soft inflation print could mean he votes for stable policy.

"Next Friday's CPI report will indeed be the key decider and the 0.4% month-on-month increase in headline prices and a 0.2% increase in core (ex-food and energy) prices, which is what both we and the consensus predict, is probably not cool enough to prevent Warsh nudging the rest of the FOMC into a hike."

On home shores, a survey showed the downturn in the construction sector deepened in August. The S&P Global construction purchasing managers' index fell to 44.3 from 44.7 in July, coming in below the 50.0 mark that separates contraction from expansion for the 20th month in a row.

Survey respondents pointed to subdued demand conditions and a reduction in new projects, especially house building starts. All three sub-sectors recorded a reduction in construction activity, with housing the only category to register a faster pace of contraction than in July.

The downturn in residential work was sharper than elsewhere in the construction sector, while commercial activity fell at the slowest rate since January, and civil engineering activity fell the least since March.

Tim Moore, economics director at S&P Global Market Intelligence, said: "UK construction companies experienced another solid reduction in output volumes, with a faster downturn in house building the main reason for a weaker overall performance during August. A sharp and accelerated drop in residential activity more than offset slower falls in the commercial and civil engineering sub-sectors.

"Sluggish demand conditions and low client confidence, combined with anxiety about the impact of the Middle East conflict, were again factors contributing to lower workloads across the construction sector. Total new business nonetheless decreased to the least marked extent for 11 months amid reports of support from transport infrastructure work and some pockets of vitality such as data centre roll outs and energy sector projects.

"Encouragingly, input price inflation eased to its lowest since February and supply chain performance was broadly stable. Softer overall inflation was recorded in August despite upward pressure on operating expenses from higher fuel bills, logistics costs and raw material prices.

"Business optimism was still subdued, as growth projections for the year ahead eased since July and were much weaker than historic trends. Concerns about geopolitical tensions, lacklustre domestic economic prospects and elevated borrowing costs were all noted as holding back confidence."

Elsewhere, figures from the British Retail Consortium and Sensormatic showed that retail footfall improved in August but remained below year-earlier levels.

There was a dearth of corporate news, but BHP was in focus after saying it "regularly explores options that may create long-term value to its shareholders" following a report that steelmaker China Baowu Steel Group is considering taking a stake in the company's Jimblebar iron ore mine in Western Australia.

"WAIO remains central to BHP's portfolio and BHP remains fully committed to WAIO and to Western Australia," the company said. The statement came after Reuters reported that Baowu - China's largest steelmaker - is considering a stake of between 15% and 25%, which would come from BHP's share of the project. Reuters sources did not give a potential valuation or other details.

In broke note action, Computacenter rallied after UBS upped its price target on the stock, while Vodafone gained after an upgrade to 'buy' from 'sell' at Goldman Sachs, which hiked its price target to 155p from 85p. The bank cited higher relative returns and equity upside.

Renishaw shot up after an upgrade to 'buy' from 'underperform' at Bank of America.

Market Movers

FTSE 100 (UKX) 10,831.09 0.00%

FTSE 250 (MCX) 24,584.71 0.36%

techMARK (TASX) 6,077.35 0.02%

FTSE 100 - Risers

Computacenter (CCC) 5,590.00p 4.10%

Kingfisher (KGF) 307.40p 3.29%

Vodafone Group (VOD) 125.60p 2.49%

M&G (MNG) 357.40p 1.77%

Associated British Foods (ABF) 2,072.00p 1.57%

Spirax Group (SPX) 6,960.00p 1.46%

Centrica (CNA) 149.80p 1.42%

Investec (INVP) 670.00p 1.36%

Tesco (TSCO) 475.40p 1.32%

Weir (WEIR) 2,724.00p 1.26%

FTSE 100 - Fallers

Experian (EXPN) 2,814.00p -4.74%

Coca-Cola Europacific Partners (DI) (CCEP) 7,870.00p -2.30%

Relx plc (REL) 2,620.00p -2.20%

IG Group Holdings (IGG) 1,335.00p -1.91%

The Sage Group (SGE) 1,051.50p -1.73%

3i Group (III) 2,771.00p -1.70%

Autotrader Group (AUTO) 505.00p -1.64%

Haleon (HLN) 352.80p -1.56%

Prudential (PRU) 1,022.50p -1.54%

Rentokil Initial (RTO) 348.40p -1.19%

FTSE 250 - Risers

RHI Magnesita N.V. (DI) (RHIM) 2,900.00p 6.81%

Renishaw (RSW) 5,170.00p 5.64%

Watches of Switzerland Group (WOSG) 695.00p 4.75%

Morgan Advanced Materials (MGAM) 247.00p 4.00%

Coats Group (COA) 81.05p 3.78%

Drax Group (DRX) 797.50p 3.17%

Raspberry PI Holdings (RPI) 596.00p 2.85%

Seraphim Space Investment Trust (SSIT) 185.00p 2.78%

Victrex plc (VCT) 866.00p 2.73%

AEP Plantations (AEP) 196.40p 2.72%

FTSE 250 - Fallers

Oxford Nanopore Technologies (ONT) 161.40p -6.87%

Globaldata (DATA) 74.10p -4.88%

Rosebank Industries NPV (ROSE) 341.00p -3.67%

Genus (GNS) 2,264.00p -2.75%

Auction Technology Group (ATG) 420.40p -2.59%

Rightmove (RMV) 491.00p -2.35%

Partners Group Private Equity Limited. (EUR) (PEY) 7.22p -1.90%

Bloomsbury Publishing (BMY) 623.00p -1.89%

Hilton Food Group (HFG) 698.00p -1.69%

WPP (WPP) 374.90p -1.58%