FTSE 100: London closes higher and Wall Street rallies after soft job report

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Richard Flynn, managing director at Charles Schwab UK, said: “In recent months, it has become clear that the Fed is happy to move slowly in the cutting part of the rate cycle, but unwanted and unexpected weakness in the economy, as we are seeing today, may cause a shift in this approach.

“A dive in the labour market may be what it takes to push the Fed from a stroll to a sprint.”

US stocks surged on Friday, as upbeat earnings from Apple (AAPL) lifted spirits and a weaker-than-expected jobs report revived bets that the Federal Reserve could cut interest rates sooner than thought.

The April jobs report painted a picture of a cooling US labor market, as employers added 175,000 jobs and the unemployment rate unexpectedly jumped to 3.9%. Economists had expected an addition of 240,000 jobs.

The report pushed up bets on a sooner-than-expected rate cut from the Fed.

The Dow Jones Industrial Average (^DJI) jumped 1.5%, or more than 500 points, while the S&P 500 (^GSPC) rose 1.2%. The tech-heavy Nasdaq Composite (^IXIC) increased roughly 1.9%. All three gauges are poised to build on sharp closing gains from Thursday.

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Almost a third (31%) of homeowners have let their mortgage slip into a higher rate for at least 1 month after their fixed-rate deal has ended, a mistake that can add £3,000 in unnecessary mortgage repayments

The total amount of time during which people had let their mortgage revert to a higher rate was an average of 10 months over the course of their mortgage, according to a survey by personal finance comparison site finder.com

Someone paying off the cost of the UK’s average house, worth £281,913, on a competitive fixed 3-year rate* of 5.5% would pay £1,361 per month during those 3 years.

But if they didn’t remortgage immediately at the end of the initial fixed term, the interest rate would revert to the lender’s standard variable rate, which is typically around 7.5% at the moment. This would cost them £1,661 per month, which is an extra £300. The average person paying 10 months of this would therefore part with an extra £3,000 to pay the extra interest.

While the average time that homeowners in the survey had left their revert rate going was 10 months, over 1 in 10 (11%) had paid a higher revert rate for more than 1 year. Worryingly, 3% said they’d paid a revert rate for over 5 years. This would cost over £30,000 in extra interest.

HSBC is in a strong position to continue paying robust dividends to shareholders chairman Mark Tucker said at the bank's annual shareholder meeting.

He predicts that the BoE will lower interest rates by 1.5 percentage points by the end of next year. That would lower Bank Rate to 3.75%, from 5.25% today.

"We expect the ECB and Bank of England to cut rates in June, cutting by 150bps by year-end 2025. We expect the Fed to cut in September, cutting by 100bps by year-end 2025," Tucker said.

The bank returned $19bn to shareholders in 2023 through dividends and share buybacks, has announced a further $8.8bn so far for 2024.

TGI Fridays operator Hostmore has narrowed its losses for the past year as it pushed forward with its turnaround strategy.

The UK hospitality company reported lower revenues in the face of the challenging backdrop for hospitality firms.

The update comes weeks after Hostmore, which runs 89 sites across the UK, agreed a deal to merge with US-based TGI Fridays Inc, to create a larger firm which will remain listed in London.

Hostmore said that 2023 was a “transitional year” as it sought to put its finances back on a strong footing.

It revealed revenues for the year to December 31 of £190.7m, dropping from £195.7m in 2022.

Nevertheless, it heavily reduced its pre-tax losses to £25.5m from £108.3m a year earlier.

The reduction came after significant cost-cutting, which it said provided a £6.2m boost last year.

Apple (AAPL) - Apple shares climbed in pre-market trading after the iPhone maker reported fiscal second-quarter earnings that topped estimates and announced an expanded stock buyback programme.

Coinbase (COIN) - Coinbase reported better-than-expected revenue in its first-quarter earnings report, helped by an uptick in cryptocurrency trading following the launch of the first US-listed exchange traded funds (ETFs) tracking bitcoin in January.

Anglo American (AAL.L) - Anglo American has jumped 3% after Reuters reported that Glencore (GLEN.L) was considering an approach for the 107-year old miner, a move that could spark a bidding war.

Diageo (DGE.L) - Guinness owner Diageo has poached the finance boss of the world’s largest Coca-Cola bottler as it seeks to recover from a drop in sales and profits.

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The oil price is on track for its biggest weekly losses in three months, bringing relief to consumers.

Brent crude futures (BZ=F) rose to $83.98 per barrel. Meanwhile, US West Texas Intermediate (MCL=F) crude futures climbed to $79.22 per barrel.

Still, both benchmarks were on track for weekly losses as investors worried about the prospect of higher-for-longer interest rates curbing growth in the US, the top global oil consumer, and in other parts of the world.

"With the US driving season almost upon us, high inflation may see consumers opt for shorter drives over the holiday period," analysts at ANZ Research said in a note.

In the City, the blue-chip share index has nearly hit a new all time high at the start of trading.

Richard Hunter, head of markets at Interactive Investor, suggests the London stock market has further to climb:

US stocks strode higher Thursday in a calm after the Fed day storm, as investors set aside rate worries for now to focus on Apple (AAPL) earnings and the coming monthly jobs report.

The S&P 500 (^GSPC) rose roughly 0.9%, while the Dow Jones Industrial Average (^DJI) gained about 0.8%. The tech-heavy Nasdaq Composite (^IXIC) led the gains, up 1.5%.

Stocks are recovering from Wednesday's volatile session dominated by the wait for the Federal Reserve's policy decision. Chair Jerome Powell played down the likelihood of an interest-rate hike, bringing relief to investors worried that recent signs of "sticky" inflation might prompt that move.

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Rail ticket platform Trainline (TRN.L) are the top riser on the FTSE 250 (^FTMC) after doubling its operating profits in the last year.

Trainline surpassed £5bn in ticket sales for the first time, as the aggregator enjoyed a recovery in rail travel in Britain and sharp growth across Europe.

The London-listed company’s pre-tax profit more than doubled to £48m in the year ending February 29, buoyed by an easing in rail strikes, which fell to 25 days from 30 in the previous 12 months.

Trainline’s ticket sales grew 22% year-on-year, mainly driven by £3.5bn in UK tickets. The overall British rail market recovered to an estimated £10.6bn in passenger revenues during the reporting period, up from £8.9bn in the prior year.

The bumper year was further boosted by sales across Spain and Italy, which grew a combined 43%, as Trainline further penetrated both international markets.

On the back of its European growth, Trainline also surpassed £1bn in international ticket sales for the first time.

Supermarket Asda has refinanced around £3.2bn of its debt amid “strong demand” from investors.

It said the new bond agreements will now mature in 2030 and 2031.

As part of the refinancing, the UK’s third largest grocery chain said it also used £300m of cash from its balance sheet to reduce its gross debt.

Asda had net debt of £3.8bn at the end of 2023, having built up the debt pile through its takeover by the billionaire Issa brother and private equity firm TDR Capital.

Michael Gleeson, Asda’s chief financial officer, said: “We saw strong demand from investors after taking a thoughtful and prudent approach to refinancing our near-term debt well ahead of maturities – to further strengthen our balance sheet.

“The refinancing also reflects the wider strength of Asda as a diversified retail group with a strong grocery business at its core supported by a fantastic non-food offering in George and following recent investments, a major presence in the high-growth convenience and food-service markets.”

Asian stocks surged to their highest in 15 months led by tech and Hong Kong stocks.

Hong Kong’s Hang Seng jumped 1% to 18,301.11, tracking gains on Wall Street. News of fresh moves by Chinese leaders to energise the economy helped drive buying of technology shares.

Gains were driven by e-commerce giant Alibaba (9988.HK) climbing 4.4% and rival JD.com (9618.HK) gaining 5%.

Vey-Sern Ling, managing director at Union Bancaire Privée, said: “The strong performance in the past two weeks is probably attracting more fund inflows for fear of missing out.

“Even after the sharp rally, valuations for the China tech stocks are still well below historical average as well as when compared with global peers.”

Several major markets including Tokyo (^N225) and Shanghai (000001.SS) were closed for holidays.

Holiday Inn operator Intercontinental Hotels Group (IHG) has revealed stronger revenues over the first quarter of 2024 driven by growth in Europe and Asia.

It came as the company, which also runs Crowne Plaza hotels, continued to expand by opening more than 6,200 rooms across 46 hotels during the period.

This represented an 11% rise in room openings compared to the same quarter a year earlier.

IHG told shareholders that global revenues per available room grew by 2.6% for the quarter.

Elie Maalouf, chief executive officer of IHG Hotels & Resorts, said: “There was an impressive performance in EMEAA (Europe Middle East Africa and Asia) which was up nearly 9%.

“The Americas, having already recovered very strongly, was broadly flat due to some adverse calendar timing, and Greater China grew by 2.5% and will continue to benefit from returning international inbound travel this year.

“Global occupancy moved up to 62% and average daily rate increased by a further 2% as pricing remained robust, reflecting the complete return of leisure, business, and group travel.”