London close: Stocks finish lower as US payrolls top forecasts

(Sharecast News) - London markets closed lower on Friday amid a backdrop of heightened investor caution, following robust US job data for March, hawkish remarks from Federal Reserve officials, and escalating tensions in the Middle East.

The FTSE 100 index ended the day down 0.81% at 7,911.16, while the FTSE 250 followed suit, declining 0.74% to settle at 19,725.94.

In currency markets, sterling was last down 0.24% on the dollar to trade at $1.2612, while it managed gains of 0.07% against the euro, changing hands at reaching €1.1659.

"Yesterday's flight to the safety of the dollar has been replaced with buying of that other safe haven - US stocks," said IG chief market analyst Chris Beauchamp.

"The Dow is up 200 points and the Nasdaq 100 has added over 1%.

"Once more the US economy has demonstrated its overall strength, and while that continues to make a rate cut less likely, it does at least mean than Americans will keep spending."

Beauchamp said that with corporate earnings season "just over the horizon", investors were feeling a major sense of relief.

"European markets have mostly played catch-up to the US drop yesterday, but have already seen some buying at the lows.

"After yesterday's yield-driven gains in London, today has seen the reverse, though the FTSE 100 still looks in a good place to make further gains thanks to a rosier earnings outlook."

US nonfarm payrolls top forecasts, UK construction sector shows signs of recovery

In economic news, the latest data from the US Department of Labor showed a significant uptick in non-farm payrolls for March, surpassing economists' forecasts.

The addition of 303,000 jobs exceeded expectations of 200,000, fuelling speculation about potential interest rate cuts by the Federal Reserve.

Consequently, Fed funds futures fully priced in a 25 basis point rate cut by September.

Revisions to previous months' data also showed a positive trend, with an additional 22,000 jobs.

"The blockbuster 303,000 increase in non-farm payrolls in March supports the Fed's position that the resilience of the economy means it can take its time with rate cuts, which might now not begin until the second half of this year," said Paul Ashworth, chief North America economist at Capital Economics.

"The rest of the report was equally as strong as the headline payrolls number, with a near-500,000 gain in the household survey measure of employment driving a drop back in the unemployment rate to 3.8%, from 3.9%."

On home shores, the UK construction sector showed signs of recovery as the S&P Global construction purchasing managers' index (PMI) rose to 50.2 in March, indicating growth for the first time since August 2023.

Notably, civil engineering projects saw increased activity, buoyed by infrastructure developments and steady demand in the energy sector.

However, housebuilding and commercial construction activity remained largely stagnant.

"UK construction output returned to growth in March as a renewed expansion of civil engineering work was supported by more stable conditions in the housing and commercial building segments," said Tim Moore, economics director at S&P Global Market Intelligence.

"The marginal overall rise in total construction activity ended a six-month period of contraction.

"The near-term outlook for construction workloads appears increasingly favourable as order books improved again in March and to the greatest extent for just under one year."

On the housing front, the UK saw a downturn as house prices fell for the first time in six months in March, according to lender Halifax.

The drop of 1% in March contrasted with previous months of growth, with the average home price decreasing to £288,430.

Despite the decline, the number of sellers surged over the Easter period, with Rightmove separately reporting its busiest day for new listings this year on 28 March.

In the eurozone, economic challenges persisted as HCOB's eurozone construction PMI dropped to 42.4 in March, reflecting a contraction driven by declines in housing activity.

Additionally, retail sales in the eurozone fell by 0.5% in February, surpassing expectations of a 0.4% decline, according to Eurostat data.

Travel stocks under pressure, Shell manages to close firmer

On London's equity markets, travel stocks faced significant pressure, with British Airways owner IAG descending 2.75%, followed by easyJet down by 1.86%, Carnival dropping by 3.33%, and Wizz Air Holdings slipping by 2.73%.

The downturn in the stocks was attributed to mounting geopolitical tensions, impacting sentiment towards the travel sector as a whole.

Ocado Group saw a steep decline of 8.99% following the announcement on Thursday of chairman Rick Haythornthwaite's departure in the coming year due to increased commitments elsewhere.

Aston Martin Lagonda faced pressure, shedding 4.66% after Barclays provided a preview of the company's first-quarter results, slated for release on 1 May.

"With volumes primarily from DB12 and DBX, we view the first quarter as the first of two 'transition quarters - before volumes of the next generation sport cars accelerate in the second half," Barclays said.

"Greater focus will likely be on the new DB12 Vantage order books and comments and comfort on the second-half earnings [and] free cash flow trajectory."

On the upside, oil and gas giant Shell managed gains of 0.58%.

The positive movement came after Shell revised its short-term production forecasts upward and expressed optimism about margin improvements, updating its guidance for the first quarter.

In the insurance sector, Admiral Group rose 0.87% following BNPP Exane's reinstatement of coverage on the shares, rating them as 'outperform' with a price target of 3,348p.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,911.16 -0.81%

FTSE 250 (MCX) 19,725.94 -0.74%

techMARK (TASX) 4,458.02 -0.34%

FTSE 100 - Risers

Flutter Entertainment (DI) (FLTR) 15,895.00p 1.15%

BAE Systems (BA.) 1,326.00p 0.99%

Smith & Nephew (SN.) 974.80p 0.93%

Admiral Group (ADM) 2,660.00p 0.87%

Shell (SHEL) 2,780.00p 0.58%

CRH (CDI) (CRH) 6,772.00p 0.56%

Rolls-Royce Holdings (RR.) 421.10p 0.50%

Bunzl (BNZL) 2,940.00p 0.48%

Haleon (HLN) 325.90p 0.31%

Fresnillo (FRES) 542.00p 0.28%

FTSE 100 - Fallers

Ocado Group (OCDO) 379.70p -8.99%

St James's Place (STJ) 429.40p -4.28%

JD Sports Fashion (JD.) 126.25p -4.03%

National Grid (NG.) 1,033.00p -3.64%

DCC (CDI) (DCC) 5,465.00p -3.27%

Associated British Foods (ABF) 2,414.00p -3.01%

Scottish Mortgage Inv Trust (SMT) 857.60p -2.99%

Kingfisher (KGF) 242.40p -2.85%

International Consolidated Airlines Group SA (CDI) (IAG) 171.50p -2.75%

Schroders (SDR) 368.00p -2.65%

FTSE 250 - Risers

Endeavour Mining (EDV) 1,707.00p 2.28%

ICG Enterprise Trust (ICGT) 1,236.00p 2.15%

Hipgnosis Songs Fund Limited NPV (SONG) 70.00p 1.89%

Diversified Energy Company (DEC) 1,003.00p 1.57%

Centamin (DI) (CEY) 119.60p 1.44%

Keller Group (KLR) 1,052.00p 1.33%

Pagegroup (PAGE) 491.40p 1.28%

HarbourVest Global Private Equity Limited A Shs (HVPE) 2,315.00p 0.87%

Syncona Limited NPV (SYNC) 118.00p 0.85%

Vietnam Enterprise Investments (DI) (VEIL) 595.00p 0.85%

FTSE 250 - Fallers

Aston Martin Lagonda Global Holdings (AML) 159.70p -4.66%

Ashmore Group (ASHM) 189.30p -4.54%

Dr. Martens (DOCS) 93.00p -4.12%

AJ Bell (AJB) 288.00p -3.52%

Ithaca Energy (ITH) 117.60p -3.45%

Carnival (CCL) 1,072.50p -3.33%

PPHE Hotel Group Ltd (PPH) 1,345.00p -3.24%

Mobico Group (MCG) 63.55p -3.05%

IP Group (IPO) 44.60p -2.83%

Wizz Air Holdings (WIZZ) 2,208.00p -2.73%