London close: Stocks mixed as US payrolls come in red-hot

London's stock markets closed with mixed results on Friday, as investors were confronted by an unexpectedly strong US labour market as revealed in the latest US non-farm payrolls report.

The FTSE 100 ended the day down 0.09% at 7,615.54 points, while the FTSE 250 saw a slight gain of 0.22%, closing at 19,172.64 points.

In currency markets, sterling was last down 0.93% on the dollar to trade at $1.2626, while it dipped 0.15% against the euro, changing hands at €1.1704.

“US stock indices are on track for their fourth consecutive week of gains despite the US economy adding jobs for 37 months in a row and much stronger-than-forecast employment and wage growth,” said IG senior market analyst Axel Rudolph.

“Pared back US rate cut expectations to May or perhaps even June with five instead of the previously anticipated six rate cuts now in the pipeline have swiftly propelled yields and the dollar higher.

“Stellar after-hours results on Thursday evening by Amazon and Meta Platforms, the last of the 'magnificent seven' to report, have contributed to risk-on sentiment.”

Despite that, Rudolph noted that European indices ended the week mixed.

“The oil price, which rallied at the start of this week on heightened Middle East tensions, spent the rest of the week declining on increased future demand concerns from top oil importer China.

“With the earnings season in full swing but a relatively light economic calendar, except for the Reserve Bank of Australia interest decision on Tuesday, stock markets may become more volatile again while commodity prices may stabilise.”

US jobs market data much hotter than anticipated

In economic news, the US job market exceeded expectations with robust hiring and wage growth in January, according to fresh data from the Department of Labor.

Non-farm payrolls surged by 353,000, far surpassing economists' forecasts of 180,000.

The impressive performance followed an upward revision of December's figures, which were initially reported as a 216,000 increase but were revised to 333,000.

Average hourly earnings also saw a substantial rise of 0.55%, nearly double the expected 0.3% increase.

The data highlighted a return to the trend of significant revisions to previous months' figures, typical for the beginning of a new year.

At the same time, the unemployment rate remained steady at 3.7%, with a participation rate of 62.5%, as reported by the household survey.

“The bottom line here is that Fed officials will regard this report as a vindication, at least for now, of their decision to resist market pressure to cut rates in March,” said Pantheon Macroeconomics chief economist Ian Shepherdson.

“But the May meeting is three months away, and we expect the labour market picture by then will be much less strong, and the inflation numbers will be benign, so we expect a 25-basis point cut.”

Meanwhile, Americans displayed increased confidence in the economy and inflation outlook in a survey by the University of Michigan.

The consumer confidence index climbed from 69.7 in December to 79.0 in January, although this was only a slight adjustment from the preliminary estimate of 78.9.

On home shores, the UK experienced a decline in retail footfall for January, largely attributed to adverse weather conditions.

The BRC-Sensormatic IQ footfall monitor reported a 2.8% drop in total UK footfall, marking a slight improvement from December's 5% decline.

High streets saw a 2.3% decrease in foot traffic, while retail parks experienced a 1.8% decline, and shopping centres saw a more substantial 5% decrease.

Typically, January sees shoppers seeking sales bargains, but inclement weather kept many at home.

Footfall on high streets saw a positive start, with a 5.6% increase in the first week and 1.5% in the second.

However, the third week saw a 7.5% decrease, followed by a sharp 10% slump in the fourth week.

“Many consumers appear particularly bargain-focused, with the first half of the month boosted by the January sales,” said Helen Dickinson, BRC chief executive.

“However, the latter part of January saw fewer shoppers out as stormy weather led to a bigger footfall decline in shopping centres and high streets.”

Superdry surges on takeover hopes, Close Brothers slips

On London’s equity markets, BT Group was up 2.16% as Citi reaffirmed its 'overweight' stance on the company following an update on Thursday.

Distilling giant Diageo added 1.08% as reports suggested the company had initiated the search for a new chairman amidst a notable slowdown in sales in key growth markets.

Executive search specialist Russell Reynolds Associates was said to be assisting in identifying a successor to the current chairman, Javier Ferran.

Budget airlines Wizz Air and easyJet ascended 6.29% and 2.93%, respectively, after they received upgrades from Barclays.

Wizz Air reported a 14.2% increase in January passenger numbers, but the load factor dropped due to the Gaza conflict and increased one-way traffic.

British Airways and Iberia owner IAG also saw positive movement, advancing 0.89%.

British American Tobacco climbed 1.14% after it announced a global settlement with Philip Morris International to resolve ongoing patent infringement litigations related to heated tobacco and vapour products.

The settlement included non-monetary provisions and prevented future claims, allowing both companies to continue innovating.

Outside the FTSE 350, Superdry rocketed 118.2% following news that Norwegian alternative investment fund First Seagull had acquired a 5.3% stake in the fashion brand.

Speculation suggested Superdry could be ripe for a takeover bid, with interest from US private equity firm Sycamore Partners and Ted Baker owner Authentic Brands Group.

On the downside, Close Brothers Group lost 4.64% after RBC Capital downgraded the sector to 'perform' from 'outperform.'

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,615.54 -0.09%
FTSE 250 (MCX) 19,172.64 0.22%
techMARK (TASX) 4,366.03 0.10%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 310.20p 3.82%
Barclays (BARC) 150.72p 3.20%
Sainsbury (J) (SBRY) 275.20p 2.99%
Tesco (TSCO) 290.80p 2.79%
BT Group (BT.A) 111.35p 2.16%
Vodafone Group (VOD) 68.60p 1.98%
CRH (CDI) (CRH) 5,758.00p 1.91%
Ashtead Group (AHT) 5,344.00p 1.83%
GSK (GSK) 1,611.20p 1.58%
Pershing Square Holdings Ltd NPV (PSH) 3,828.00p 1.48%

FTSE 100 - Fallers

Endeavour Mining (EDV) 1,357.00p -4.10%
Fresnillo (FRES) 505.60p -3.14%
Mondi (MNDI) 1,367.50p -2.39%
Anglo American (AAL) 1,835.60p -2.29%
Ocado Group (OCDO) 505.00p -2.17%
Croda International (CRDA) 4,863.00p -2.09%
Glencore (GLEN) 417.60p -1.99%
Hikma Pharmaceuticals (HIK) 1,877.00p -1.80%
JD Sports Fashion (JD.) 113.00p -1.70%
Centrica (CNA) 134.45p -1.64%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 2,188.00p 10.28%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,410.00p 5.24%
Trustpilot Group (TRST) 176.30p 4.07%
Jupiter Fund Management (JUP) 81.50p 3.56%
Allianz Technology Trust (ATT) 327.50p 3.31%
Senior (SNR) 159.80p 2.96%
easyJet (EZJ) 575.20p 2.93%
Vesuvius (VSVS) 490.40p 2.72%
Coats Group (COA) 72.60p 2.69%
Hargreaves Lansdown (HL.) 778.60p 2.66%

FTSE 250 - Fallers

Close Brothers Group (CBG) 501.00p -5.02%
Watches of Switzerland Group (WOSG) 359.60p -4.51%
IntegraFin Holding (IHP) 274.40p -3.79%
Helios Towers (HTWS) 73.70p -3.22%
Moonpig Group (MOON) 159.40p -2.80%
Hipgnosis Songs Fund Limited NPV (SONG) 65.30p -2.54%
Foresight Group Holdings Limited NPV (FSG) 437.00p -2.46%
Johnson Matthey (JMAT) 1,588.00p -2.07%
The Renewables Infrastructure Group Limited (TRIG) 104.40p -1.88%
PureTech Health (PRTC) 190.00p -1.86%