10th Jan 2025 16:46
(Alliance News) - Stock prices in London closed lower on Friday, following a "very strong" US jobs report which arguably "put to bed" hopes of a first-half rate cut.
The FTSE 100 index closed down 71.20 points, 0.9%, at 8,248.49. The FTSE 250 ended down 271.20 points, 1.4%, at 19,733.94, and the AIM All-Share closed down 6.48 points, 0.9%, at 713.48.
The Cboe UK 100 ended down 0.7% at 826.80, the Cboe UK 250 closed down 1.4% at 17,184.87, and the Cboe Small Companies ended down 0.8% at 15,271.00.
InterContinental Hotels was among the FTSE 100's biggest winners, up 1.4%.
Bernstein raised it to 'MP' from 'UP', and raised the price target to 9,000 pence from 8,570p.
Schroders was one of the biggest losers, down 4.4%.
J Sainsbury lost 4.3%, after Jefferies cut its price target to 300p from 325p but retained a 'buy' rating.
Sainsbury had that day reported strong third-quarter retail sales including a 4.1% rise for Sainsbury's brand groceries. However, weakness from the Argos brand and general merchandise sales cast a shadow.
In small-caps, Georgina Energy lost 22%.
The onshore helium, hydrogen and hydrocarbon prospects company reported "unforeseen weather and revisions of the environmental impact report" at an asset in Australia.
Alliance Pharma was 38% higher.
The consumer healthcare company, which has a market capitalisation of GBP330.3 million, said it backs a GBP349.7 million cash buyout from DBAY Advisors, its largest shareholder.
In European equities on Friday, the CAC 40 in Paris ended down 0.9%, while the DAX 40 in Frankfurt ended down 0.4%.
The pound was quoted lower at USD1.2200 at the London equities close Friday, compared to USD1.2304 at the close on Thursday.
UK Chancellor Rachel Reeves remains under pressure to balance the books as the UK's borrowing costs hit their highest level since the 2008 financial crisis. Yields on government bonds continued to rise on Thursday, up eight basis points to 4.89% for 10-year gilts - although they settled later that day at 4.82%.
Morgan Stanley on Friday said it does not see an "attractive" risk-reward in adding GBP shorts at such levels and moved to a 'neutral' stance on the UK currency from 'bullish' previously.
"Given the UK's reliance on foreign capital and the likely need for a higher risk premium on the back of fiscal concerns, we think it will require either a weaker GBP or higher yields (or both) to attract foreign demand for UK assets," the investment bank said. "For now, we stay cautious on GBP...The eventual price discovery and finding a new level of sufficient risk compensation might be the time to re-enter longs in GBP, but we think this will take time."
The euro stood lower at USD1.0233 at the European equities close Friday, against USD1.0295 at the same time on Thursday.
Against the yen, the dollar was trading lower at JPY157.81 compared to JPY157.96 late Thursday.
Stocks in New York were lower at the London equities close, with the DJIA down 1.5%, the S&P 500 index down 1.6%, and the Nasdaq Composite down 1.9%.
Total nonfarm payroll employment rose by 256,000 in December, easily beating the FXStreet-cited consensus of 160,000 according to the US Bureau of Labor Statistics. The US unemployment rate meanwhile edged down to 4.1% in December, from 4.2% in November and better than consensus, which had anticipated no change.
"How strong was the jobs growth? Very strong," commented StoneX analyst Fawad Razaqzada. "Though revisions took away about 8,000 from the prior two months' data, the December payrolls report was still much stronger than expected...average earnings came in as expected, rising 0.3% on a month-over-month basis, or 3.9% year-over-year, down from 4.0%.
"The wage growth and the strong headline job gains point to a strong labour market. With inflation also sticking around, calls for a rate cut in H1 have been put to bed."
In other US news, a judge sentenced Donald Trump to an unconditional discharge Friday for covering up hush money payments to a porn star despite the US president-elect's last-ditch efforts to avoid becoming the first felon in the White House.
The judge spared Trump prison or a fine even though the 34 counts of falsifying business records on which he was convicted in May 2024 carried potential jail time. Instead, New York judge Juan Merchan handed down the mildest criminal sanction available, an unconditional discharge – a relatively uncommon measure.
The outcome cements Mr Trump's conviction while freeing him to return to the White House unencumbered by the threat of a jail term or a fine.
Brent oil was quoted at USD78.61 a barrel at the London equities close Friday from USD77.11 late Thursday.
"The recent rise in oil prices – to a three-month high just shy of USD80pb – can be partly attributed to the apparent pick-up in activity in China at the end of 2024, which is likely to continue to support oil prices in early 2025," said Capital Economics' David Oxley earlier on Friday. "Nonetheless, amid persistent structural headwinds to China's GDP growth, the rapid rollout of electric vehicles in the country, and the prospect of Opec raising oil supply from April, we remain happy with our below-consensus forecasts for Brent crude to fall to USD70pb and USD60pb by end-2025 and end-2026, respectively."
Gold was quoted higher at USD2,690.05 an ounce at the London equities close Friday against USD2,667.81 at the close on Thursday.
In Monday's UK corporate calendar, PageGroup releases a trading update.
The economic calendar for Monday has construction PMI data from Ireland, and consumer inflation expectations from the US.
By Emma Curzon, Alliance News reporter
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