Stock prices in London continued to trend down this week, as new US non farms payroll data signalled that a Fed interest rate cut won’t be happening anytime soon.
The FTSE 100 index closed down 39.97 points, 0.5%, at 8,245.37. The FTSE 250 ended down 160.51 points, 0.8%, at 20,555.37, and the AIM All-Share closed down 3.01 points, 0.4%, at 793.53.
Over the course of the week, they are down 0.4%, 0.8%, and 1.6%, respectively.
The Cboe UK 100 ended down 0.4% at 822.55, the Cboe UK 250 closed down 0.9% at 17,977.67, and the Cboe Small Companies ended down marginally at 16,844.97.
In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt both closed down 0.5%.Stocks in New York were mixed at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.1%, and the Nasdaq Composite down 0.1%.
On Friday, investors were digesting some stronger-than-expected nonfarm payrolls data, which signalled that the labour market is robust.
This has dimmed hopes of interest rate cuts from the US Federal Reserve.
According to the Bureau of Labor Statistics, nonfarm payroll employment rose by 272,000 in May. This was ahead of FXStreet consensus of 185,000 and higher than the average monthly gain of 232,000 over the prior 12 months.
In May, average hourly earnings for all employees on private nonfarm payrolls increased by 0.4% to $34.91. Over the past 12 months, average hourly earnings have increased by 4.1%.
‘Another very strong jobs report has cast further doubt on the prospect of interest rate cuts this year,’ analysts at ING said.
Nigel Green at deVere Group said the latest report demonstrates that the labour market ‘is still remarkably robust.’
‘This all makes it harder for the Fed to even consider cutting interest rates as the economy remains super hot,’ Green continued.
The US Fed will announce its latest interest rate decision on Wednesday next week. At the central bank’s fourth meeting of 2024, the Fed is expected to leave interest rates unchanged.
This week saw the Bank of Canada and European Central Bank break the trend of keeping interest rates unchanged. Both central banks cut interest rates by 25 basis points, as expected by markets.
The pound was quoted at $1.2724 at the London equities close Friday, lower compared to $1.2783 at the close on Thursday. The euro stood at $1.0812 at the European equities close Friday, down against $1.0882 at the same time on Thursday. Against the yen, the dollar was trading at JP¥156.82, up compared to JP¥156.03 late Thursday.
In the FTSE 100, housebuilders were mixed. Taylor Wimpey and Persimmon were down 1.6% and 3.3%. Barratt Developments edged up 0.5%.
Figures from Halifax showed the average UK house price fell by 0.1% month on month or around £170 in cash terms in May.
The typical property value was £288,688, which was 1.5% higher than a year earlier, the lender said.
‘Despite mixed house price data there were signs of life in the UK property market on Friday,’ said AJ Bell’s Russ Mould.
This was thanks to Bellway, which closed down marginally despite posting a positive trading update.
In a trading update for the four months to June 2, the Newcastle Upon Tyne, England-based company reported stronger trading through the spring selling season, with improved reservation rates compared to the first half of the financial year.
‘The group is now fully sold for the current financial year and given our strong outlet opening programme and healthy forward order book, Bellway is well-positioned to return to growth in financial year 2025,’ the company stated.
Elsewhere in the FTSE 250 index, C&C plummeted 7.6%.
C&C’s Chief Executive Patrick McMahon said he would step down, after accounting errors during his tenure as chief financial officer led the firm to adjust prior year financial figures.
Dublin-based drinks maker C&C, best known for its cider brands Magners and Bulmers, said the total value of the adjustments in aggregate represent an underlying operating profit charge of €5 million. This covers the period 2021 to 2023.
In addition, C&C expects to record an exceptional prior year charge with respect to onerous Apple contracts of €12 million in financial 2023 which was initially expected to be recorded in financial 2024.
The total value of the adjustments is €17 million.
On London’s AIM, Kibo Energy plummeted 44%, after it announced a corporate restructuring that involves a board overhaul, capital raise and repositioning of the group.
The Galway, Ireland-based company with energy projects in Africa and UK said it had decided to implement an ‘extensive’ restructuring and repositioning plan focused on transitioning itself as a broader based energy company, looking also at opportunities in the oil and gas sector.
It is considering delisting from the Johannesburg Stock Exchange as part of this plan.
Kibo said it had conditionally raised £500,000 by way of a placing of 3.33 billion new shares at 0.015 pence each.
Brent oil was quoted at $79.81 a barrel at the London equities close Friday, up from $79.69 late Thursday.
Gold was quoted at $2,312.90 an ounce at the London equities close Friday, lower against $2,374.90 at the close on Thursday.
In Monday’s UK corporate calendar, there are no events scheduled. On Tuesday, there is a trading statement from Bellway.
The economic calendar for next week starts off pretty quiet, and will pick up with UK unemployment data at 0700 BST on Tuesday
On Wednesday, there is consumer price inflation data from China, Germany and the US. There is also gross domestic product data for the UK, alongside a trade balance reading.
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