London close: Stocks finish red after US payrolls beat

London stocks ended the trading day in negative territory on Friday as investors considered the latest UK construction data and a fresh non-farm payrolls report out of the US.

The FTSE 100 declined by 0.43%, closing at 7,689.61 points, while the FTSE 250 experienced a more substantial drop of 0.83%, closing at 19,210.39.

In currency markets, sterling was last up 0.34% on the dollar, trading at $1.2725, while it increased 0.28% against the euro to change hands at €1.1620.

"Global stock indices end their multi-week long winning streaks as investors pare back their expectations regarding the speed and extent of this year's anticipated rate cuts," said IG senior market analyst Axel Rudolph.

"US stocks help lift their European counterparts at the end of the week as the US labour market continues to show signs of strength, even though the services sector softens.

"Non-farm payrolls increased by 216,000 jobs last month, handily beating expectations for a 170,000 gain."

Rudolph noted that the US unemployment rate held steady, wage growth accelerated, but the labour force declined.

"In the eurozone inflation rose less than forecast."

UK construction sector improving, US payrolls beat forecasts

In economic news, the UK construction sector showed signs of improvement in December, according to fresh survey data.

The S&P Global construction purchasing managers' (PMI) index came in at 46.8, although it remained below the crucial 50.0 mark that separates contraction from expansion for the fourth consecutive month.

The continued slump in house building remained a key factor, with the index at 41.1, albeit an improvement from November's 39.2.

Civil engineering activity also saw a slower contraction at 47.0.

On the other hand, commercial construction declined slightly more rapidly, with the index dropping to 47.6 in December.

"Construction companies experienced another fall in business activity at the end of 2023 as weak order books meant a lack of new work to replace completed projects," said Tim Moore, economics director at S&P Global Market Intelligence.

"House building was the worst-performing area of construction activity, but even in this segment, there were signs that the downturn has started to ease.

"Elevated borrowing costs and a subsequent slump in market confidence were the main factors leading to falling sales volumes across the construction sector in the second half of 2023."

On a different note, house prices in the UK continued their upward trajectory, rising for the third consecutive month in December.

The Halifax house price index reported an average home price of £287,105, up 1.1% from November and reaching its highest since March last year.

Compared to the prior year, prices were £4,800 higher, reflecting an annual growth rate of 1.7%.

However, experts were cautioning that the fourth-quarter price growth was primarily a rebound, with a modest 1.7% increase over the entire year of 2023.

"Whilst it's encouraging that we saw growth in the last three months of the year, this was preceded with property price falls for six consecutive months between April and September," said Halifax mortgages director Kim Kinnaird.

"The growth we have seen is likely being driven by a shortage of properties on the market, rather than the strength of buyer demand."

Elsewhere, UK new car registrations marked a significant rebound in 2023, recording their most robust jump since the onset of the Covid pandemic.

Sales surged 17.9% to reach 1.9 million vehicles, the highest level since 2019, as supply chain constraints eased and fleet demand bolstered sales.

December alone saw a year-on-year increase of 9.8%, driven by fleet owners increasing investments after pandemic-induced disruptions in production.

Across the Atlantic, the US job market displayed robust performance in December, with the Bureau of Labor Statistics reporting the addition of 216,000 non-farm jobs.

That exceeded market expectations of 170,000 and marked an improvement from November's downwardly revised figure of 173,000.

Government employment increased by 52,000, leisure and hospitality added 40,000 jobs, healthcare gained 38,000 positions, and construction roles increased by 17,000.

However, the transportation and warehousing sector experienced a loss of 23,000 jobs.

The unemployment rate remained steady at 3.7%, while wages rose by 0.3% month-on-month, as anticipated.

In the eurozone, inflation accelerated in December but fell slightly short of expectations, according to Eurostat.

The harmonised index of consumer prices showed an annual increase of 2.9%, up from 2.4% in November but below the consensus estimate of 3.0%.

Endeavour Mining falls on CEO dismissal, WPP rises on Kantar reports

On London's equity markets, Endeavour Mining dropped 6.91% after the company announced the immediate dismissal of its president and chief executive, Sebastien de Montessus, due to "serious misconduct".

The dismissal followed an internal board investigation into an "irregular payment instruction" issued by de Montessus related to asset disposal amounting to $5.9m.

Its board said it became aware of the issue during a review of acquisitions and disposals, an ongoing process for the company.

Ithaca Energy slipped 0.7% as its chief executive, Alan Bruce, resigned "to pursue new opportunities".

The North Sea oil and gas producer will promptly initiate a formal search for a new CEO.

In the interim, chief financial officer Iain Lewis will assume Bruce's responsibilities alongside his own.

In broker note action, Mondi declined 2.31% after Jefferies downgraded the company from 'buy' to 'hold'.

On the upside, shipping services provider Clarkson jumped 6.28% after it revised its annual guidance upward following a solid final quarter in 2023, driven by its broking division.

Clarkson said it now expected the underlying pre-tax profit for the 12 months that ended 31 December to be at least £108m.

Advertising giant WPP gained 4.15% in response to reports that Kantar Media could be auctioned later in the year.

According to Sky News, Kantar's majority owner, Bain Capital, was in the process of appointing investment bankers to oversee the sale.

Industry experts suggested that Kantar Media could be valued as high as £1bn, although the timing of the sale process was unclear.

Bain Capital holds a 60% stake in Kantar, with WPP holding the remaining 40% interest.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,689.61 -0.43%
FTSE 250 (MCX) 19,210.39 -0.83%
techMARK (TASX) 4,267.09 -0.64%

FTSE 100 - Risers

WPP (WPP) 770.20p 3.77%
Centrica (CNA) 151.70p 2.95%
Burberry Group (BRBY) 1,378.00p 1.36%
Experian (EXPN) 3,092.00p 1.34%
Convatec Group (CTEC) 244.80p 0.91%
Entain (ENT) 977.00p 0.83%
Glencore (GLEN) 463.00p 0.82%
Antofagasta (ANTO) 1,621.50p 0.75%
SSE (SSE) 1,858.00p 0.65%
Frasers Group (FRAS) 845.00p 0.60%

FTSE 100 - Fallers

Endeavour Mining (EDV) 1,577.00p -6.91%
IMI (IMI) 1,556.00p -3.47%
RS Group (RS1) 796.40p -3.30%
Ashtead Group (AHT) 5,098.00p -2.82%
Mondi (MNDI) 1,499.50p -2.47%
3i Group (III) 2,293.00p -1.88%
Prudential (PRU) 820.80p -1.77%
St James's Place (STJ) 643.20p -1.71%
Ocado Group (OCDO) 721.80p -1.69%
Kingfisher (KGF) 229.30p -1.59%

FTSE 250 - Risers

Clarkson (CKN) 3,480.00p 6.58%
Me Group International (MEGP) 126.80p 6.02%
PureTech Health (PRTC) 207.00p 2.99%
Carnival (CCL) 1,228.00p 2.21%
Bellway (BWY) 2,608.00p 1.95%
Moonpig Group (MOON) 156.70p 1.69%
Crest Nicholson Holdings (CRST) 216.00p 1.60%
TBC Bank Group (TBCG) 2,790.00p 1.45%
Octopus Renewables Infrastructure Trust (ORIT) 90.20p 1.35%
Barr (A.G.) (BAG) 529.00p 1.34%

FTSE 250 - Fallers

SDCL Energy Efficiency Income Trust (SEIT) 59.40p -4.35%
Future (FUTR) 778.00p -4.25%
Darktrace (DARK) 323.10p -4.12%
Jupiter Fund Management (JUP) 86.05p -4.07%
TI Fluid Systems (TIFS) 145.00p -3.72%
Man Group (EMG) 222.90p -3.71%
Spectris (SXS) 3,545.00p -3.59%
Diversified Energy Company (DEC) 1,178.00p -3.44%
QinetiQ Group (QQ.) 305.60p -3.41%
Coats Group (COA) 72.50p -3.07%