(Alliance News) - Stocks in London ended higher on Friday as markets digested the latest US employment report, which came in far hotter than expected, and cheered as a bill to raise the US debt ceiling passed the Senate.
The FTSE 100 index closed up 117.01 points, or 1.6% at 7,607.28 on Friday, and closed the week 0.5% higher.
The FTSE 250 ended up 321.55 points, or 1.7%, at 19,149.31 - ending the week up 1.6%. The AIM All-Share closed up 5.13 points, or 0.7%, at 789.58, but finished the week down 0.5%.
The Cboe UK 100 ended up 1.5% at 760.05, the Cboe UK 250 closed up 1.8% at 16,696.34, and the Cboe Small Companies ended up 1.6% at 13,314.51.
Growth in US employment was far stronger than anticipated in May, according to the US Bureau of Labor Statistics.
Nonfarm payroll employment increased by 339,000 in May, accelerating from a rise of 294,000 in April. That number was revised up by 41,000 from 253,000. March's increase was revised up by 52,000 to 217,000 from 165,000.
The May increase was markedly above FX Street-cited market consensus of growth in jobs of 190,000.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, said it was a "nightmare report" for the US Federal Reserve.
For Marcus Brookes, chief investment officer at Quilter Investors, Friday's numbers are "only going to add fuel to the fire that the Federal Reserve has to raise rates once again, despite earlier this year appearing to be ready to press pause on the hikes."
The Fed will next meet to decide on US interest rate hikes at its meeting on June 13 and 14.
According to the CME FedWatch Tool, markets see a 65% chance of the Fed holding interest rates steady at its next meet. Last week, markets saw only a 36% chance of this outcome.
In the wake of the employment data, the dollar firmed. The pound was quoted at USD1.2476 at the London equities close on Friday, down from USD1.2523 at the close on Thursday.
The euro stood at USD1.0728 at the European equities close on Friday, lower against USD1.0737 at the same time on Thursday. Against the yen, the dollar was trading at JPY139.68, higher compared to JPY138.88 late Thursday.
Stocks in New York were firmly in the green at the London equities close, with the Dow Jones Industrial Average up 1.7%, the S&P 500 index up 1.3%, and the Nasdaq Composite up 1.0%.
In London, mining stocks were also amongst the top performers in the FTSE 100. CMC Markets' Michael Hewson said commodity stocks were boosted on reports that China is looking at new support measures for its property market.
"The weak China recovery story has acted as a drag on the wider mining and commodity sector thus far year to date with the likes of Anglo American, Rio Tinto and Antofagasta all down heavily. Today's reports of a possible stimulus plan have prompted a strong rebound for the whole sector, and those same miners, while other China exposed companies are also seeing a lift, with Prudential and Standard Chartered also higher," he said.
Anglo American, Antofagasta, and Rio Tinto closed 5.3%, 5.7% and 4.1% higher, respectively.
Prudential finished 4.9% higher. Standard Chartered closed up 3.8%.
In the FTSE 250, Dechra Pharmaceuticals climbed 8.4% to 3,657.56 pence after it agreed to a takeover by EQT Fund Management and Luxinva, valuing it at GBP4.46 billion.
The offer values Dechra shares at 3,875 pence each, which is a 13% premium to the company's closing price of 3,439.65p each on Thursday. It is 44% higher than Dechra's share price of 2,690p of April 12, a day before the start of its offer period.
However, the offer is 4.8% lower than the 4,070p potential offer floated in mid-April. Dechra said it considered the new offer "fair and reasonable."
The lowered offer came after Dechra last week Monday warned that it was likely to miss its annual profit guidance after a more "volatile and challenging" trading environment in 2023.
Dechra had said underlying operating profit for the financial year ending June 30 was likely to fall short of its GBP186 million guidance, blaming destocking by US wholesalers.
The takeover needs approval from 75% of Dechra shareholders and requires sanctioning by a court. The notices of the court meeting and the general meeting will be posted soon, Dechra said.
Elsewhere in London, PayPoint added 6.0% as it reconfirmed its annual guidance for financial 2023 that ended on March 31.
The payment services company said it continues to anticipate annual net revenue, excluding its acquired Appreciate Group, of around GBP125 million, 8.6% higher than GBP115.1 million in financial 2022.
Regarding its Appreciate takeover, PayPoint said: "The integration of Appreciate Group (now known as Love2shop) continues to progress well, opening up further revenue opportunities."
On AIM, Pelatro jumped 15% after it the marketing software specialist said it won a "large" contract for campaign management solutions by an unnamed Middle East telecommunications company with operations in multiple countries.
Managing Director & Chief Executive Officer Subash Menon said: "We are excited with this large recurring revenue contract which increases our [annual recurring revenue] by a significant amount. As is the case with this contract, all material contracts in our pipeline are also recurring in nature."
The overall contract is expected to deliver recurring revenue of about USD650,000 per year, Pelatro said.
In European equities on Friday, the CAC 40 in Paris ended up 1.9%, while the DAX 40 in Frankfurt ended 1.3% higher.
Brent oil was quoted at USD75.89 a barrel at the London equities close on Friday, up from USD74.35 late Thursday. Gold was quoted at USD1,963.45 an ounce, sharply lower than USD1,978.50 at the close on Thursday.
In the UK corporate calendar on Monday, there are full-year results from Sirius Real Estate, Itaconix, and Celadon Pharmaceuticals.
The economic calendar has a slew of services PMI prints, including those from the EU, the UK and the US.
By Heather Rydings, Alliance News senior economics reporter
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