London close: Stocks rise as investors sift through US payrolls

London stocks closed in positive territory on Friday, as investors thumbed through the latest batch of US non-farm payrolls figures.

The FTSE 100 ended the session up 0.87% at 7,699.49, and the FTSE 250 was 0.21% firmer at 19,504.72.

For the week as a whole, the FTSE 100 was up 2.49%, or 186.77 points.

Sterling was also in the green, last rising 1.39% on the dollar to $1.2074, and strengthening 0.36% against the euro to trade at €1.1359.

“While US markets might be cheering their recovery, for the FTSE 100 it appears to be business as usual, with the index touching its highest level since before the pandemic,” said IG chief market analyst Chris Beauchamp.

“Once again it is the weaker dollar that is behind the move, driving stronger commodity prices and lifting mining stocks.

“But here again the risk of a recession suggests that in the medium-term prices for raw materials will continue to fall, leaving the index looking at risk of a fresh drop.”

The US non-farm payrolls report was squarely in focus during the afternoon, with hiring in the US rising by a stronger-than-expected 223,000, while both unemployment and hourly wage growth surprised to the downside.

According to the US Department of Labor, non-farm payrolls increased by a seasonally-adjusted 203,000 in December - above the 200,000 economists were expecting.

Estimates of payroll growth for the previous two months were revised lower by a combined 28,000.

The rate of unemployment, meanwhile, fell by one-tenth of a percentage point to 3.5%.

That was on top of a downwards one-tenth of a point revision to the previous month's estimate of 3.7%.

On home shores, UK house prices fell in December for the fourth month in a row amid rising interest rates, according to lender Halifax, with prices set to drop by around 8% this year.

Prices declined by 1.5% on the month following a 2.4% fall in November.

On the year, meanwhile, house prices rose 2% in December following a 4.6% increase the month before, with the rate of growth slowing in all nations and regions.

The price of a house now stood at £281,272, down from £285,425 in November.

“As we’ve seen over the past few months, uncertainties about the extent to which cost of living increases will impact household bills, alongside rising interest rates, is leading to an overall slowing of the market,” said Kim Kinnaird, director at Halifax.

“The housing market was a mixed picture in 2022.

“We saw rapid house price growth during the first six months, followed by a plateau in the summer before prices began to fall from September, as the impact of cost-of-living pressures, coupled with a rising rates environment, began to take effect on household finances and demand.”

Elsewhere, activity in the UK construction sector fell in December at the fastest rate since May 2020, according to a survey released earlier.

The S&P Global/CIPS construction purchasing managers’ index declined to 48.8 from 50.4 in November, coming in below the 50.0 mark that separates contraction from expansion for the first time since last August.

It showed that house building fell back into contraction for the first time since July, while civil engineering remained the weakest performer, with a sixth month of contraction.

“The UK's construction sector registered a relatively poor finish to 2022, with business activity falling into decline following a three-month growth sequence amid the fastest contraction in new work since the initial pandemic period in May 2020,” said Lewis Cooper, economist at S&P Global Market Intelligence.

“Companies cited weak client demand, driven partly by higher prices amid ongoing inflationary pressures.

“Commercial construction activity remained the only bright spot, though here the rate of growth came close to stalling, with the overall contraction led by a further sharp decline in civil engineering and the first fall in residential construction activity since last July.”

On the continent, eurozone inflation fell more sharply than expected in December as energy prices retreated, according Eurostat.

Consumer price inflation rose 9.2% in the year to December, down from 10.1% in November and versus expectations of 9.7%.

Falling energy prices were the main factor behind the decline, with annual energy price inflation slowing to 25.7% in December from 34.9% the month before.

Still, core inflation rose to 5.2% last month from 5% in November, while food inflation increased to 13.8% from 13.6%.

Fresh manufacturing and retail sales data out of Germany painted a mixed picture, meanwhile, with factory orders plunging as retailers enjoyed a boost.

According to the Destatis federal statistics office, factory orders tumbled 5.3% month-on-month in November.

That was a swing from a revised 0.6% rise in October, and was well below the 0.5% decline economists had pencilled in.

On the retail front, meanwhile, sales advanced 1.1% month-on-month in November, clawing back some of the 2.8% fall recorded in October.

That was also just above consensus expectations for a 1.0% improvement.

The year-on-year change, however, fell by 0.9 percentage points to reach a 5.9% decline.

Finally on data, services sector activity in the US shrank unexpectedly at the end of 2022, according to a closely-followed survey.

The Institute for Supply Management's PMI for the sector fell to 49.6 in December from 56.5 in November.

Economists at Barclays had pencilled in a reading of 54.5, while the market consensus was for a print of 55.1.

On London’s equity markets, miners were shining as metals prices rose, with Anglo American up 5.72%, Glencore ahead 2.32%, Rio Tinto Group 1.99% firmer, and Antofagasta 2.76% higher.

Shell gushed 1.67% after the oil giant said it was expecting to pay around $2bn in windfall taxes for the final quarter of 2022.

The company said that fourth-quarter results from the integrated gas segment were set to be "significantly higher" than in the third quarter.

It also said liquefied natural gas production would take a hit from longer-than-expected plant outages in Australia.

Elsewhere, shipping services firm Clarkson surged 5.09% after it said results for the year to the end of December were set to be ahead of current market expectations.

In a very brief statement, the company hailed strong trading throughout the final quarter, particularly from the broking division.

It now expected underlying pre-tax profit of no less than £98m.

On the downside, components maker Essentra tumbled 6.84% after saying it saw annual profits in line with expectations, despite economic headwinds globally.

Standard Chartered was in the red by 1.05%, having surged 20% on Thursday after a Bloomberg report suggested First Abu Dhabi Bank was considering making an offer for the bank.

First Abu Dhabi later confirmed that it had been in the “very early” stages of evaluating a possible offer but was no longer doing so.

In broker note action, Next was knocked 0.55% lower by a downgrade to ‘underperform’ at Credit Suisse, while easyJet was hit 0.91% by a downgrade to ‘neutral’ at Goldman Sachs.

Rentokil Initial fell 3.65% after an initiation at ‘underperform’ by Exane, while credit-checking firm Experian managed gains of 0.21% after an initiation of coverage by Exane at ‘outperform’.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,699.49 0.87%
FTSE 250 (MCX) 19,504.72 0.21%
techMARK (TASX) 4,503.78 0.38%

FTSE 100 - Risers

Anglo American (AAL) 3,509.00p 5.72%
Endeavour Mining (EDV) 1,913.00p 4.31%
Smurfit Kappa Group (CDI) (SKG) 3,338.00p 2.95%
Entain (ENT) 1,415.00p 2.95%
Antofagasta (ANTO) 1,655.00p 2.76%
Smith (DS) (SMDS) 348.70p 2.47%
InterContinental Hotels Group (IHG) 5,100.00p 2.43%
Johnson Matthey (JMAT) 2,182.00p 2.39%
Glencore (GLEN) 525.90p 2.32%
BT Group (BT.A) 126.65p 2.30%

FTSE 100 - Fallers

Rentokil Initial (RTO) 501.40p -3.65%
DCC (CDI) (DCC) 4,268.00p -1.45%
Compass Group (CPG) 1,909.00p -1.32%
Standard Chartered (STAN) 697.80p -1.05%
Pershing Square Holdings Ltd NPV (PSH) 2,900.00p -1.02%
Imperial Brands (IMB) 2,073.00p -0.72%
Lloyds Banking Group (LLOY) 48.00p -0.64%
Scottish Mortgage Inv Trust (SMT) 724.00p -0.63%
Next (NXT) 6,482.00p -0.55%
Frasers Group (FRAS) 758.00p -0.39%

FTSE 250 - Risers

Hochschild Mining (HOC) 79.20p 5.25%
Clarkson (CKN) 3,305.00p 5.09%
RIT Capital Partners (RCP) 2,060.00p 3.52%
Carnival (CCL) 665.20p 3.42%
BlackRock World Mining Trust (BRWM) 730.00p 3.26%
Playtech (PTEC) 550.00p 3.00%
Jupiter Fund Management (JUP) 141.90p 2.90%
Synthomer (SYNT) 155.50p 2.64%
Genuit Group (GEN) 312.50p 2.45%
Pennon Group (PNN) 950.50p 2.31%

FTSE 250 - Fallers

Essentra (ESNT) 218.00p -6.84%
Ascential (ASCL) 198.20p -4.99%
Dunelm Group (DNLM) 1,037.00p -4.69%
Plus500 Ltd (DI) (PLUS) 1,723.00p -4.12%
Savills (SVS) 829.50p -3.21%
UK Commercial Property Reit Limited (UKCM) 59.10p -3.11%
Telecom Plus (TEP) 2,055.00p -3.07%
TI Fluid Systems (TIFS) 136.40p -2.99%
Hilton Food Group (HFG) 563.00p -2.93%
CMC Markets (CMCX) 228.00p -2.56%