Stocks in London ended higher on Friday in defiance of UK households coming to terms with rising prices, with a healthy US jobs report, and sharp rises from small cap stocks on takeover bids and strong trading.
US nonfarm payrolls for March slightly undershot consensus, data showed, but February saw a notable upwards revision.
At the same time, the unemployment rate continued to decline and wage growth accelerated.
Total nonfarm payroll employment rose by 431,000 in March, below the 490,000 forecast by analysts, according to FXStreet-cited consensus. However, February's figure was revised up to 750,000 from 678,000.
The unemployment rate declined to 3.6% in March from 3.8% the month before, beating analyst expectations for a more moderate fall to 3.7% and nearing the pre-pandemic level of 3.5%. In March 2021, the jobless rate stood at 6.0%.
Average hourly earnings rose by 5.6% on an annual basis, accelerating from the 5.2% reported for February.
Stocks in New York were higher at the London equities close. The DJIA was up 0.1%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.4%.
‘Over on Wall Street investors weren't quite sure what to make of some pretty decent jobs figures which saw US unemployment fall to a two-year low. The strength of the economy has increased expectation that the Fed's next rate hike is more likely to be 0.5 than 0.25 percentage points next time out,’ said Danni Hewson of AJ Bell.
Meanwhile, Moscow on Friday accused Kyiv of carrying out its first air strike on Russian soil, in a new blow to hopes of any deescalation in President Vladimir Putin's war against Ukraine.
Peace talks between Ukrainian and Russian officials resumed via video, but Moscow warned that the helicopter attack on a fuel depot in the town of Belgorod would hamper negotiations.
Kyiv would neither confirm nor deny it was behind the attack, with Foreign Minister Dmytro Kuleba saying he did ‘not possess all the military information’.
After over a month of a military campaign that has reduced parts of Ukraine to rubble, Moscow said in peace talks earlier this week it would scale back attacks on the capital Kyiv and the city of Chernigiv.
But Ukraine's President Volodymyr Zelensky said Russia was consolidating and preparing ‘powerful strikes’ in the country's east and south, joining a chorus of Western assessments that Moscow troops were regrouping.
The FTSE 100 index closed up 22.22 points, or 0.3%, at 7,537.90, ending the week up 0.7%.
The mid-cap FTSE 250 index closed up 57.94 points, or 0.3%, at 21,218.01, gaining 1.3% for the week.
The AIM All-Share index closed up 2.73 points, or 0.3%, at 1,045.09, up 0.8% for the week
The Cboe UK 100 index closed up 0.1% at 750.00. The Cboe 250 closed up 0.2% at 18,677.83, and the Cboe Small Companies closed up 0.1% at 15,370.22.
In mainland Europe, the CAC 40 stock index in Paris ended up 0.4%, while the DAX 40 in Frankfurt closed up 0.2%.
‘There are days when markets seem to be seriously disconnected from the current economic climate. Today, as households grappled with a 'Bleak Friday', that unfortunately is no laughing matter, a number of UK retailers enjoyed a surprising rally,’ Hewson added.
In the FTSE 100, Reckitt Benckiser ended the best performer, up 3.1%, after Barclays raised its price target on the household goods firm to 9,100 pence from 8,800p and reiterated its 'overweight' rating.
In the FTSE 250, Bridgepoint Group closed up 3.8% after Citigroup raised the private assets growth investor to 'buy' from 'neutral'.
Frasers Group closed up 3.5% after the House of Fraser owner unveiled a new share buyback programme that will run until late-April.
A share repurchase programme worth up to £70.0 million begins on Friday and ends on April 24, the day before the retailer ends its financial year. The company, which also owns store brands such as Sports Direct and Evans Cycles, said the maximum amount of shares that can be bought through the buyback is 10.0 million.
Elsewhere in London, Randall & Quilter Investment Holdings closed up 11% at 161.07 pence after the investment firm accepted a £482 million takeover offer from 23% shareholder Brickell PC Insurance Holdings.
Brickell will pay 175.00p in cash per R&Q share, a 20% premium to its closing price of 146p on Thursday. The stock was up 9.6% early Friday in London at 159.44p.
Despite holding 23% of R&Q shares, Brickell has only 9.9% of the voting rights under an agreement related to its exchange of preferred stock last year.
The offer also has support from R&Q directors for their 3.3% holding. Brickell has committed to provide $100 million in new equity funding to R&Q to de-leverage its balance sheet.
On AIM, Quiz surged 49% after the fashion retailer said it expects to report an annual profit, helped by revenue coming in ahead of expectations.
For the financial year that ended on Thursday, Quiz expects to post revenue of £78.0 million, which would top expectations and be up 96% from £39.7 million from the year prior.
‘Positive sales momentum’ it saw over the Christmas period continued into the final quarter of its financial year.
The dollar was higher across the board. The pound was quoted at $1.3108 at the London equities close, down from $1.3155 at the close Thursday.
On the economic front, UK factory growth faded in March as firms struggled with supply shortages and customers grew cautious amid inflationary pressures and geopolitical tensions, survey data showed on Friday.
The S&P Global/Chartered Institute of Procurement & Supply UK manufacturing purchasing managers' index declined to 55.2 points in March, a 13-month low, from 58.0 in February. The reading was also below March's flash estimate of 55.5.
Any reading over the no-change mark of 50.0 indicates expansion, but March saw growth slow after a three-month high for activity in February.
New order growth eased with domestic demand ‘less robust’ and new export orders contracted for the sixth time in the past seven months. This was linked to Russia's invasion of Ukraine and to post-Brexit difficulties.
The euro stood at $1.1035 at the European equities close, down from $1.1111 late Thursday, even as data showed inflation on the continent at all-time high levels.
Eurozone inflation is set to surge to a fresh record high in March, preliminary data from Eurostat showed.
The annual inflation rate is expected to accelerate to 7.5% in March from 5.9% in February, in large part due to a hefty 45% increase in energy prices.
Energy prices, already boosted as economies across the globe re-opened from Covid lockdowns, have been further propelled in recent weeks following Russia's invasion of Ukraine.
Against the yen, the dollar was trading at JP¥122.82, up sharply from JP¥121.43 late Thursday.
Brent oil was quoted at $105.32 a barrel at the equities close, down from $108.02 at the close Thursday.
Gold stood at $1,928.25 an ounce at the London equities close, lower against $1,941.55 late Thursday.
The economic events calendar on Monday has Germany trade data at 0700 BST and a speech from Bank of England Governor Andrew Bailey at 1000 BST. Financial markets in Shanghai are closed for the Tomb Sweeping Day holiday.
The UK corporate calendar on Monday has annual results from CentralNic Group and Xpediator.
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