London’s FTSE 100 ended a strong start to 2023 with more gains on Friday, climbing despite mixed US data, though the dollar moved lower.
The FTSE 100 was supported by another strong session for the mining sector, driven by optimism out of China.
The FTSE 100 index was up 66.04 points, or 0.9%, at 7,699.49. The FTSE 250 rose 41.29 points, or 0.2%, at 19,504.72, while the AIM All-Share climbed 3.72 points, 0.4%, at 847.46.
For the week, the FTSE 100 added 3.3%, the FTSE 250 rose 3.5% and the AIM All-Share added 1.9%.
The Cboe UK 100 ended up 0.8% at 770.55, the Cboe UK 250 closed flat at 16,978.41, and the Cboe Small Companies added 0.7% at 13,716.69.
In European equities on Friday, the CAC 40 in Paris shot up 1.5%, while the DAX 40 in Frankfurt added 1.2%.
At the time of the closing bell in London, US stocks were higher. The Dow Jones Industrial Average was up 1.6%, the S&P 500 up 1.7% and the Nasdaq Composite up 1.5%.
The US added more jobs than expected in December, according to the latest data from the US Department of Labor. Total non-farm payroll employment increased by 223,000 in December, the department said. This came in higher than market expectations of 200,000 jobs, as cited by FXStreet.
The unemployment rate edged down to 3.5% from 3.6% in November. It has remained in a narrow range between 3.5% and 3.7% since March.
However, wage growth came in below expectations. Hourly earnings rose 4.6% on-year, slowing from 4.8% in November, and below FXStreet cited consensus of 5%.
‘The US added 223,000 jobs and the unemployment rate returned to cycle lows, but there are signs that a turn is coming. A fifth consecutive drop in temporary help employment is a warning signal while softer wage inflation suggests labour market dynamics are shifting. With business surveys pointing to recession, tougher times are coming,’ analysts at Dutch bank ING commented.
For the service sector, perhaps those ‘tougher times’ are already here.
The US service sector finally slipped into contraction territory at the end of December, after two-and-a-half years of growth, according to a survey by the Institute for Supply Chain Management.
The latest ISM services purchasing managers’ index fell to 49.6 points in December, from 56.5 in November. Below the 50.0 no-change mark, the reading suggests the US services economy is in decline.
It was the first reading below 50 points in 30 months, ISM noted.
‘Although ISM services disappointed in December, we are still quite a ways from a significant slowdown. Also, it’s important to remember that softer readings on the economy are a feature, not a bug, of the Fed’s rate hiking campaign,’ analysts at Oxford Economics commented.
The dollar edged higher shortly after the US jobs data, but struggled as the afternoon wore on.
The pound was quoted at $1.2051 at the time of the London equities close on Friday, up sharply from $1.1890 on Thursday. The euro stood at $1.0612, up against $1.0525. Against the yen, the dollar was trading at JP¥132.44, down from JP¥133.89.
In London, miners ended higher. Optimism stemming from a re-opening of the Chinese economy, after a period of damaging zero-Covid curbs, has been a key theme so far in 2023. An easing of mobility restrictions in China would be good news for miners, as the nation is a big buyer of minerals.
Anglo-American surged 5.7%, Antofagasta added 2.8% and Glencore rose 2.3%.
Among FTSE 250 constituents, Clarkson rose 5.1%. The shipping services provider announced strong fourth-quarter trading, particularly from its Broking division, and, as a result, said it now expected its full-year performance to be ahead of current market expectations.
Clarkson said 2022 underlying pretax profit was at least £98 million. This is up 41% from £69.4 million in 2021.
At the other end of the FTSE 250, Essentra lost 6.8%. It reported its business saw a slower period of economic growth in 2022 as a result of toughening market headwinds.
This, coupled with a strong comparative for its final quarter, saw the firm’s LFL trading day adjusted sales fall by 3.0% compared with the year prior.
Elsewhere in London, Nanoco added 31%. The quantum dot developer said that it has agreed a term sheet for a no-fault settlement with Korean electronics firm Samsung.
The two firms now have 30 days to agree the terms of a binding agreement. They have jointly requested a stay to the trial that was scheduled on Friday in order to allow time for this agreement to be finalised.
The duo have been locked in a dispute with Nanoco claiming Samsung infringed on its unique synthesis and resin capabilities for quantum dots. Quantum dot technology is used on Samsung QLED televisions. QLED stands for quantum light-emitting diode.
Brent oil was quoted at $79.64 a barrel late Friday, up from $78.48 late Thursday. Gold was quoted at $1,861.63 an ounce, sharply higher than $1,828.35.
Monday’s economic calendar has a eurozone unemployment reading at 1000 GMT. Over the course of the week, there is US inflation data on Thursday and gross domestic product readings from the UK and Germany on Friday.
Also of interest, the US banking earnings season kicks off on Friday, with results from JPMorgan Chase & Co, Morgan Stanley and Bank of America.
Monday’s local corporate calendar has trading statements from property company Assura and vehicle tracking system provider Quartix Technologies.
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