Jobs
Wall Street and FTSE rise as traders await US inflation figures later this week
Wall Street followed the FTSE 100 (^FTSE) and European stocks higher on Monday despite the UK jobs market suffering its worst month in more than a decade, raising pressure on the Bank of England to cut interest rates.
A report by accountant BDO revealed that the strength of the jobs market declined for a fourteenth consecutive month in August, with a reading of 95.89.
Anything over 95 signals growth, meaning recruitment is still just expanding, but this was the lowest score since January 2013.
There were also more people claiming unemployment-related benefits in August. This was at the highest level since December 2021, according to figures from the Office for National Statistics.
It comes as traders await US inflation figures later this week. Shares are rebounding from a previous week of heavy losses as investors remained optimistic about a so-called “soft landing” for the US economy.
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London’s benchmark index was 1% higher by the end of the day.
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Germany’s DAX (^GDAXI) rose 0.8% and the CAC (^FCHI) in Paris headed 1% into the green.
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The pan-European STOXX 600 (^STOXX) was up 0.8%.
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Wall Street opened higher despite the Nasdaq Composite (^IXIC) suffering its worst week since January 2022.
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The pound was 0.4% lower against the US dollar (GBPUSD=X) at 1.3077.
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Key companies reporting this week: Apple, GameStop, Inditex, Oracle and WH Smith.
Seema Shah, chief global strategist at Principal Asset Management, said: “Today, the markets remain cautiously optimistic, reflecting hopes that rate cuts will avoid a downturn.
“Yet, if economic conditions worsen sharply, fears of a recession could outweigh the benefits of rate cuts. History shows that rate cuts themselves are not the enemy — it’s the economic context in which they occur that investors should be paying close attention to.”
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Pembroke VCT announces £60m fundraise
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The Pembroke VCT has announced an offer for up to £60m (£40m plus £20m overallotment).
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The VCTs have total net assets of £224.1m and a combined portfolio of around 45 companies.
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The manager invests in business models with premium pricing potential, with a bias towards premium consumer brands, technology and business services.
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Highlights within the portfolio include LYMA Life, the medical grade beauty laser and supplement business, and Five Guys UK, the burger chain.
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Over the five years to June 2024, the VCTs have generated an average NAV total return of 18.3%.
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The VCT targets an annual dividend of 5p. (Latest ex-dividend NAV c.102.6p).
Jonathan Moyes, head of investment research at Wealth Club, said:
“Since launching its first VCT in 2013, the manager has developed a successful track record for backing premium consumer brands. Historic successes include Pasta Evangelists, the premium fresh pasta delivery chain, and ME+EM, the luxury fashion brand popular with celebrities, royals and politicians alike. It delivered a 16.1x realised return for the VCT in 2022.
The VCT appears willing to use the experience of lead manager Andrew Wolfson, to back companies at an earlier stage, with greater firepower, and in a sector that many of its peers would be unwilling to match. A notable example being LYMA Life, now the VCT’s largest holding after an initial £2m investment was recently valued at £31.2m.
Longer term, the VCT benefits from a proven management team and the wider resources of Oakley Capital. After several years of successful fundraises, the VCT has grown assets to more than £200m, meaning it should be able to provide that firepower to early-stage companies without having to bet the ranch in the process, improving the portfolio’s risk management.
This is a distinctive VCT and should complement a wider VCT portfolio.”
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Oil stocks higher on Brent Crude recovery
Oil majors BP (BP.L) and Shell (SHEL.L) benefited from an upturn in the Brent Crude price to just above $72 a barrel.
The benchmark reversed 8% last week but is up this morning, partly due to supply fears caused by the approach of a hurricane in the Gulf of Mexico. Meanwhile, West Texas Intermediate was up 1.3% above $68.
Oil has risen from its lowest close since 2021 ahead of reports this week that may clarify the demand outlook.
Traders will have forecasts from the Opec cartel, the Energy Information Administration and the International Energy Agency in
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Michael O’Leary calls for air traffic control chief to resign
Ryanair (RYA.IR) boss Michael O’Leary has issued fresh calls for the resignation of the chief executive of air traffic control (ATC) provider Nats.
He urged Martin Rolfe to step down and “allow someone competent” to take over after flights were disrupted at Gatwick Airport on Sunday due to “Nats staff shortages”.
The airline’s chief executive has repeatedly criticised Rolfe, particularly over the widespread disruption at UK airports during last year’s August bank holiday Monday, which was caused by a Nats technical failure.
O’Leary said:
“This is the latest in a long line of cock-ups by UK Nats, which has yet again disrupted multiple flights and thousands of passengers at Gatwick. Airlines and passengers deserve better.
“Ryanair again calls on UK Nats chief executive Martin Rolfe to step down and allow someone competent to run an efficient UK ATC service, which airlines and passengers are entitled to expect.
“If he won’t go, then (new transport secretary) Louise Haigh should sack him.”
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