FTSE 100 gains after stronger-than-expected Non-Farm Payrolls, Anglo American crashes

The FTSE 100 gained on Friday after stronger-than-expected Non-Farm Payrolls painted a resilient picture of the US economy.

The US economy added 199,000 jobs in November, exceeding economist forecasts of 185,000. The unemployment rate came in at 3.7% compared to estimates of 3.9%.

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The conundrum for markets is the jobs report doesn’t support the argument that the Federal Reserve will cut rates in early 2024, but at the same time, it doesn’t support further interest rate hikes.

The FTSE 100 was up 0.5% at the time of writing and will likely remain choppy for the rest of the session. US stocks whipsawed and promised volatility going into the weekend as investors assessed the implications for central bank meetings next week.

The jobs report will influence the Federal Reserve’s thinking on rates and may dictate a more hawkish tone than equity bulls would like.

Anglo American

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Anglo American was the FTSE 100’s top faller after the miner said it planned to cut production in the coming years to conserve cash. Mining investors never want to hear about production cuts, and Anglo shares sank over 14% on Friday.

“Mining giant Anglo American is taking the secateurs to its costs, and it plans to reduce expenditure by another $500m next year. The huge increase in the existing plan comes as production from its extensive Copper, iron, platinum, and other commodities will be lower than previously thought,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

“Miners are at the mercy of cyclical material costs, and the wheel has been turning against new CEO Duncan Wanblad – with issues compounded by operational headaches too.”

Despite the destruction of Anglo American shares on Friday, the losses were limited mainly to Anglo, with only minor losses in Rio Tinto. Indeed, copper miner Antofagasta was the FTSE 100’s top riser, and Glencore edged higher.

Housebuilder Berkeley Group was among the fallers as investors booked profits after the company released reasonably respectable half-year earnings.

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