1st Sep 2023 16:52
(Alliance News) - The FTSE 100 closed higher on Friday, as investors digested a mixed US jobs report, which has raised expectations that the US Federal Reserve will hold rates steady at its next meeting.
The FTSE 100 index closed up 25.41 points, 0.3%, at 7,464.54. The FTSE 250 ended down 68.80 points, 0.4%, at 18,536.90, and the AIM All-Share closed down 0.1%, or 0.50 of a point, at 741.43.
Over the course of the week, the FTSE 100 is up 1.8%, the FTSE 250 up 1.9%, and the AIM All-Share up 0.8%.
The Cboe UK 100 ended up 0.3% at 743.50, the Cboe UK 250 closed down 0.4% at 16,194.78, and the Cboe Small Companies ended up 0.5% at 13,462.27.
Stocks in New York were higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.1%, and the Nasdaq Composite was marginally higher.
Stock market investors on Friday were optimistic, with increasing hopes that the latest US jobs report will seal the deal on the US Federal Reserve ending its current round of interest rates hikes.
According to the US Bureau of Labor Statistics, total non-farm payroll employment increased by 187,000 in August, picking up from a revised rise of 157,000 in July. July's figure was revised down by 30,000 from 187,000.
August's figure came in stronger than expectations. According to FXStreet-cited consensus, 170,000 jobs were expected to be added last month.
However, the unemployment rate rose to 3.8%. It was expected to remain steady from July at 3.5%.
Earlier on Friday, Tim Waterer, chief market analyst at KCM Trade, said that "arguably the most crucial data point as far as the Fed is concerned will be the non-farm payrolls".
Currently, the market sees a 93% chance of the US central bank holding rates steady at its next meeting in September and a 63% chance of rates holding steady again at the following meeting in November. Before the jobs report was published, markets saw an 89% chance of the US central bank holding rates steady at its next meeting this month and a 53% chance of rates holding steady again at the following meeting in November.
The keenly awaited US non-farm payroll data for August was the last scheduled risk event before US markets close for a long weekend for the Labor Day holiday.
Earlier on Friday, survey data from S&P Global showed that the health of the UK manufacturing sector deteriorated to its lowest level since May 2020 in August.
The seasonally adjusted S&P Global CIPS UK manufacturing purchasing managers' index stood at 43.0 in August, down from 45.3 in July but above an earlier flash estimate of 42.5.
Falling further below the 50.0 no-change mark, it shows the contraction in the UK manufacturing sector worsened last month, reaching its lowest level in 39 months.
"Another substantial fall in manufacturing activity, contracting for the sixth month in a row and the fastest rate since May 2020, showed that these are tough times for manufacturers," said John Glen, chief economist at the Chartered Institute of Procurement & Supply.
On the London Stock Exchange, Johnson Matthey closed as the FTSE 100's top performer on Friday, up 10%. On Wednesday, FTSE Russell confirmed that the speciality chemicals firm would be removed from London's flagship index from the market open on Monday, September 18.
Shell and BP closed higher, up 1.5% and 3.0% respectively, as oil prices continued their upward trajectory.
Brent oil was quoted at USD88.00 a barrel at the London equities close Friday, up from USD85.88 late Thursday.
London-based Shell also said it agreed to sell its home energy businesses in the UK and Germany via its 100%-owned subsidiary Impello Ltd to Octopus Energy Group.
Shell did not disclose fees for the sales of Shell Energy Retail Ltd in the UK and Shell Energy Retail Gmbh in Germany, but said the disposals are expected to complete in the fourth quarter, subject to regulatory approval.
Octopus is an energy retail company which provides energy solutions to residential customers and operates in 15 countries, Shell said.
In the FTSE 250, Direct Line closed down 2.4%.
The UK Financial Conduct Authority said the insurer charged existing home and motor customers more for their renewals than if they had been a new customer.
The company estimates the redress payments to customers will cost it around GBP30 million, for which half was provided in its 2022 results.
However, AJ Bell investment director Russ Mould said: "The greater damage to Direct Line from the GBP30 million cost to cover over-charging customers for insurance products is to its brand and reputation – even if the financial cost will sting too."
On London's AIM, Accsys shares were down 25%.
The London-based wood building products manufacturer expects its full year sales volumes and revenue to fall below market consensus amid diminished demand for its products, but said trading in the first four months was robust.
The company will publish its interim results for the six months to September 30 on November 21.
In European equities on Friday, the CAC 40 in Paris ended down 0.3%, while the DAX 40 in Frankfurt ended down 0.6%.
In Frankfurt, car manufacturers Volkswagen, Mercedes and Porsche were down 4.2%, 2.6% and 2.1%, respectively. In Paris, Renault lost 5.7%.
UBS cut Volkswagen's rating to 'sell' from 'neutral', on Friday. It also cut Renault to 'sell.'
The pound was quoted at USD1.2604 at the London equities close Friday, down compared to USD1.2671 at the close on Thursday. The euro stood at USD1.0792 at the European equities close Friday, lower against USD1.0847 at the same time on Thursday.
Against the yen, the dollar was trading at JPY146.21, higher compared to JPY145.65 late Thursday.
Gold was quoted at USD1,938.09 an ounce at the London equities close Friday, lower against USD1,942.51 at the close on Thursday.
In Monday's UK corporate calendar, there are half year results from Ashtead Technology and Belvoir Group.
The economic calendar for Monday there is a foreign trade reading from Germany. The week will pick up on Tuesday, with a slew of PMI readings from China, the EU, Germany, the UK and the US.
By Sophie Rose, Alliance News reporter
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