LONDON MARKET CLOSE: Inflationary fears weigh amid US jobs report beat

Fri, 05th Mar 2021 16:55

(Alliance News) - Stock prices in Europe closed lower on Friday, with the FTSE 100 failing to cling onto afternoon gains and ending the day in negative territory as investors continued to trade with trepidation amid concern over rising bond yields and inflationary fears.

Comments from US Federal Reserve Chair Jerome Powell failed to allay bond market fears, initially sending global markets on the retreat, though the FTSE regained some composure in afternoon trade, helped by a strong US jobs report. However, London's blue-chip index fell in late trade, following the lead of stocks in New York.

The FTSE 100 index closed down 20.36 points, or 0.3, at 6,630.52 on Friday, but ended the week up 2.3%. The FTSE 250 ended down 334.92 points, or 1.6%, at 20,961.31, it rose 0.2% this week. The AIM All-Share fell 11.89 points, or 1.0%, at 1,161.50, falling 1.8% over the week.

The Cboe UK 100 ended down 0.3% at 661.18, the Cboe UK 250 closed down 1.6%, at 18,680.47, and the Cboe Small Companies ended marginally lower at 13,537.76.

The DAX 30 in Frankfurt fell 1.0%. The CAC 40 in Paris lost 0.8.

"It's been a strange day, one that started with the utmost consistency but has now broken down into pockets of red and green," Spreadex analyst Connor Campbell commented.

"The complicating factor this afternoon was the nonfarm jobs data for February. Pre-release there were questions over what kind of numbers investors actually wanted: signs of a firm recovery in the jobs market, the kind which may carry with it inflationary pressures, or a softer than forecast number, to assuage investors' fears over interest rates."

The US economy added 379,000 jobs in February, following an upwardly revised 166,000 hike in January. The latest figure beat market expectations by more than double. Consensus cited by FXStreet forecast the US economy to have added 182,000 jobs in February.

"Initially investors couldn't help but express their relief â€“ so much so that the Dow Jones briefly shot up 1%, with the FTSE right there alongside it. However, as the session progressed, those inflationary fears started to creep in once again," Campbell added.

The Dow Jones Industrial Average was 0.3% lower at the time of the closing bell in London. The S&P 500 was down 0.7% and the Nasdaq Composite fell by 2.1%.

US indices were hurt by tech stocks. Amazon was 2.5% lower, Netflix fell 1.8% and Tesla plunged 10%.

"The value composition of UK markets does help alleviate some of that selling pressure, with pro-cyclical sectors such as banks and energy on the rise today," IG Markets analyst Josh Mahony commented.

Standard Chartered rose 4.6%, Barclays ended up 3.0% and HSBC rose 2.6%.

London-listed oil majors also rose. Royal Dutch Shell 'A' shares ended up 1.7%, its 'B' rose 1.1% and peer BP climbed 1.8%.

"Despite what OPEC's balances showed it, the group still opted to hold back increasing output, demonstrating its determination to continue to adopt an extremely cautious stance with oil topping USD68 per barrel," Axi analyst Stephen Innes noted.

Brent oil rose to USD68.74 a barrel at the London market close on Friday, up from USD67.11 on Thursday.

In New York, Chevron was up 2.0% and Exxon Mobil was 1.2% higher.

London-listed travel stocks struggled. British Airways parent International Consolidated Airlines Group fell 5.7%, easyJet lost 4.9% and Ryanair fell 4.3%. Rising oil prices result in increased costs for carriers.

London Stock Exchange Group slumped 14% on Friday. The trading, clearing operator and index calculator said it delivered a strong financial performance in 2020, saying revenue growth continued across its businesses as it prepared to take on new acquisition Refinitiv.

"LSE anticipates higher operating costs in the new financial year, and that appears to have weighed on the share price," CMC Markets analyst David Madden noted.

For 2020, LSEG posted total revenue of GBP2.12 billion, up 2.9% from GBP2.06 billion in 2019, and total income rose 6% to GBP2.44 billion from GBP2.31 billion.

Sterling was quoted at USD1.3813 at the London equity market close on Friday, down from USD1.3989 on Thursday. The euro stood at USD1.1912, down from USD1.2047. Against the Japanese yen, the dollar rose to JPY108.21, from JPY107.56.

An ounce of gold fetched USD1,697.43 at the time of the London equity market close on Friday, down from USD1,718.65 on Thursday.

Monday's economic calendar has German industrial production figures at 0700 GMT and Bank of England Governor Andrew Bailey speaks on the UK's economic outlook at 1000 GMT. Tuesday has a eurozone GDP reading at 1000 GMT, before the European Central Bank's latest interest rate decision on Thursday.

Monday's corporate calendar has annual results from education publisher Pearson and retailer Shoe Zone.

By Eric Cunha; ericcunha@alliancenews.com