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(Alliance News) - Stocks in London ended in the red on Friday as US employment levels advanced at quicker pace than expected, strengthening the case for another 75 basis point rate hike by the US Federal Reserve.
Investors were holding out on hope that the figure would undershoot expectations, forcing the Fed to lower the pace of its rate hikes to support a beleaguered economy.
"Those hoping for a Fed pivot have been sorely disappointed with today's job numbers, which have confirmed that US economy continues to rumble along quite well," said Chris Beauchamp, chief market analyst at online trading platform IG.
"Once more we are back to buying the dollar and selling stocks, in a continuation of the themes that have been so strong throughout the year," he continued.
The FTSE 100 index closed down 6.18 points, or 0.1% at 6,991.09 - though the index closed the week 1.4% higher. The FTSE 250 ended down 279.36 points, or 1.6%, at 17,353.28, finishing the week up 1.1%. The AIM All-Share closed down 5.98 points, or 0.7% at 810.22, ending 0.6% higher over the past five days.
The Cboe UK 100 ended down 0.1% at 698.41, the Cboe UK 250 closed down 1.4% at 14,823.77, and the Cboe Small Companies ended down 0.3% at 12,185.63.
The US economy added more jobs than expected in September, according to the latest nonfarm payrolls.
According to the Bureau of Labor Statistics, nonfarm payroll employment increased by 263,000 in September, beating expectations of 250,000, according to consensus cited by FXStreet.
The unemployment rate fell to 3.5% in September from 3.7% in August. It had been expected to remain at 3.7%, according to FXStreet.
Commenting on the data, Susannah Streeter, analyst at Hargreaves Lansdown said: "Warmth is still radiating in the economy so the Federal Reserve is still expected to put its foot on the gas of rate rises, in its attempt to bring inflation down to its target, with another 0.75% hike expected."
Stocks in New York were firmly in the red at the London equities close, with the Dow Jones Industrial Average down 1.7%, the S&P 500 index down 2.2%, and the Nasdaq Composite 3.1% lower.
An already weak sterling was pushed lower as the dollar strengthened on the latest jobs data.
The pound was quoted at USD1.1130 at the London equities close Friday, down slightly from USD1.1191 at the close on Thursday.
In another blow to the currency, September recorded the slowest retail sales growth in the UK since shops reopened post-Covid due to a combination of inflation, economic crisis and an unexpected bank holiday, figures showed.
Total in-store and online sales increased by just 2.8% in September on last year, according to BDO's High Street Sales Tracker.
This follows a similarly poor set of results in August, which was the previous lowest post-Covid performance for retail sales.
It was a similar story for the euro. The single currency stood at USD0.9779 at the European equities close Friday, lower against USD0.9837 at the same time on Thursday.
Against the yen, meanwhile, the dollar was trading at JPY145.15 late Friday, higher compared to JPY144.81 late Thursday.
In London, JD Wetherspoon jumped 9.5% to end the day as the FTSE 250's best performer.
The pub chain reported higher annual revenue and a rise in like-for-like sales in the first nine weeks of financial 2023.
Revenue in the 53 weeks to July 31 came in at GBP1.74 billion, up significantly from GBP772.6 million the year prior. Compared to financial 2020, however, revenue was down 4.3% from GBP1.82 billion.
Pretax loss before exceptional items narrowed substantially to GBP30.4 million from a loss of GBP167.2 million the year before.
Looking further ahead, the pub chain warned that firm predictions about its financial performance are difficult to make, owing to rising costs of labour and repairs, but it is "cautiously optimistic".
At the other end of the FTSE 250 was landscaping products firm, Marshalls, dropping 17%.
The firm admitted that full-year outturn will be beneath the bottom end of market guidance - consensus stands at a range of GBP95.1 million to GBP101.0 million.
The guidance cut is due to the "combined impact of the accelerated rate of revenue contraction in Marshalls Landscape Products in the third quarter and the reduction in efficiency resulting from lower manufacturing output in this reporting segment", it explained.
In the small-caps, Superdry climbed 11% as the clothing retailer swung to an annual profit in the 2022 financial year.
In the year ended April 30, Superdry posted a pretax profit of GBP17.9 million compared to a loss of GBP36.7 million a year prior, as revenue grew 9.6% to GBP609.6 million from GBP556.1 million.
Looking forward, the firm said: "Although we remain cautious on the macroeconomic outlook and the impact of inflation, we are confident that our strategy is positioning the brand for future success."
In European equities on Friday, the CAC 40 in Paris closed down 1.2%, while the DAX 40 in Frankfurt down 1.6%.
Brent oil was quoted at USD97.09 a barrel at the London equities close Friday, up sharply from USD94.30 late Thursday.
Gold was quoted at USD1,702.27 an ounce at the London equities close Friday, significantly lower against USD1,712.13 at the close on Thursday.
In the UK corporate calendar on Monday, student accommodation provider Unite Group will publish a trading statement.
Coming next week, there's UK unemployment on Tuesday followed by UK GDP on Wednesday.
By Heather Rydings; heatherrydings@alliancenews.com
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