Stocks in London took a hit on Friday, with New York also plummeting, after a slew of poor US economic data.
The FTSE 100 index closed down 108.65 points, 1.3%, at 8,174.71. The FTSE 250 ended down 632.88 points, 3.0%, at 20,826.35, and the AIM All-Share closed down 11.81 points, 1.5%, at 771.27.
Friday’s fall meant London’s blue-chip index ended a volatile week 1.3% worse off.
The Cboe UK 100 ended down 1.4% at 814.93, the Cboe UK 250 closed down 2.3% at 18,247.63, and the Cboe Small Companies ended down 1.6% at 16,991.87.
The CAC 40 in Paris ended down 1.6%, while the DAX 40 in Frankfurt ended down 2.5%.
In New York, at the time of the London close, the DJIA was down 2.3%, the S&P 500 index was down 2.4%, and the Nasdaq Composite was down 2.5%.
Weak non-farm payrolls figures added to the concerns sparked by weak manufacturing data on Thursday.
The US economy added far fewer jobs in July than expected, while the unemployment rate jumped, adding to concerns that growth in the world’s largest economy is slowing.
Figures from the US Bureau of Labor Statistics showed nonfarm payrolls rose by 114,000 in July, well below the average monthly gain of 215,000 over the prior 12 months.
FXStreet consensus had forecast nonfarm payrolls to increase by 175,000.
May’s figure was revised down by 2,000, from 218,000 to 216,000, and the change for June was revised down by 27,000, from 206,000 to 179,000. This means employment in May and June combined is 29,000 lower than previously reported.
The unemployment rate rose to 4.3% in July from 4.1% in June. It had been expected to stay unchanged at 4.1%.
Matthew Ryan at Ebury said it was ‘an extremely soft US labour report’.
‘The undoubtedly disappointing data has amplified concerns that the Fed has perhaps left it too late to start cutting US interest rates. Futures markets have gone into overdrive in the past couple of trading sessions and are now pricing in almost 110 basis points of Fed rate reductions by year-end, from around 65bps at the start of the week.’
He suggested there could be a ‘front-loading of easing, perhaps beginning with a jumbo 50 basis point cut at the next FOMC meeting in September.’
Stephen Brown at Capital Economics speculated there could even be an ‘inter-meeting cut, although the latter would probably be dependent on another sharp rise in the unemployment rate in the August Employment Report,’ ahead of the Fed‘s September meeting.
On Wednesday, the Federal Reserve left interest rates unchanged but set the scene for a cut in September.
Adding to New York’s woes, Intel plunged 27%, after it suspended its dividend and announced plans to cut 15% of its workforce amid a drive to cut $10 billion of costs.
Sterling gained ground in the wake of the soft date. The pound was quoted at $1.2803 at the London equities close Friday, higher compared to $1.2771 at the close on Thursday.
The euro stood at $1.0919 at the European equities close Friday, up against $1.0787 at the same time on Thursday. Against the yen, the dollar was trading at JP¥146.53, down sharply compared to JP¥150.09 late Thursday.
On London’s FTSE 100, fallers were broad-based. Aerospace firm Melrose fell 6.3%, extending Thursday’s fall, banks Barclays and Standard Chartered fell 5.4% and 3.8% respectively, while retailer JD Sports fell 4.2% and housebuilder Vistry fell 4.7%.
More positively, British Airways owner IAG rose 4.7% after it paid its first dividend since the pandemic and scrapped plans to buy Air Europa.
Second quarter earnings also pleased the City.
Revenue climbed 7.8% to €8.30 billion from €7.69 billion. Within this, passenger revenue rose 9.9% to €7.41 billion from €6.74 billion.
UBS noted revenue landed in line with consensus, but beat the Swiss bank’s €8.2 billion forecast. Operating profit topped consensus of €1.1 billion, and the UBS prediction of €1.01 billion.
‘Results [were] stronger than any of the major European airline competitors that reported,’ UBS said.
It added that IAG’s numbers are ‘the most reassuring of the reporting season’.
GSK rose 2.4%, as the US Food & Drug Administration expanded the approval of its cancer medicine Jemperli, also known as dostarlimab, in endometrial cancer.
In the FTSE 250, Wizz Air fell 3.9%.
The Budapest-based carrier said it carried 5.9 million passengers in July, down 1.4% from 6.0 million a year before. Its load factor also slipped, to 93.8% from 94.9%.
Capacity was down 0.3%, due to geared turbofan engine-related groundings of A321neo planes, Wizz said. The airline also was hurt by the worldwide IT outage on July 19, which disrupted about 1% of its scheduled flights last month, it said.
Among London’s small caps, NCC rose 8.1% after the cybersecurity company said after the market close Thursday it has agreed to sell Fox Crypto BV, which forms part of its Cyber division in the Netherlands.
The unit will be sold for €77 million in cash to CR Group Nordic.
On AIM, Trinity Exploration & Production leapt 9.3%. The Trinidad & Tobago-focused oil exploration and production backed a new takeover offer, and withdrew its support for a bid from fellow AIM listing Touchstone Exploration.
Trinity said it has accepted a £26.4 million cash bid from Lease Operators. Lease Operators will pay 68.05 pence for each Trinity share, which it says is a 31% premium to the Touchstone bid, based on Touchstone’s 34.8p closing price on Thursday.
Brent oil was quoted at $76.88 a barrel at the London equities close Friday, down from $80.48 late Thursday.
Gold was quoted at $2,425.65 an ounce at the London equities close Friday, lower against $2,448.60 at the close on Thursday.
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