London close: Stocks slip as US non-farm payrolls undershoot

(Sharecast News) - London stocks ended lower on Friday, as disappointing US jobs data weighed on investor sentiment.

The FTSE 100 index dropped 0.73%, closing at 8,181.47 points, while the FTSE 250 saw a sharper decline of 1.29%, finishing at 20,494.00 points.

In currency markets, sterling was last down 0.36% on the dollar to trade at $1.3132, while it eased 0.13% against the euro, changing hands at €1.1847.

"The US economy added less jobs than expected," said IG senior technical analyst Axel Rudolph.

"This data initially propped up US indices, with rate cut expectations between 25 and 50 basis points at the Fed's 18 September meeting at first being finely balanced.

"Within a couple of hours of the non-farm payrolls release, the probability of a 50 basis point rate cut slid to 43%, though, together with stock indices which had a dismal week."

Rudolph said that with US employment data out of the way, investors were now looking forward to US CPI and PPI as well as next Thursday's ECB interest rate decision.

"The oil price continues to slide and hit levels last seen in June 2023 amid ample supply, OPEC+ aiming for higher production quotas and the world's largest oil-importing economy, China, looking sluggish.

"The price of gold remained in positive territory for the week but that of silver retreated for a second straight week amid a volatile US dollar which jackknifed from bullish to bearish."

US job growth falls short of forecasts, UK house prices climb

In economic news, US job growth in August fell short of expectations, with non-farm payrolls increasing by 142,000, below the 161,000 forecast by economists.

The Department of Labor also revised down the job gains from the previous two months by a total of 86,000.

In August, private sector employment grew by 118,000, while the government added 24,000 jobs.

The manufacturing sector lost 24,000 jobs, while private services providers added 108,000.

Despite the weaker-than-expected job growth, average hourly earnings rose 0.4% month-on-month, ahead of the 0.3% consensus estimate, while the unemployment rate remained steady at 4.2%.

"The 142,000 gain in non-farm payroll employment in August was probably just enough to tip the Fed in favour of a measured 25 basis point rate cut this month, rather than a more dramatic move, but the labour market is clearly experiencing a marked slowdown," said Paul Ashworth, chief North America economist at Capital Economics.

On home shores, UK house prices climbed to their highest level in two years in August, according to lender Halifax.

Prices increased 0.3% compared to July's 0.9% rise, and were up 4.3% year-on-year, the strongest annual growth since November 2022.

Halifax noted the gains were largely due to comparisons with weaker price growth in the same period last year.

The average home price stood at £292,505 in August, up slightly from £291,585 in July.

"Recent price rises build on a largely positive summer for the UK housing market," said Amanda Bryden, head of mortgages at Halifax.

"Prospective homebuyers are feeling more confident thanks to easing interest rates.

"That optimism is reflected in the latest mortgage approval figures, now at their highest level in almost two years."

On the continent, economic growth in the eurozone remained weak in the second quarter, as GDP expanded by just 0.2%, down from 0.3% in the first quarter, according to Eurostat.

Government spending and exports provided modest support, but household consumption was flat, reflecting ongoing economic challenges across the region.

In Germany, industrial production slumped in July, declining by 2.4% month-on-month, far worse than the expected 0.3% drop.

The automotive sector was hit particularly hard, with production falling by 8.1% after a strong 7.9% increase in June.

Year-on-year, industrial production in Germany fell 5.3%, highlighting ongoing struggles in the manufacturing sector.

Rolls-Royce slips on engine concerns, Experian in the green

On London's equity markets, Rolls-Royce Holdings saw a 0.63% decline after the European air regulator announced an inspection of the UK firm's Trent XWB-97 engines.

The scrutiny followed an incident involving Cathay Pacific earlier this week.

Housebuilder Berkeley Group dropped 0.56%, despite reaffirming its full-year guidance and reporting stable trading in the first four months of the year.

Cybersecurity firm Darktrace edged down 0.03% after it announced a leadership change.

CEO Poppy Gustafsson was stepping down, with COO Jill Popelka taking over immediately.

Vistry Group fell sharply, down 6.29%, despite positive news the previous day.

The company had announced a £130m share buyback and a 7% rise in first-half pre-tax profit, driven by a 9.1% increase in total completions and 11.1% growth in revenue.

Mining companies also struggled, with Anglo American down 3.71%, Antofagasta off 3.76%, and Glencore declining 3.23%, reflecting sector-wide weakness.

Indivior was one of the worst performers, plunging 12.75%.

The opioid addiction treatment maker's drop followed news earlier in the week that it would be removed from Europe's Stoxx 600 index later this month.

Bakkavor Group fell 2.86%, after reporting higher first-half profit and revenue on Thursday.

The food producer said it remained confident in achieving its upgraded full-year outlook.

On the upside, credit-checking firm Experian rose 0.66%, though it gave up most of its earlier gains by the close.

Endeavour Mining gained 0.9%, while Ninety One and British Land added 0.69% and 1.8%, respectively.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,181.47 -0.73% FTSE 250 (MCX) 20,494.00 -1.29% techMARK (TASX) 4,816.78 -0.57%

FTSE 100 - Risers

CRH (CDI) (CRH) 6,426.00p 1.45% Smith & Nephew (SN.) 1,198.50p 1.40% United Utilities Group (UU.) 1,068.50p 1.18% Relx plc (REL) 3,519.00p 0.95% AstraZeneca (AZN) 12,650.00p 0.88% SEGRO (SGRO) 877.40p 0.85% Reckitt Benckiser Group (RKT) 4,538.00p 0.84% London Stock Exchange Group (LSEG) 10,180.00p 0.84% GSK (GSK) 1,651.50p 0.76% Compass Group (CPG) 2,446.00p 0.70%

FTSE 100 - Fallers

Vistry Group (VTY) 1,340.00p -6.29% Burberry Group (BRBY) 604.40p -5.18% Antofagasta (ANTO) 1,638.50p -3.76% Anglo American (AAL) 2,024.00p -3.71% Associated British Foods (ABF) 2,205.00p -3.67% Barclays (BARC) 220.85p -3.37% B&M European Value Retail S.A. (DI) (BME) 425.30p -3.36% Glencore (GLEN) 367.10p -3.23% NATWEST GROUP (NWG) 328.40p -3.18% Rolls-Royce Holdings (RR.) 462.70p -3.18%

FTSE 250 - Risers

British Land Company (BLND) 442.00p 1.80% Hammerson (HMSO) 29.20p 1.46% TI Fluid Systems (TIFS) 132.40p 1.38% Safestore Holdings (SAFE) 886.00p 1.26% Assura (AGR) 40.96p 1.24% Sirius Real Estate Ltd. (SRE) 98.30p 1.13% Target Healthcare Reit Ltd (THRL) 85.30p 1.07% Great Portland Estates (GPE) 351.50p 1.01% JTC (JTC) 1,066.00p 0.95% Empiric Student Property (ESP) 96.90p 0.94%

FTSE 250 - Fallers

Indivior (INDV) 794.00p -12.75% Babcock International Group (BAB) 467.60p -6.76% Bank of Georgia Group (BGEO) 4,055.00p -6.24% Kainos Group (KNOS) 840.00p -5.62% Ithaca Energy (ITH) 109.80p -5.34% Auction Technology Group (ATG) 369.50p -5.26% Mony Group (MONY) 199.00p -4.42% Aston Martin Lagonda Global Holdings (AML) 149.70p -4.41% Alpha Group International (ALPH) 2,270.00p -4.22% BlackRock World Mining Trust (BRWM) 471.00p -4.17%