- FTSE 100 up 62 points to 8,837
- Bargain-hunters snap up Convatec
- Bond markets calmer after Downing St reassures over Reeves
- Currys restores dividend after profits and cashflow improve
1.35pm: US jobs report stronger than expectred
The FTSE 100 has been lifted, as the dollar has jumped against the pound after the US jobs market continued to show its strength.
The nonfarm payrolls report showed 147K new jobs were added in the US econony last momth, much higher than the expected 111K and up from May’s figure, even though that was revised higher to 144K.
In the initial reaction in currency markets, the euro dropped 0.6% to $1.1723 and the pound 0.3% to $1.3588.
12.52pm: US futures flat
US futures are flat, having been searching high and low for direction in the past few hours.
Futures for the S&P 500, Dow Jones and Nasdaq Composite are all up less than 0.1%.
Today brings a rare occurrence of the US non-farm payrolls coming out on a Thursday, with markets closed tomorrow for the 4th July Independence Day holiday.
Fresh from yesterday’s disappointing ADP jobs figure, the lowest since March 2023, traders are wondering whether the official jobs number can come in higher than expected for the third month in a row.
“For markets the current lack of any notable uptick in inflation pressures does mean that they can dream of near-term rate cuts, but realistically it would require significant job market weakness in the form of an unemployment spike, or a payrolls collapse,” says market analyst Joshua Mahony at Rostro.
“In reality, the ongoing tariff uncertainty will mean that market perception over where rates go in H2 will be dictated by whether Trump pushes trade taxes sharply higher for some of their key trading partners next week.”
On top of the Vietnam deal announced yesterday, there are reports of another deal with Indonesia now.
Voting on Donald Trump’s ‘One Big Beautiful Bill’ is also a key event today, with the President having wanted his tax and spending budget to be signed off before the long weekend.
12:07pm: Convatec tops the risers
Convatec shares rose 2.5% and topped the Footsie risers as bargain hunters stepped in following the pullback, which wiped around 13% off the valuation of the stoma maker over the past two days.
Analysts at Stifel called the sell-off “overdone”. The stock had fallen amid fears of proposed changes to US reimbursement rules for medical supplies, which could affect its continence and ostomy divisions.
The broker reiterated its ‘buy’ rating, saying the episode presents a buying opportunity despite the added uncertainty.
UBS agreed that the impact is likely to be limited, estimating about 12% of ConvaTec’s group revenue is exposed to Medicare through ostomy and continence products, but said the company’s Infusion Care segment is not affected.
Turning to the wider market, the FTSE 100 continued in the green, rising 35 points to 8,809.
11.11am: PMI ‘weakens argument for BoE cut’
While an earlier commentator said the services PMI was good news for those wanting the BoE’s monetary policy committee to cut interest rates next month, this is not the opinion of everyone.
Rob Wood, chief UK economist at Pantheon Macroeconomics sauys: “All told, we think that June’s DMP weakens the argument for an August rate cut.
“The doves argued that widening slack in the economy would increase the pace of disinflation. But employment intentions rebounded, suggesting slack will no longer widen, and inflation looks stubborn.
“The MPC could easily focus on realised job growth instead and the PMI, which is more dovish, and cut in August anyway.
“But we continue to think that only one more rate cut this year is the right call. If it comes in August, then we think the MPC will be on hold for the rest of the year.”
However, the City’s money markets are pricing a better chance of an August rate cut this morning, with just over an 80% chance seen now, up from around 75% earlier in the week.
10.52am: Keller hit by Deutsche downgrade
Keller Group PLC (LSE:KLR) shares are down 4.2% after a downgrade from Deutsche Bank.
The investment case “has played out, for now”, says analyst Jonathan Coubrough, with management actions over the past five years contributing to an impressive transformation in financial metrics, resulting in the share price doubling since late 2023.
However, he says, group profits fell double digits in the second half of 2024, and guidance for a return to a normal H2-weighting this year implies a further fall in the first half of this year, before requiring high growth in the second half to meet consensus forecasts.
The FTSE 250 is 154 points over, or 0.7%, with Keller’s decline as well as those from Baltic Classifieds and Watched of Switzerland holding it back from even bigger gains.
The FTSE 100 is up almost 0.4%, with the London indices the only European benchmarks in green.
In Frankfurt and Paris, the DAX and CAC are down 0.1% and 0.2% respectively.
10.23am: Rate cut ‘more likely’ after PMIs
The rise in the UK services and composite PMI “suggests that the economy is continuing to recover from the tax and tariff shocks in April”, says Thomas Pugh, chief economist at RSM UK.
Despite this, Pugh said UK economic growth in Q2 “will still fall sharply” from Q1’s bumper 0.7% though, to around 0.2% he reckons.
“What’s more, the output prices balance hit its lowest level since February 2021, which will give some ammunition to the doves at the Bank of England, and makes a rate cut in August even more likely,” he added, with good news also on inflation.
While there were encouraging signs, such as new orders rising to suggest confidence is starting to return across the supply chain, the future output index slipped back and employment remains a weak spot.
It suggested that firms were still shedding jobs heading into the summer, though Pugh says he suspects “the worst of the labour market pain is already behind us, but demand for labour is unlikely to pick up rapidly”.
9.44am: Services output improves despite continued contraints from exports
June’s PMI data highlights a “modest rebound in UK service sector growth, fuelled by a turnaround in domestic business and consumer spending after a soft patch during the spring,” says Tim Moore, economics director at S&P Global Market Intelligence.
Activity was slightly stronger than the earlier ‘flash’ estimate for June and the fastest in 10 monthsa.
“While total new work picked up in June, shrinking export sales were a constraint on service sector growth,” he says, noting that survey respondents cited headwinds from US tariffs and geopolitical tensions, resulting in subdued demand conditions across global markets.
Employment numbers in the services sector decreased for the ninth month running and at a faster pace than in May, with companies explaining that job shedding was a mix of redundancies and non-replacement of voluntary leavers, while Moore pointed to concerns about elevated payroll costs.
On inflation, he says the survey pointed to a “considerable slowdown” in overall cost inflation across services businesses.
“A combination of easing price pressures and lower employment leaves the door open for the Bank of England to resume its run of interest rate cuts at the next policy meeting in August.”
9.37am: UK services rebound
The UK’s key services sector expanded at the fastest rate of growth since last August, with new orders rising for the first time in three months.
There was also good news on inflation for the Bank of England, with the services purchasing managers’ index (PMI) survey finding the slowest pace of prices-charged inflation since February 2021.
The S&P Global UK services PMI jumped to 52.8 for June, up from 50.9 in May and the highest for 10 months.
The UK composite PMI for June therefore rose to 52.0 from 50.3, beating the expected 50.7 by a long way.
The Bank of England has also published its Decision Maker Panel survey.
UK firms’ annual wage growth was 4.6% in the three months to June, the report said, 0.1 percentage points lower than in the three months to May.
UK lenders expect demand for mortgages to fall in the next three months, the weakest reading since 2023.
9.09am: WOSG was ‘a little vague’
The results from Watches of Switzerland Group PLC (LSE:WOSG) has largely been pre-announced, says analyst Jonathan Pritchard at Peel Hunt.
He says EBIT of £150 million was in line with expectations but flags that there was no update on current trading, and the outlook for FY26 “is a little vague”.
Guidance for sales growth of 6-10% is “largely in line with where the market had gathered”, but the range of margin expectations of flat to down -100bps compares with a consensus forecast of a 30bps decline before the announcement.
“Currency has gone against WOSG as well, so it is likely that forecasts will come down this morning,” says Pritchard, “we would expect 3-5% as a first stab, but intend to confirm after the call at 9am”.
8.53am: Trump, bond markets, UK repair mode
Donald Trump has renewed his attacks on Federal Reserve chief Jerome Powell, calling for his immediate resignation in a social media post.
The US president posted a link to a news report suggesting Powell should be investigated over renovation costs at the central bank’s Washington headquarters, adding that “‘Too Late’ should resign immediately.”
US Treasury yields, which indicate government borrowing costs, have shown a mixed reaction, with shorter-dated government bonds slightly higher, while 10-year and longer bonds continuing to ease.
Meanwhile, UK gilt yields are largely back to where they were before bond markets got in a tizzy over Rachel Reeves’ teary appearance, while the pound
The FTSE 100 is up, helped by PM Keir Starmer backing Reeves to remain chancellor “into the next election”.
Gilt yields, which indicate UK government borrowing costs, have dipped back from the sharp gains yesterday, while the pound has also regained some strength, up 0.2% against the dollar and euro.
“A Chancellor in tears, a backbench revolt, and signs investors are becoming more risk averse to the UK is hardly the way the Prime Minister wanted to mark his first year in office,” says market analyst Susannah Streeter at Hargreaves Lansdown.
The government is “in repair mode”, she says. “This is helping restore some calm on bond and currency markets, given that investors need stability and certainty to have the confidence to invest in UK assets.”
“Sterling is still lower against the dollar compared to 24 hours ago, having reached multi-year highs earlier this week. But it is still up 1.5% on a fortnight ago, and around 12% since the start of the year.
“Some worries remain about the government being backed into a corner and losing its grip on the public finances. Investors may still be on alert to fresh opposition to government plans to trim spending, to try and abide by its fiscal rules and keep bond markets onside.”
8.30am: Frasers secures hefty increase in borrowing capacity
Shares in Mike Ashley’s Frasers Group PLC (LSE:FRAS) are up 0.5% after it arranged a mammoth £3 billion borrowing facility from its banks.
The combination of term loan and revolving credit facility replaces existing financing facilities of £1.65 billion and is valid for three years extension options up to five years and for a further £500 million.
“The group believes the substantial increase in the total facility demonstrates significant support from the banking industry for the success and strength of the group and its elevation strategy,” Frasers said.
8.15am: FTSE climbs at the open
The FTSE 100 has started in a more positive mood, wiping away the bond market tears of yesterday, up 37 points to 8,811.48.
There’s a hodge-podge among the top risers, with no clear picture again: chemicals group Croda, lender Lloyds, real estate developer Segro, housebuilder Persimmon, retailer M&S.
A few other retailers, housebuilders, banks and REITs are also higher.
The FTSE 250 is up 0.5%, with Currys PLC (LSE:CURY) in the lead, up 6% after its results seem to impress.
Watches of Switzerland Group PLC (LSE:WOSG) is down 4.4% after its results, including uninspiring guidance.
The biggest mid-cap faller is Baltic Classifieds Group PLC (LSE:BCG), down 13.5% as the owner of fourteen leading online classified ad portals in Lithuania, Estonia and Latvia reports final result, with its shares having hit all-time highs in recent weeks.
7.57am: WoS profits beats expectations, but margins may fall this year
Watches of Switzerland Group PLC (LSE:WOSG) has reported underlying profits for the past year slightly higher than expected, but indicated that profit margins are likely to shrink in the coming year.
The luxury jewellery and timepiece retailer reported record revenue of £1.65 billion for the year to 27 April 2025, up 7% on the previous year, or 8% at constant currency rates, which was in line with its year-end update in May.
Underlying profits on an adjusted EBIT basis rose 12% to £150 million, just ahead of the average City analyst forecast of £148.8 million, while statutory pre-tax profit fell 18% to £76 million, with free cash flow also falling.
Guidance for FY26 points to 6-10% revenue growth at constant currency and adjusted EBIT margin somewhere between flat to down 100 basis points, as the US 10% current tariff on imported goods from Switzerland has led some brand partners putting through mid-single digit price increases in the US, alongside reducing their authorised distribution network’s margin percentage.
7.28am: Currys plugs dividend back in as cash reaches decade high
Currys PLC (LSE:CURY) has plugged its dividend back in after sales, profits and cashflow for the past year all met expectations.
The electrical products retailer reported a 37% rise in adjusted profit before tax to £162 million for the year to 3 May 2025, bang in line with indications given in a May update, as like-for-like sales grew 2%.
Group free cash flow rose 82% to £149 million, while the company ended the year with £184 million in net cash, the strongest balance sheet in over a decade.
The FTSE 250-listed group proposed a final dividend of 1.5p and said early trading in the new financial year is in line with expectations.
7.15am: FTSE 100 to sail higher
A rebound for the FTSE 100 is expected on Thursday morning, as the London index plays catch-up with gains elsewhere after speculation over the future of chancellor Rachel Reeves hit shares yesterday.
Futures are calling the benchmark 22 points higher, following the 10-point drop the day before that left the index at 8,774.69.
Overnight on Wall Street, the S&P 500 rose 0.5% to another new all-time high, and the Nasdaq Composite leapt 0.9%, though the Dow Jones fell slightly.
Asian markets are mixed again, with the Japanese Nikkei down for a third day.
“Long-term bond yields across Western markets are flashing early signs of stress,” says market analyst Ipek Ozkardeskaya at Swissquote Bank, noting the latest catalyst was Keir Starmer hesitating to confirm whether Reeves would remain in her post, while Reeves was seen wiping away tears behind him in the House of Commons.
While Downing Street assured that it was for personal reasons, “the imagery alone raised alarms about the UK’s narrowing fiscal headroom, the need to raise taxes and cut spending, and the credibility of the gilt market”, says Ozkardeskaya.
As a result, the 10-year gilt yield surged 25 basis points, with US 10-year yields rising too.
While Donald Trump announced a rather one-sided trade deal with Vietnam, it includes tariffs that “could reignite inflation”, Ozkardeskaya adds.
“Economic data is weakening, but not enough to force the Fed’s hand. And long-term yields are creeping higher, flashing early signs of market stress. Stocks may be hitting new highs, but under the surface, the pressure is building. This isn’t smooth sailing — it’s a rally flying straight into headwinds.”
6am: What to watch on Thursday 3 July
Currys PLC (LSE:CURY) shares recently reached their highest level since 2021 following the company’s rejection of an opportunistic offer from activist investor Elliott last spring, with the price now trading well above the bid price.
Adjusted pre-tax profits are expected to rise by more than a third to around £162 million, the retailer indicated in May, on like-for-like sales growth of 2% for the year to April.
A year-end update in May indicated that dividends will be resumed, though expectations are not super high.
Expanding the retail theme, Watches of Switzerland Group PLC (LSE:WOSG) also gave an indication of its performance in May, indicating revenues had risen 8% on a constant currency basis and that adjusted EBIT was “expected to be in line with market expectations”, with a consensus forecast of £148.8 million.
There is likely to be bigger news for markets in the form of macroeconomic data, starting with services sector PMI surveys, followed by the US official jobs report.
A day earlier than the usual Friday spot, the US non-farm payrolls report is being brought forward due to the 4th July public holiday falling on Friday this year.
Economists expect 126K of new jobs to have been added, based on the median Wall Street estimate, with an unemployment rate remaining at 4.2% (though many expect a rise to 4.3%).
Wage growth is a key focus, with a 0.3% rise in the month of June, or 3.7% compared to a year earlier.
Announcements expected:
Finals: Baltic Classifieds Group, Currys, Watches of Switzerland
Economic announcements: Services PMIs (CHN, UK, EU, US), Non-Farm Payrolls (US), Unemployment Rate (US), Factory Orders (US), ISM Services PMI (US), Balance of Trade (US)