LONDON (Alliance News) - UK stocks closed firmly higher Friday, with the FTSE 100 posting its biggest daily rise since April 29, boosted by a strong session on Wall Street on Thursday and after the US non-farm payroll report came in broadly as expected.
London's major equity indices opened higher Friday, buoyed by yet another record-breaking session in the US on Thursday, but pushed even higher later in the session following the release of some upbeat US jobs data.
"The June US non-farm payrolls report can be aptly described as a 'goldilocks' report: not too hot, not too cold, but just right," said Christopher Vecchio, a currency strategist at DailyFX.
The report showed that the US economy added 217,000 jobs in May, just 1,000 less than the consensus expectation, while the April number was revised down slightly to 282,000, from its the very strong original print of 288,000. It also revealed that employment gains were broad-based, spread across professional and business services, retail trade, food services and drinking places, and construction.
The near-consensus job growth was "a bit of a relief," said Teunis Brosens, senior economist at ING Bank, "as earlier indicators this week, on balance, pointed towards some downside risk."
At the same time, the US Labor Department revealed that the headline rate of US unemployment remained stable at 6.3% over the month, beating economist expectations for it to tick up to 6.4%, although since the Federal Reserve dropped its unemployment target as a single policy, the rate has lost a certain degree of importance.
"Following the Fed's decision to look at a broader range of data as part of their revised forward guidance, other aspects of the jobs report have become increasingly important, while the unemployment rate has become less so," said Craig Erlam, a market analyst at Alpari. "Participation has been a major talking point over the last couple of years, with many pointing to this as being part of the reason for the decline in unemployment," he added.
The latest figures showed that the participation rate has fallen by 0.6% over the last year, although it was unchanged in the May alone, at 62.8%.
The FTSE 100 closed up 0.7% at 6,858.21, snapping a three day losing streak and meaning that it ended the week up 0.2%, while the FTSE 250 closed up 1.5% at 16,232.9, ending the week 1.4% higher.
The AIM All-Share index closed up 0.6% at 805.19 Friday, but down 1.2% for the week, after it was heavily weighed upon by ASOS, its biggest constituent by market capitalisation, on Thursday. The online fashion retailer lost nearly a third of its value on Thursday in the wake of a profit warning.
In Europe, stocks fared well Friday, having also closed sharply higher on Thursday. The CAC 40 in Paris and DAX 30 in Frankfurt both jumped on Thursday after the European Central Bank finally moved to cut interest rates and prompt banks to lend more in an effort to stave off the threat of deflation, and it was a similar story on Friday following the US jobs data.
The CAC 40 in Paris closed up 0.7%, meaning it ended the week 1.4% higher, while the DAX 30 closed up 0.4%, and up 0.4% for the week.
On Wall Street, at the UK equity market close, the NASDAQ Composite trades up 0.5%, while the DJIA and S&P 500 are both up 0.4%, having hit record highs, yet again, earlier in the day.
In the forex market, both the pound and the euro rose against the dollar in the immediate aftermath of the US employment data, before quickly returning to pre-announcement levels.
"With 217,000 jobs created in May, some worries about the US economy have been dispelled, with the in-line number staying just the right side of positive to encourage equity rallies without sparking a rush for the US dollar," said Chris Beauchamp, a market analyst at IG.
"Given the market reaction observed in the USD spectrum, it now appears market participants have raised expectations for the US economy to see 200,000+ payroll growth going forward at a minimum, and the recent reading at the lower end of the acceptable bound suggests that US economic growth is still moderate at best," said DailyFX's Vecchio. "In essence, the June US NFP report is a ?good? report, not ?great,? but more like ?just right?," he said.
At the close of the UK equity market, sterling trades at USD1.6794, while the euro trades at USD1.3637.
In the commodities market, gold continued to be volatile Friday. The precious metal was unconvinced by the jobs report, "moving higher not long after the release but eventually turning over in the face of a strong stock market," said Jasper Lawler, a market analyst at CMC Markets.
At the close of the UK equity market, the precious metal is quoted at USD1,252.03 per ounce.
At the individual UK equity level, Smith & Nephew's recent volatile trading continued Friday, with its shares closing down 0.7%, placing them among the heaviest fallers in the FTSE 100.
The medical technology company has closed among the blue-chip index's biggest risers or fallers almost every day for the last eight days amid ongoing speculation that it is set to be taken over.
Last week, the Financial Times published an article that suggested Stryker, a US maker of hip implants and knee replacements, was about to make an unquantified takeover bid for the company. Stryker quickly denied the rumour, but Smith & Nephew was once again in the spotlight this week, as Bloomberg reported that US medical device maker Medtronic Inc is considering a takeover bid.
Despite Friday's fall, Smith & Nephew's shares are still up 12% for the last eight days.
FTSE 250-listed Synergy Health was the one of the biggest risers in the mid-cap index Friday, ending the day up 4.5%. Shares in the company jumped after it said it had signed a multi-year outsourcing contract with Minnesota-based Sterilmed Inc. Under the contract, Synergy will take over Sterilmed's manufacturing operations and will be responsible for all the receiving, production and distribution functions, with all current Sterilmed employees transferring to Synergy. The transfer of operations and employees will occur July 27.
Telecommunications company KCOM Group, closing up 2.2%, was another leading gainer in the FTSE 250. The company - which will be deleted from the mid-cap index on June 23 following the completion of FTSE's quarterly index review - reported that its pretax profit for the year to end-March rose to GBP50.5 million, from GBP47.7 million in the previous year, despite seeing revenue decline slightly to GBP370.7 million from GBP372.9 million, offset by lowered operating expenses.
The group also raised its dividend and pledged a continued investment in the roll-out of high speed fibre-based broadband products.
AIM All-Share-listed Redhall's shares plummeted Friday, closing down 31%, after its Chief Executive Richard Shuttleworth resigned. The company lowered its expectations for its current financial year for a second time in two months, hit by further delays in the timing of major contracts and as it took a more cautious line on the timing and impact of new business prospects.
In a quiet day in the data calendar Monday, the latest reading of the Japanese consumer confidence index is released at 0600 BST, with the Sentix investor confidence data for the eurozone due at 0930 BST.
In the corporate calendar, AIM All-Share-listed Falkland Island Holdings releases full-year results.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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