The FTSE 100 held on to modest gains on Friday despite weakness in mining stocks, but Wall Street headed lower after better-than-expected jobs data raised the chances of a rate hike across the pond.
The FTSE 100 closed up 7.73 points, or 0.1%, at 10,368.05. The FTSE 250 closed down 241.91 points, or 1.0%, to 23,060.74, while the AIM All-Share fell 10.99 points, or 1.4%, to 797.27.
Over the week, the FTSE 100 fell 0.4%, the FTSE 250 fell 1.6% and the AIM All-Share fell 2.6%.
In European stock markets on Friday, the CAC 40 in Paris closed down 0.3% and the DAX 40 in Frankfurt closed down 0.8%.
In New York, the Dow Jones Industrial Average was down 0.3%, the S&P 500 was down 1.2% and the Nasdaq Composite was down 2.2%.
US nonfarm payrolls rose by 172,000 in May, more than double the consensus cited by FXStreet for an increase of 85,000, data released by the US Bureau of Labor Statistics showed.
Additionally, April's figure was revised sharply to an increase of 179,000 from 115,000. The March figure was revised upward to an increase of 214,000 from 185,000. The US unemployment rate remained unchanged at 4.3% in May.
Analysts at TD Economics said: “From the Fed's point of view, the narrative has clearly changed from when they will cut again to whether their next move will even be a cut. Yields across the curve rose after payrolls, and Fed futures are already fully pricing in a rate hike by the end of the year.
“At a minimum, this suggests that the FOMC will abandon its easing bias in its next monetary policy announcement on June 17 and perhaps even adopt a more hawkish tone given that the labor market is now showing signs of reacceleration.”
The leisure and hospitality sector added 70,000 jobs last month, new data showed, well above its average monthly gain of 14,000 over the past year.
“That gain was the largest since January 2023 and had an additional boost due to hiring triggered by the upcoming World Cup matches,” said Diane Swonk, chief economist at KPMG, referring to the soccer tournament co-hosted by the United States this summer.
The jobs report saw the dollar rise and bond yields rise. The pound was trading at $1.3371 on Friday afternoon, down from $1.3436 on Thursday.
The euro traded lower against the dollar, settling at 1.1542 on Friday compared to 1.1624 on Thursday.
Against the euro, sterling strengthened to 1.1583 euros from 1.1558 on Thursday.
The 10-year US Treasury yield stretched to 4.54% on Friday from 4.47% on Thursday. The 30-year U.S. Treasury yield widened to 5.01% from 4.97%.
Elsewhere, oil prices cooled slightly as Lebanese parliament speaker and Hezbollah ally Nabih Berri said the Iran-backed group would withdraw from the area south of Lebanon's Litani River if Israel withdraws and a comprehensive ceasefire is reached.
“I agree with… Hezbollah's withdrawal from the south of the Litani River in parallel with an Israeli withdrawal from the areas it occupies” and “a complete and comprehensive ceasefire without conditions,” Berri, who acts as Hezbollah's mediator, said in a statement.
Brent crude oil for August delivery traded lower on Friday at $93.70 a barrel, down from $94.88 at the close of the London Stock Exchange on Thursday.
Back in London, UK companies have said they expect to raise prices less sharply than previously expected in the wake of the Iran war, but more than half still plan to do so in response to the energy shock, according to Bank of England data.
The central bank's latest survey of UK business finance chiefs suggested expectations for price growth had fallen slightly in May from the previous month.
The Decision Maker Panel (DMP) survey showed that companies expected to increase their prices by 4% over the next 12 months, based on data from May. This is 0.4 percentage points less than expected in April.
However, data for the three months to May also show that companies expect to increase prices by 4% over the next year, 0.2 percentage points more than expected in the three months to April.
Barclays said the data showed no signs of accelerating inflation expectations, while the employment outlook remains weak.
“We believe this is consistent with a change in the level of short-term expectations at the beginning of the conflict, but without further acceleration and, in fact, with some signs of the recovery of an initial excess,” Barclays added.
The biggest risers on the FTSE 100 were Imperial Brands, up 75.0p to 2,761.0p. 7.2p to 337.0p.
The biggest decliners on the FTSE 100 were Fresnillo, falling 198.0p to 2,986.0p. 214.0p to 4,664.0p.
Monday's global economic calendar includes US consumer inflation expectations, Japanese GDP data and German factory order figures.
Monday's local corporate calendar has GENinCode's full-year results.
Contributed by Alliance News.
