Stocks slide on US payroll data

London Stock ExchangeShares slid as a rise in US interest rates seemed inevitable on the back of an upwardly revised non-farm payrolls report.

US non-farm payrolls in November rose by 211,000 compared with October’s upwardly revised 298,000 gain and with analysts’ expectations for a 200,000 reading, according to the Labor Department.

The unemployment rate was unchanged at 5%, as analysts had forecast, while the labour-force participation rate rose by one tenth of a percentage point to 62.5%.

Oil and gas stocks were under pressure as the Organisation of Petroleum Exporting Countries (Opec) maintained the current production level last published at 30 million bpd.  Brent crude slipped 1.8% to $43.06 per barrel.

Following the conclusion of proceedings, Secretary General Abdalla Salem El-Badri said, “Opec will wait and see how the market develops over the next six months and saw no need to alter the current production level during a period of market adjustment.”

Russ Mould, investment director at AJ Bell, said: “The lack of a decision one way or another from Opec means production is likely to remain at current levels and this is going to further increase the glut in supply and depress the oil price. There have now been ten consecutive weekly increases in US oil inventories which now stand at 489 million barrels, up from 385 million at the turn of the year.

“Sustained, further oil price declines could raise further questions over the fat dividend yields offered by BP and Shell and indeed the FTSE 100 as a whole, because oil stocks represent 13% of the £73.7 billion in shareholder distributions expected from the index by the analyst consensus for 2016.

“In theory, weaker oil prices should feed through to lower prices at the pumps and give consumers a timely boost as we head into Christmas, especially as the Chancellor of the Exchequer chose not to increase fuel duty in the Autumn Statement last month.”

Oil companies were among the biggest fallers in the FTSE 350 index, including BP, Royal Dutch Shell, Tullow Oil and Nostrum Oil & Gas.

Elsewhere, there was positive news from Germany, where factory orders beat expectations in October, and Japan, where consumer confidence grew for the second consecutive month in November.

The FTSE100 closed down 36.7 points at 6,238.

Among corporates, Premier Inn and Costa Coffee owner Whitbread dropped after Barclays downgraded the stock to ‘equalweight’ from ‘overweight’ and cut the price target to 5,200p from 5,800p.

easyJet gained after reporting a 9.6% increase in passengers for the November despite the situation in Sharm el-Sheikh and heavy fog at the beginning of the month.

JD Sports Fashion was higher after it said late on Thursday that it expects headline profit before tax and exceptional items for the current financial year to exceed consensus market expectations of £125m by £10m.


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