US jobs figures beat expectations, while oil prices remain volatile - as it happened

Nick Fletcher and Angela Monaghan

from on 2017-05-05 17:14 (#2NDPH)

6.14pm BST

US drillers added oil rigs last week for the sixteenth week in a row.

The Baker Hughes rig count showed 6 oil rigs added to give a total of 703, the largest number since April 2015. Two gas rigs were added to give 173.

5.07pm BST

Ahead of the French election, investors seemed to be betting the more-market friendly Emmanuel Macron was likely to win the day, and pushed European markets higher. The moves came despite the better than expected US jobs figures doing little for the American market. On the French elections, Oliver Jones at Capital Economics said:

Investors breathed a sigh of relief after Emmanuel Macron claimed the largest share of the vote in the first round of the French presidential election, and there is scope for a further rally if, as opinion polls suggest, he wins Sunday's run-off handsomely.

[But]we are not convinced that French bonds and the euro would stay strong for very long. For one thing, political risk will linger ahead of June's National Assembly elections, especially if Macron doesn't win the run-off by the wide margin that the polls suggest. A relatively narrow victory would increase the chances that Macron's party, En Marche!, fails to secure a majority in those elections, which in turn would damage the prospects for his market-friendly labour reforms.

4.22pm BST

After the recent falls on worries about oversupply and the (lack of) effect of the producers' attempts to cap suppliers, oil prices are heading higher again.

Brent crude is now up 1.9% at $49.32 a barrel having fallen as low as $46.64. Chris Beauchamp, chief market analyst at IG, said:

Oil prices have bounced this afternoon, recovering a significant portion of yesterday's heavy losses, but other than a snap-back rally in an overstretched market there is little sign of a firm fundamental reason.

4.07pm BST

Over to Greece now. With another vote looming over painful pension cuts and tax increases - the price of emergency bailout loans to avoid default - the Greek prime minister has been busily trying to sweeten the pills today telling his own leftist MPS that the end of austerity is in sight.Helena Smith reports from Athens:

It has been four days since Greece cut a preliminary agreement with creditors that paves the way to disbursement of loans in return for more painful reforms and which should open the door to debt relief.

In theory all 153 MPs in prime minister Alexis Tsipras' two-party coalition will also support the measures when put to parliament for vote on May 16. But disaffection is mounting in the ranks of Tsipras' own Syriza party with many leftists openly questioning the wisdom of applying measures that will not only deepen Greece's debt deflationary cycle - and in so doing aggravate a depression now longer and deeper than that suffered in the US in the 1930s - but further impoverish those already hit hardest by the crisis.

"When the time comes, the government will hand out " what will be left after having exceeded its [primary] surplus [targets]," he said.

The preliminary agreement, to be complemented by further talks in the coming weeks, is expected to be harshly debated before the vote takes place. Measures include a 13^th pension cut of as much as 18% and abolishment of tax breaks that will broaden the tax base.

3.38pm BST

A U.S. rate hike in June is now a certainty according to market pricing. pic.twitter.com/RUOAsth11z

2.45pm BST

US markets are struggling for direction despite the better than expected April jobs figures.

The S&P 500 and Nasdaq Composite both opened more than 0.25 higher but the Dow Jones Industrial Average is currently 27 points or 013% lower, dragged down by a fall in IBM following reports billionaire investment guru Warren Buffett had sold about a third of his stake.

2.36pm BST

Back with the corporate world, and Pearson's trading update may have pleased the market, but the company's shareholders have just staged a revolt against the pay package awarded to chief executive John Fallon despite a number of profit warnings.

The story is here:

2.10pm BST

Monthly guide to interpreting non-farm payrolls:
1. "Ooh!"
2. Check revision
3. "Ahh..."

2.04pm BST

The better than expected non-farm payroll numbers mean another interest rate rise from the US Federal Reserve is very much on the cards, analysts believe. Here are some initial reactions to the figures:

1.48pm BST

The dollar has lost its initial gains following the employment report, with the yearly drop in wage growth seemingly hitting sentiment.

#Jobsreport April: payrolls strong +211k but wage growth slips +2.5%. #Unemployment rate falls to 4.4% as #participation rate drops to 62.9% pic.twitter.com/nrTZWLAUZv

1.43pm BST

1.37pm BST

The dollar has edged higher after the better than expected April job numbers, but there is little change in the futures market, with the Dow Jones Industrial Average forecast to open slightly lower.

1.34pm BST

The US jobless rate for April was slightly better than forecast at 4.4% rather than 4.6%, and better than March's figure of 4.5%.

Average hourly earnings month on month were in line with expectations with a rise of 0.3%. But the year on year increase fell from 2.6% to 2.5%.

1.31pm BST

BREAKING:

The US non-farm payroll numbers for April have come in better than expected, with a 211,000 rise compared to expectations of a 190,000 increase.

12.17pm BST

The falling oil price could bring some good news for car owners. Patrick Collinson reports:

Motorists could see around 3p chopped off the price of petrol this weekend if supermarkets match the sharp falls in the underlying oil price, according to the RAC.

The national average price for unleaded should fall from 118p to 115p, the motoring group said, although it warned that many forecourts have been slow to pass on the savings and are instead increasing their profit margins.

12.07pm BST

Looking ahead to the US non-farm payroll numbers for April, and there is expected to be a strong recovery after the surprisingly weak figure for March. But there is plenty of divergence in analyst expectations.

11.02am BST

Here's a succinct summary of the oil situation from the Economist Intelligence Unit:

Oil mkts gloomy about #OPEC continuing its production restraint. We still think they will but too small given rising output elsewhere

10.42am BST

As well as the US non-farm payroll figures later, there are also the latest figures from Baker Hughes on the number of oil rigs working in the US last week. This of course has an influence on the crude price, showing as it does the growing US production which is offsetting the attempts by Opec and other producers to cap supplies. Here's a Wall Street Journal graphic showing the Baker Hughes rig count and the oil price:

#Oil correction could go further until US rig count comes back to earth https://t.co/kINrjDCGbc pic.twitter.com/lsEIMkRtR0

10.22am BST

Joshua Mahony, market analyst at IG, said the decline in oil prices may have eased but there could be further losses ahead:

The FTSE has managed to recover early losses, as news-driven gains for the likes of Pearson, M&S and IAG dragged the index back into the green despite the negative sentiment from a week of plummeting crude prices.

It seems the markets have given up all optimism when it comes to OPEC's ability to dictate oil prices. For whatever OPEC does from here, it will either be undermined by low conformity (if the cut is too large) or a like-for-like rise in US production (in response to higher prices). In a world where Donald Trump is encouraging even greater US production, there is reason to believe the losses seen this week could be just the beginning.

10.20am BST

Here are the biggest movers in the FTSE 100:

10.02am BST

After the drop in oil prices, there are now signs crude may be stabilising.

Brent has now edged up 0.5% to $48.65 a barrel after falling as low as $46.64. West Texas Intermediate - the US benchmark - is up 0.26%.

9.58am BST

And British Airways owner International Airlines Group has soared more than 4% after a record first quarter performance.

Operating profits rose a better than expected 9.7% despite a 2.8% fall in revenues. Chief executive Willie Walsh said, "This is a record performance in the first quarter, traditionally our weakest quarter, with the improving trend in passenger unit revenue continuing."

9.55am BST

Elsewhere educational specialist Pearson has jumped 10% making it the biggest riser in the leading index.

After several profit warnings, there was relief its latest trading statement was in line with forecasts, with underlying sales up 6%. However analysts at Shore Capital were not convinced, saying:

Although we see long-term growth in global learning spend as a potentially attractive opportunity for Pearson, we remain cautious on near term trading prospects and on the challenges involved in negotiating the substantial organisational and cultural change required to realign itself to a digital future. This morning's update provides a degree of comfort on trading (in that it is not a warning), but another raft of reorganisation and repositioning provides further evidence of the complexity of this change process.

9.49am BST

For a Friday, there's a lot of company news around. Apart from Marks & Spencer appointing Archie Norman as chairman which has lifted the retailer's shares by 5%, there is news that Richard Solomons, the chief executive of InterContinental Hotels is retiring and will be succeeded by chief commercial officer Keith Barr. The news was accompanied by news that revenue per available room - a key indicator for the hotel sector - had jumped from 1.7% in the fourth quarter to 2.7% for the first three months of the year. But this was less well received, with InterContinental's shares down more than 2%, making them the biggest faller in the FTSE 100.

Analysts at Numis moved from hold to reduce, saying:

The outperformance was mainly in Europe, which experienced a strong recovery in capital cities and benefited from a favourable trade fair calendar in Germany. Overall, first quarter growth was boosted by Easter falling in the second quarter which we estimate may have added 50-100 basis points to RevPAR.

9.35am BST

The fall in oil prices bring them back to an appropriate level given the fundamentals of the market, says Norbert Ri1/4cker, head of macro and commodity research at Julius Baer :

Concerns about the persistent supply glut and US production growth pressured prices, with yesterday's down move likely accelerated by long covering in the futures market. Scepticism about the effectiveness of the supply deal had grown in recent weeks with global oil inventories receding much slower than anticipated.

The revived US shale boom undermines the Middle East's restriction efforts, among other sources of near-term supply growth. US oil production surpassed expectations in terms of an early bottoming and swift up tick, and is set to expand further based on the latest drilling momentum.

9.02am BST

Marks & Spencer has appointed retail veteran Archie Norman as its new chairman.

I am looking forward to taking on the role of the chairmanship of Marks & Spencer as the business under Steve Rowe's leadership faces into the considerable challenges ahead in a rapidly changing retail landscape.

8.43am BST

Europe's major markets have followed Asia lower in early trading, as the lower oil price weighs on shares.

The scores so far:

8.29am BST

Another Brexit warning, this time from the chief executive of Goldman Sachs, the world's second largest investment bank.

[The City] will stall, it might backtrack a bit, it just depends on a lot of things about which we are uncertain and I know there isn't certainty at the moment. I don't think it will totally reverse.

"We don't have big plans now, we are looking - we are trying to avoid [it].

Obviously, a lot of people elect to have their European business concentrated in a single place, and the easiest place, certainly, for the biggest economy in the world [America] to concentrate would be the UK - the culture, the language, the special relationship, and we are an example of that.

8.08am BST

The price of Brent crude oil has not been lower since November 2016, before Opec's last agreement on production caps.

7.53am BST

The FTSE is expected to open lower this morning:

Our European opening calls:$FTSE 7236 -0.17%
$DAX 12632 -0.12%
$CAC 5361 -0.21%$IBEX 11016 +0.03%$MIB 21141 -0.13%

7.51am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Brent crude is down a further 2% this morning at $47.51 a barrel, the lowest level in more than five months.

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