Friday, 7th October: Sterling was once again on the slide during Friday’s trade after initially recovering from a “flash crash” during Asian trading. Overnight sterling collapsed more than 6% in the space of 2 minutes as a result of algorithmic/computer-initiated sell orders, at a time where there was low liquidity. Sterling bounced back but once again fell back during European trading. The correlation was once again evident between a falling pound and rising FTSE 100 as the blue chip index secured a first week gain of Q4.
First Friday of the month brings with it US jobs data. Following a disappointing jobs figure in August which pulled the brakes (amongst other data) on a rate rise in the US, attention has been focused towards September jobs as today’s payrolls report is the last one before the Fed next meet in November (due to meeting 2nd November). Modest job growth was delivered as employment grew by 156,000 (vs 170,000 forecast) whilst the unemployment rate rose 10bps to 5.0%. The 156k jobs created is the smallest gain since May as August jobs were revised up from 151k to 167k. Gold initially spiked on the back of the data release (seen as a safe haven asset) before paring back during afternoon trading. There is now a 10% probability of a rate rise in November, increasing to 70% in December.
With not much company specific news to report on the FTSE 100 was driven forward by overseas earners and gold miners leading the way: Glencore and Fresnillo secured the top two positions at the week-end . Sports Direct came out today claiming the sterling volatility, more so specifying the overnight drop, is to affect next year’s profits by about £15m. The continued to say that should GBP/USD be at $1.20 on average for the rest of the year, they may lose an additional £20m. The sports retailer ended the day lower by more than 9%.
The FTSE 100 ended the day higher by 0.63%, however the domestically orientated FTSE 250 closed down 0.67%. GBP/USD is slightly higher at the time of writing, currently at $1.24. GBP/EUR is flat at €1.11.Over in the US the Dow Jones and S&P 500 are trading in the red whilst the CAC 40 and the DAX closed lower by 0.67% and 0.74% respectively.
*image source Proquote