Slowing US labour market recovery tempers Wall Street
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US shares dropped sharply on Wednesday morning after weaker than expected payrolls data tempered investor sentiment.
The blue-chip S&P 500 dipped 0.42 per cent to 4,404, while the Dow Jones was clipped 0.78 per cent to 34,848. The tech-heavy Nasdaq edged down 0.06 per cent 14,752.
Read more: Demand ‘peaks’ as US services recovery slows
Latest research from ADP shows the number of payrolled employees in the US rose 330,000 over the last month, much lower than analysts’ forecasts.
Yields on ten-year Treasuries were broadly flat at 1.2 per cent.
FTSE 100 jumps despite UK services recovery slowing
A closely watched survey tracking activity in the UK services business industry came in much higher than analysts’ expectations, helping to lift London’s FTSE 100 on Wednesday.
The capital’s premier index added 0.29 per cent to reach 7,126 in afternoon trading.
The latest IHS Markit / CIPS purchasing managers’ index for the UK services industry dropped to 59.6 in July, but did come in above an expected reading of 57.8, indicating output grew in last month, but at a slower rate compared to June.
Read more: PMI: Eurozone business activity grows at fastest pace for 15 years
Gains were also driven by strong performances among financial stocks, with fund managers Legal and General and Abrdn leading the way.
The rampant UK property market boosted housebuilder Taylor Whimpey’s first half earnings, helping to surge up biggest riser rankings on the index – revenues came in just shy of £2.2bn on a record number of housing completions.
Michael Hewson, chief market analyst at CMC Markets UK, said: “There appear to be fewer concerns about economies in Europe, where vaccination levels are higher, although we are seeing some signs that economic activity may have peaked in the short term.”
The domestically-focused FTSE 250 hit another record high on Wednesday, but pared back to rise 0.12 per cent to reach 23,316 in late afternoon trading, while AIM inched down 0.01 per cent to 1,258.
The pound lost 0.1 per cent against the greenback to buy $1.39.
Winners and losers
Bookmaker Entain was the day’s best performer, climbing 5.77 per cent to 1,906.50p after rumours that it could be the subject of an improved takeover big from MGM Resorts gathered pace.
Energy provider SSE came second, adding 3.34 per cent to hit 1,510p, while Legal and General came third, up 2.73 per cent to 271p after it posted a strong set of results showing operating profits in the first half of this year rose 14 per cent.
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Publisher Pearson led the day’s biggest fallers on the FTSE 100, dropping 3.66 per cent to hit 785.60p.
Miner Fresnillo took a hit of 2.36 per cent to drop to 818.60p, while middle class favourite Ocado lost 2.2 per cent, down to 1,799p.
Around the world
Asian shares fared well in overnight trading, helping to claw back losses registered at the start of the week.
China’s CSI 300 and Hong Kong’s Hang Seng both added 0.9 per cent and 1.02 per cent respectively. However, Japan’s Nikkei edged down 0.21 per cent.
Rising Covid cases have yet to dampen market sentiment, “but they easily could,” analysts at ING warned.
“The return of Covid to China is our biggest concern. Aggressive measures should bring it under control – the question is, how fast, and at what economic cost.”
European shares kicked off the day well, with the Stoxx 600 up 0.2 per cent to 465.
Read more: US stocks struggle for direction amid weakening economic outlook