The FTSE 100 clung on to modest gains on Friday despite weak mining stocks but Wall Street headed south after stronger-than-expected jobs data increased chances of a rate hike across the pond.
The FTSE 100 closed up 7.73 points, 0.1%, at 10,368.05. The FTSE 250 ended down 241.91 points, 1.0%, at 23,060.74, while the AIM All-Share fell 10.99 points, 1.4%, to 797.27.
For the week, the FTSE 100 fell 0.4%, the FTSE 250 dropped 1.6%, and the AIM All-Share declined 2.6%.
In European equity markets on Friday, the CAC 40 in Paris ended down 0.3%, and the DAX 40 in Frankfurt closed 0.8% lower.
In New York, the Dow Jones Industrial Average was down 0.3%, the S&P 500 was 1.2% lower, and the Nasdaq Composite dropped 2.2%.
US non-farm payrolls climbed by 172,000 in May, more than twice as much as the FXStreet-cited consensus of an 85,000 rise, data published by the US Bureau of Labour Statistics showed.
In addition, April’s figure was sharply revised up to a rise of 179,000 from 115,000. March’s figure was revised up to an increase of 214,000 from 185,000. The unemployment rate in the US was unchanged at 4.3% in May.
Analysts at TD Economics said: “From the Fed’s standpoint, the narrative has clearly shifted from when they’ll cut again to if their next move is even a cut. Yields across the curve jumped higher post-payrolls, with Fed futures now fully pricing in a rate hike by year-end.
“At a minimum, this suggests the FOMC will drop its easing bias at its next policy announcement on June 17th and perhaps even strike a more hawkish tone given the labour market is now showing signs of reaccelerating.”
The leisure and hospitality sector added 70,000 jobs last month, the new data showed, well above its average monthly gain of 14,000 over the last year.
“That gain was the largest since January 2023 and had an extra lift from hiring triggered by the upcoming World Cup matches,” said Diane Swonk, chief economist at KPMG, referring to the football tournament co-hosted by the US this summer.
The jobs report saw the dollar climb and bond yields rise. The pound traded at 1.3371 dollars on Friday afternoon, down from 1.3436 on Thursday.
The euro traded lower against the greenback, at 1.1542 on Friday against 1.1624 on Thursday.
Against the euro, sterling firmed to 1.1583 euro from 1.1558 on Thursday.
The yield on the US 10-year Treasury stretched to 4.54% on Friday from 4.47% on Thursday. The yield on the US 30-year Treasury widened to 5.01% from 4.97%.
Elsewhere, the oil price cooled a touch as Lebanese parliament speaker and Hezbollah ally Nabih Berri said that the Iran-backed group would withdraw from the area south of Lebanon’s Litani River if Israel pulls out and a comprehensive ceasefire is reached.
“I agree to…Hezbollah’s withdrawal from south of the Litani River in parallel with an Israeli withdrawal from the areas it occupies” and “a complete and comprehensive ceasefire without conditions”, Mr Berri, who acts as Hezbollah’s mediator, said in a statement.
Brent crude for August delivery traded lower at 93.70 dollars a barrel on Friday, down from 94.88 at the time of the equities close in London on Thursday.
Back in London, UK firms have said they expect to increase prices less sharply than previously predicted in the aftermath of the Iran war, but more than half still plan to do so in response to the energy shock, according to Bank of England data.
The central bank’s latest survey of finance bosses across UK companies suggested that price growth expectations had eased back slightly in May from the month before.
The Decision Maker Panel, DMP, survey showed that firms expected to increase their prices by 4% over the next 12 months, according to data for May. This is 0.4 percentage points lower than predicted in April.
However, data for the three months to May also shows firms expect to raise prices by 4% over the year ahead, which is 0.2 percentage points higher than predicted in the three months to April.
Barclays said the data showed no signs of accelerating inflation expectations, while the employment outlook continues to look weak.
“We think this is consistent with there having been a level shift in near-term expectations at the onset of the conflict, but no further acceleration, and in fact, some signs of the unwind of an initial overshoot,” Barclays added.
The biggest risers on the FTSE 100 were Imperial Brands, up 75.0p at 2,761.0p, Unilever, up 110.5p at 4,188.5p, London Stock Exchange Group, up 222.0p at 9,384.0p, AstraZeneca, up 304.0p at 13,858.0p and Haleon, up 7.2p at 337.0p.
The biggest fallers on the FTSE 100 were Fresnillo, down 198.0p at 2,986.0p, Endeavour Mining, down 249.0p at 3,975.0p, Antofagasta, down 240.0p at 3,970.0p, Anglo American, down 210.0p at 3,856.0p, and Halma, down 214.0p at 4,664.0p.
Monday’s global economic calendar includes US consumer inflation expectations, Japanese GDP data, and German factory orders figures.
Monday’s local corporate calendar has full-year results from GENinCode.
Contributed by Alliance News.