(Alliance News) - Stocks in London ended lower on Friday after a blowout US jobs report raised expectations that the Federal Reserve may soon start raising interest rates.
The US economy added substantially more jobs than expected in January, with December's figure also getting a sizeable bump up, figures on Friday showed.
According to the Bureau of Labor Statistics, nonfarm payroll employment rose by 467,000 in January, beating expectations of 150,000 new jobs.
Also suggesting the US jobs market has been in good health recently was a dramatic upward revision of December's figure to 510,000 from a lowly 199,000. However, the figure for January still means employment growth slowed slightly.
Average hourly earnings rose 0.7% to USD31.63 in January, from USD31.40 in December. Smaller growth of 0.5% was expected, according to consensus cited by FXStreet. On a yearly basis, average hourly earnings are 5.7% higher.
The FTSE 100 index closed down 12.44 points, or 0.2%, at 7,516.40 on Friday, rising 0.7% over the course of the week.
The FTSE 250 ended down 255.74 points, or 1.2%, at 21,712.04, up 0.3% for the week-to-date.
The AIM All-Share closed down 4.21 points, or 0.4%, at 1,086.01, finishing the week overall 0.3% higher.
The Cboe UK 100 ended down 0.3% at 745.53, the Cboe UK 250 closed down 1.3% at 19,436.16, and the Cboe Small Companies ended down 0.4% at 15,326.53.
In Paris, the CAC 40 stock index ended 0.8% lower, while the DAX 40 in Frankfurt ended down 1.8%.
Stocks in New York were mostly lower at the London equities close. The DJIA was down 0.7%, the S&P 500 index down 0.3% but the Nasdaq Composite was up 0.5%.
The consensus-topping jobs figure for January comes as all signs point to an interest hike by the US Federal Reserve next month.
"Investors appear to be mulling the prospect of higher inflation, as well as rates, and their cumulative effect on growth prospects across the board in the coming months. This weakness continued in the wake of this afternoon's US payrolls report, which not only posted an upside beat, but also saw wage growth surge," said CMC Markets analyst Michael Hewson.
"Earlier this week Fed officials spent a good deal of time dialling back market expectations that the Fed would raise rates by 50bps in March, and until last night’s big falls did a fairly decent job. Today’s US payrolls and wages numbers have put the prospect of a 50bps rate rise firmly back on the table," Hewson added.
On Wall Street, Amazon.com was up 12% after the e-commerce company late Thursday said it saw it record sales of almost USD140 billion in the holiday quarter.
In the FTSE 100, oil majors BP and Shell ended the best performers, up 3.4% and 3.9% respectively, tracking spot oil prices higher.
Midcap energy names ended as the top gainers. John Wood closed up 4.9%, Energean up 4.4%, Harbour Energy up 4.3% and Capricorn Energy up 3.2%.
Brent oil was quoted at USD93.35 a barrel at the equities close, up sharply from USD89.45 late Thursday. The North Sea benchmark hit an intraday high of USD93.70 - its highest level since October 2014.
Oil prices struck seven-year highs as traders bet on continued improvement in demand thanks to the economic reopening, and with the US hit by a cold snap with the oil-rich state of Texas hit hard.
Lingering worries over Ukraine-Russia tensions were also playing a key role in the spike, with analysts predicting USD100 could be breached soon.
"Crude prices seem to have a one-way ticket to USD100 oil. This week's rally in crude was supported by the OPEC+ decision to stick to their gradual increase strategy and as US production fell again. An artic blast is also disrupting some production in Texas and that is driving this latest price surge," said Oanda Markets analyst Ed Moya.
FTSE 250 member SSP Group gained 0.7%. The travel concessions operator In the four-month period from October 1 to January 30, SSP said that group revenue was at 62% of 2019 levels.
"The spread of the Omicron variant around the world and the subsequent government restrictions have inevitably had an impact on passenger numbers in many of our markets," SSP said.
Group sales in the more-recent eight weeks from December 6 stood at 57% of 2019 levels.
AJ Bell's Russ Mould noted: "Travel food hub operator SSP may have reported a big hit from Omicron ,but investors were largely content to look forward to sunnier horizons with a target of returning to pre-pandemic levels of profitability and sales growth by 2024."
Elsewhere, DX Group said Grant Thornton has resigned as its auditor, citing concerns about the findings of a corporate governance inquiry.
The Slough, England-based parcel freight, secure courier and logistics provider said it had been in discussions with Grant Thornton over the pace of the inquiry, which is holding up the audit of its financial 2021 accounts.
According to DX, Grant Thornton said it resigned over concerns about "actual or potential breaches of law" by DX employees and the provision of inaccurate information to the corporate governance inquiry that didn't "give a full picture of the scale and seriousness of the facts".
DX said it disagrees with the reasons given by Grant Thornton and will provide further commentary in "due course".
DX Group shares have been suspended since the start of 2022 due to the late accounts. If the company doesn't publish the accounts by July 4 this year, it may be de-listed from AIM.
The pound was quoted at USD1.3535 at the London equities close, down from USD1.3616 at the close Thursday.
On the economic front, the UK's construction sector began the new year strongly, expanding for the 12th month in succession, survey results showed.
The latest IHS Markit-CIPS UK construction purchasing managers' index rose to 56.3 points in January from 54.3 in December.
IHS Markit said the total activity index for the sector registered above the 50.0-point no-change mark for the 12th month in a row. The 56.3 point score signalled the strongest rate of output expansion since July 2021, it said.
New orders rose at the strongest pace since August.
The euro stood at USD1.1443 at the European equities close, up from USD1.1425 late Thursday Against the yen, the dollar was trading at JPY115.25, up from JPY114.85 late Thursday.
Gold stood at USD1,804.75 an ounce at the London equities close, soft against USD1,805.70 late Thursday.
The economic events calendar on Monday has China PMI data overnight and UK Halifax house prices at 0700 GMT.
The UK corporate calendar on Monday has trading statements from Lamprell and Lok'nStore Group.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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