LONDON MARKET CLOSE: FTSE 100 ends green after another US jobs flop

(Alliance News) - A weaker-than-expected US nonfarm payrolls figure sparked a recovery in London in the afternoon after stocks started Friday's session on shaky footing.

"Though nowhere near as disappointing as the previous month's data, this afternoon's headline nonfarm number was still a let-down...In normal times it would be a spectacular reading. However, given that just last month there were expectations of the addition of almost 1 million jobs, the pace of progress is erring on the sluggish side," said Connor Campbell, financial analyst at Spreadex.

The FTSE 100 index closed up 4.69 points, or 0.1%, at 7,069.04 on Friday, having dipped as low as 7,039.74 in the session prior to the US jobs print. London's blue-chip index gained 0.6% over the week-to-date.

The FTSE 250 ended up 30.33 points, or 0.1%, at 22,832.73 on Friday, and rose 0.7% over the course of the week. The AIM All-Share closed up 6.46 points, or 0.5%, at 1,257.08, finishing the week up 0.1%.

The Cboe UK 100 ended down 0.1% at 704.40, the Cboe UK 250 closed up 0.1% at 20,590.38, and the Cboe Small Companies ended down 0.3% at 15,182.45.

In European equities on Friday, the CAC 40 in Paris ended up 0.1% and the DAX 30 in Frankfurt gained 0.4%.

"Today's NFP report is yet another this year that can be filed in the 'Goldilocks' category – not too hot to worry about inflation but not too soft to provoke fears that the recovery is stalling," said Chris Beauchamp, chief market analyst at IG.

The US economy added 559,000 jobs in May, doubled from an upwardly revised figure of 278,000 in April. However, the latest print was well short of the market consensus, cited by FXStreet, of 664,000. It also followed a disappointing report for April, for which some market participants had anticipated a figure above one million.

The Labor Department said notable job gains occurred in leisure and hospitality, in public and private education, in healthcare and social assistance.

Positively, the US unemployment rate reduced to 5.8% in May from 6.1% in April, beating the market estimate of 5.9%.

"An NFP figure above the million mark would have certainly sparked worries about an overheating economy, but a figure of around [half] that is, as Goldilocks herself would say, 'just right'," the IG analyst said.

As such, stocks approached the weekend in a "more optimistic frame of mind", said Beauchamp, led by gains for tech and growth names. Shares in online grocer Ocado rose 3.0% on Friday, topping the FTSE 100, while food delivery platform Just Eat Takeaway.com rose 2.0%.

Stocks in New York were climbing at the London equities close, with the DJIA up 0.4%, the S&P 500 index up 0.7%, and the Nasdaq Composite surging 1.3%.

However, the dollar suffered at the hands of the US jobs data.

The pound was quoted at USD1.4169 at the London equities close Friday, up compared to USD1.4108 at the close on Thursday. The euro climbed to USD1.2172 at the European equities close against USD1.2125 at the same time on Thursday.

Against the yen, the dollar was trading at JPY109.44, down compared to JPY110.27 late Thursday.

Also lower in the wake of the data were financial stocks. Standard Chartered shares closed down 1.7% in London, while HSBC fell 1.2% and Lloyds Banking dipped 1.2%.

"The slight miss on the headline [nonfarm payrolls number] has seen yields fall back, and in the process act as a drag on financials which are the worst performing sector in Europe today, with the likes of HSBC, Standard Chartered and Lloyds Banking Group all underperforming," said CMC Markets chief market analyst Michael Hewson.

Elsewhere in the FTSE 100, Bunzl shares fell 2.0% after Bank of America cut the stock to Neutral from Buy.

Precious metals miner Fresnillo rose 1.1% as gold prices ticked up. Gold was quoted at USD1,893.48 an ounce at the London equities close Friday, up against USD1,869.72 at the close on Thursday as the shining mental benefited from a weaker dollar.

Oil prices also advanced on Friday. Brent oil was quoted at USD71.55 a barrel at the London equities close Friday, up from USD71.25 late Thursday.

Travel stocks continued to fall amid disappointment over the UK government's decision to impose quarantine rules on arrivals from Portugal. Airlines Wizz Air and easyJet shed 3.2% and 2.7% respectively in the FTSE 250.

Travel bosses are facing "another lost summer" after Portugal was added to the amber travel list just weeks after the holiday hotspot reopened for British tourists. Urging caution ahead of the scheduled domestic unlock on June 21, UK Transport Secretary Grant Shapps blamed the move on "a sort of Nepal mutation of the so-called Indian variant" having been detected, and an increased test positivity rate in the country.

Portugal, including the islands of Madeira and the Azores, will be removed from the green list which exempts the need to quarantine on return from 4am on Tuesday, meaning travellers will be required to self-isolate for 10 days at home.

The travel industry have reacted with dismay at Thursday's announcement, which also confirmed that no additional countries will move on to the green list for the time being, despite speculation that popular destinations such as some Spanish and Greek islands could be added.

On AIM, shares in fast fashion retailer Boohoo rose 3.3% after Morgan Stanley bumped the stock up to Equal Weight from Underweight.

A quiet start to the new week on the UK corporate front sees half-year results from drug discovery and development company Redx Pharma and full-year results from Germany-focused business park operator Sirius Real Estate on Monday.

In Monday's economic calendar there is Chinese trade data due overnight and then German factory orders at 0700 BST. UK Halifax house prices are at 0830 BST and at 0930 BST is eurozone investor confidence.

By Lucy Heming; lucyheming@alliancenews.com

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