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(Alliance News) - Stocks in London ended lower on Friday after a disappointing US jobs report complicated matters for US President Joe Biden's economic recovery programme, against a backdrop of the spreading Omicron variant of Covid-19.
US nonfarm payrolls significantly undershot expectations in November, official data showed, but the unemployment rate dropped.
The US Bureau of Labor Statistics said payroll employment increased by just 210,000 in November, slower than the 546,000 jobs added in October. Consensus, cited by FXStreet, had been looking for a figure of 550,000.
Global equity markets have seen wild swings since Omicron variant hit the headlines last week, prompting some governments to reimpose containment measures that could dampen economic activity.
Further, the White House had been banking on a solid economic recovery to bolster public support for the Biden administration's Build Back Better spending bill that is inching its way through Congress, but the data released presented a complicated picture of American workers' prospects, as businesses recover from the Covid-19 pandemic.
The FTSE 100 closed down 6.89 points, or 0.1%, at 7,122.32 - but ended the week 1.1% higher.
The FTSE 250 ended down 38.76 points, or 0.2%, at 22,646.08 - gaining 0.5% for the week and the AIM All-Share closed down 6.41 points, or 0.5%, at 1,182.33 - shedding 0.3% over the week.
The Cboe UK 100 ended down 0.2% at 705.30, the Cboe UK 250 closed down 0.5% at 20,106.00, and the Cboe Small Companies ended down 0.4% at 14,789.80.
In Paris the CAC 40 stock index ended down 0.4%, while the DAX 40 in Frankfurt ended down 0.6% lower.
Stocks in New York were sharply lower at the London equities close. The DJIA was down 0.7%, the S&P 500 index down 1.7% and the Nasdaq Composite down 2.2%.
"The week is ending on a sour note for equities, which remain in thrall to the potential spread of the Omicron variant, and are also sulking in the wake of a poor NFP figure. Hopes of another 500K [plus] month of job creation were dashed, and while the unemployment rate dropped, a slower pace of wage increases has contributed to a general move out of risk assets," commented IG Group's Chris Beauchamp.
"Growth fears are taking centre stage across markets, as a slowing recovery threatens to put more pressure on stocks after a strong year for the headline indices. Until the extent of the hit from Omicron becomes clearer it looks like we have more downside to come in indices, with intraday bounces being sold," Beauchamp added.
In the FTSE 100, housebuilders ended among the performers following comments from a prominent Bank of England policymaker.
Michael Saunders has been a lone voice to raise rates on the committee that sets them. But in a speech on Friday, he said he will assess the impact the new Covid variant Omicron might have on the UK economy before December's vote on the issue.
"At present, given the new Omicron Covid variant has only been detected quite recently, there could be particular advantages in waiting to see more evidence on its possible effects on public health outcomes and hence on the economy," he said.
It is a signal that the biggest inflation hawk on the bank's Monetary Policy Committee might rethink his stance, at least temporarily.
Berkeley Group closed up 2.0%, Barratt Developments up 1.1%, Taylor Wimpey up 0.7% and Persimmon up 0.7%.
"Housebuilders have been buoyed today by this morning's comments from Bank of England external MPC member Michael Saunders who appeared to soften his position on an interest rate increase later this month. This has helped push the likes of Berkeley Group and Taylor Wimpey higher on the day, and added boost on top of this week's positive Nationwide House Price data survey," said CMC Markets analyst Michael Hewson.
BP closed up 1.3% after Deutsche Bank upgraded the oil major to Buy from Hold. SSE closed up 1.5% after Jefferies raised the energy company to Buy from Hold.
In the FTSE 250, AJ Bell closed up 2.7% after Jefferies raised the stockbroker to Hold from Underperform. On Thursday, AJ Bell reported a rise in full-year profit and revenue and recommended a special dividend to return surplus capital to shareholders.
Elsewhere in London, Wickes Group gained 11% after the DIY retailer said its earnings for the year would beat market expectations due to a strong period of trading.
The Watford, Hertfordshire-based company lifted its full-year adjusted pretax profit guidance to no less than GBP83 million. The building supplies retailer noted that market consensus lies around GBP74 million to GBP75 million. The company booked half-year adjusted pretax profit of 46.5 million.
Shares in FTSE 250-listed Travis Perkins, which Wickes was demerged from, closed up 1.7%.
The dollar was higher across the board. The pound was quoted at USD1.3223 at the London equities close, down sharply from USD1.3317 at the close Thursday.
The euro stood at USD1.1291 at the European equities close, down from USD1.1315 late Thursday Against the yen, the dollar was trading at JPY113.06, up slightly from JPY113.03.
On the economic front, the UK service sector's recovery continued to come along nicely in November, with a relaxation of travel rules boosting new business from abroad.
The IHS Markit/CIPS UK services business activity index eased to 58.5 points in November from October's three-month high of 59.1. The reading was marginally below November's flash figure of 58.6.
While service firms continued to signal robust demand for staff in November, the rate of job creation was the slowest since July as businesses struggled to fill vacancies. Wage pressures, along with a spike in energy costs and other rising prices, resulted in November's input price growth being the strongest in 25 years of survey data collection.
Brent oil was quoted at USD71.43 a barrel at the equities close, up sharply from USD69.67 at the close Thursday.
Gold stood at USD1,775.82 an ounce at the London equities close, higher against USD1,761.10 late Thursday.
The economic events calendar on Monday has UK construction PMI at 0930 GMT and eurozone consumer confidence at 1500 GMT.
The UK corporate calendar on Monday has annual results from speciality chemicals firm Victrex and interim results from Real Greek and Franco Manca restaurant owner Fulham Shore.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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