Markets live: Wall Street falters and FTSE 100 sinks as US jobless claims fall
Wall Street faltered and the FTSE 100 finished lower today as bullish sentiment faded and traders turned their attention to US jobless data.
The blue-chip index closed down 1.30 per cent to 6,198 points, reversing gains earlier in the week that saw it smash through the 6,200 mark.
Rally runs out
The hesitant start marks an end to a recent bullish run for the FTSE, which has benefited from optimism over a US stimulus package.
The nerves spread elsewhere in Europe, with Germany’s Dax slipping 0.38 per cent to 13,009 points and the French benchmark Cac 40 closing down 0.61 per cent at 5,042.
It comes a day after the FTSE 100 shrugged off bleak UK GDP data that showed Britain fell to its worst ever recession in the first half of the year.
Traders have also been buoyed by optimism about a US stimulus package and capital gains tax cut as well as hopes of a coronavirus vaccine.
Markets have also set aside jitters about US-China tensions in recent sessions.
Stimulus fears return
But the bullish sentiment stalled this morning, as traders turned their attention to US jobless data.
Moreover, optimism about a US stimulus package has also been hit after Speaker Nancy Pelosi warned Democrats and the Trump administration were “miles apart” on a new fiscal policy.
“Despite this week’s optimistic tone, there remains an undercurrent of concern about the prospect for any sort of agreement between US policymakers,” said Michael Hewson, chief markets analyst at CMC Markets.
Wall Street wavers
There were mixed feelings on Wall Street as markets opened in New York this afternoon.
The S&P 500 ticked up a marginal 0.04 per cent in early trading, slamming the brakes on its rapid ascent towards new record highs.
The Dow Jones was down 0.18 per cent, but the tech-heavy Nasdaq proved resilient with a rise of 0.80 per cent.
Traders were buoyed by better-than-expected US jobless data earlier this afternoon, which showed weekly jobless claims fell below 1m for the first time since the start of the coronavirus pandemic.
“The initial jobless claims number was much better than the market anticipation and this has pushed the equity futures higher,” said Naeem Aslam, chief market analyst at Ava Trade.
“The fact is that the US economy has become more resilient to pandemic and it is trying its best to find its way out.”
But this confidence failed to translate into market open, with uncertainty over a US stimulus package tempering gains.
“Let’s not overstate how great the unemployment claims figure was,” said Connor Campbell, financial analyst at Spreadex.
“At 963,000, it is still far more swollen than anything seen pre-pandemic. Nevertheless, it is another move in the right direction, shaving more than 150,000 off of analysts’ estimates.”
Michael Hewson, chief market analyst at CMC Markets, said: “At the end of July there was much handwringing at the prospect of the loss of the weekly $600 unemployment enhancement, and the effect it might have on the US jobs market. Yet here we are, two weeks into August and the weekly claims numbers have continued to fall, as have the continuing claims numbers.”
“With US stock markets at record highs and the jobless claims numbers still on a downward track, US politicians have little incentive to arrive at any sort of new stimulus deal, and so the procrastination is likely to go on, until one or other of these two factors goes into reverse.”
Ex-dividend dent
This morning’s losses reversed a large portion of yesterday’s gains on the FTSE 100 as bullish sentiment appeared to falter.
“It seems that investors aren’t feeling quite so confident in the FTSE now that the dust has settled on the latest GDP data,” said Connor Campbell, financial analyst at Spreadex.
But the blue-chip index was also dragged down by ex-dividend stock, with BP, Shell, Diageo, Astrazeneca, GSK and Legal & General among the companies to go ex-dividend.
“A combination of some big stocks trading without the rights to their dividend and a bit of profit taking after a strong run for equities so far in August saw the FTSE 100 on the back foot on Thursday morning,” said Russ Mould, investment director at AJ Bell.
FTSE risers and fallers
Funeral provider Dignity led the FTSE risers today, soaring more than 38 per cent in morning trading.
It came after the competition watchdog said it would hold off on price controls in the funeral sector.
Watches of Switzerland followed close behind, with shares jumping more than 25 per cent following a strong set of interim results.
The luxury retailer said sales in June and July were up on the previous year as it bounced back from a sharp drop during lockdown.
By contrast, National Express dropped almost 13 per cent after it posted a £30m loss for the first half of the year.
The downbeat figures came after the coach operator suffered an 80 per cent drop in passenger demand due to the Covid-19 crisis.
National Express has ramped up its liquidity in a bid to counteract the downturn, and has placed more than 40,000 employees on furlough.