London close: Stocks lower as US job growth slows

(Sharecast News) - London stocks closed lower on Friday, pulling back from record territory as investors assessed a slowdown in US job growth. The FTSE 100 index declined 0.31% to 8,700.53 points after hitting an all-time high on Thursday, while the FTSE 250 lost 0.79% to end at 20,807.84 points.

In currency markets, sterling was last down 0.29% on the dollar to trade at $1.2399, while it gained 0.18% against the euro, changing hands at €1.1997.

"January US nonfarm payrolls increased by 143,000, a significant drop from December's upwardly revised 307,000 and below the anticipated 170,000," said IG senior technical analyst Axel Rudolph.

"Despite this slowdown, the unemployment rate edged down to 4.0% from 4.1%, indicating underlying labour market strength.

"Average hourly earnings rose by 0.5% month-over-month, the most substantial gain since August 2024, surpassing market expectations of a 0.3% increase."

Rudolph noted that, following the release of the mixed employment data, stock indices remained relatively flat before US year-ahead inflation expectations surged from 3.3% to 4.3% this month - the highest level since November 2023, pushing equities lower.

"Such a substantial one-month rise of one percentage point or more has occurred only five times in the past 14 years.

"European stock markets experienced modest declines after a week of significant gains, which had propelled indices like the FTSE 100, DAX 40, Euro Stoxx 50, and Stoxx 600 to record highs.

"The gold price surged to a new record high near the $2,900 mark, its fourth in a week, amid inflationary fears."

US job growth slows, UK retail footfall rebounds

In economic news, US job growth slowed more than expected in January, following a strong end to 2024.

Nonfarm payrolls increased by 143,000 last month, according to the US Department of Labor, well below December's upwardly revised gain of 307,000.

Revisions added 100,000 jobs to the combined November and December tallies.

Despite the slowdown, wage growth outpaced expectations, with average hourly earnings rising 0.5% month-on-month.

The unemployment rate edged down to 4.0%.

Consumer confidence in the US meanwhile declined as concerns over tariff-related price pressures weighed on sentiment.

The University of Michigan's preliminary consumer confidence index fell to 67.8 from 71.1 in January.

Notably, inflation expectations for the year ahead surged to 4.3%, marking one of the sharpest monthly increases in over a decade.

On home shores, UK retail footfall rebounded in January as shoppers took advantage of post-holiday sales despite wintry conditions.

Data from the BRC-Sensormatic monitor showed overall footfall rising 6.6% after a 2.2% decline in December.

Retail parks and shopping centres led the gains, with footfall increasing by 7.9% and 7.4%, respectively, while high streets saw a more modest 4.5% rise.

"Store visits increased substantially in the first week of the month, as many consumers hit the January sales," said Helen Dickinson, chief executive of the British Retail Consortium.

"Despite snowy weather and Storm Eowyn causing disruption in some areas, footfall was still positive across major UK cities over the whole month."

House prices in the UK also saw a stronger-than-expected increase, reaching record levels.

The latest Halifax house price index showed a 0.7% monthly rise in January, following a 0.2% dip in December.

Analysts had expected a far smaller gain of 0.2%.

The average house price now stood at £299,138.

However, annual growth slowed slightly to 3% from 3.4% in December, marking the slowest yearly increase since July.

"Affordability is still a challenge for many would-be buyers, but the market's resilience is noteworthy," said Amanda Bryden, head of mortgages at Halifax.

"There's strong demand for new mortgages and growth in lending.

"With a stamp duty increase looming, some of this demand may have come from first-time buyers eager to complete transactions before the end of March."

Meanwhile, Germany's industrial sector ended 2024 on a weak note, with output falling sharply in December.

Destatis reported a 2.4% decline in industrial production, significantly worse than the expected 0.6% drop and reversing November's 1.3% increase.

Year-on-year, production contracted 3.1%, extending a 2.8% fall in November, as Europe's largest economy continued to struggle with sluggish demand.

Victrex falls on uneven trading warning, Legal & General pops

On London's equity markets, Victrex dropped 2.73% after the polymer manufacturer maintained its full-year guidance but cautioned that trading conditions remain uneven.

The company reported a 9% increase in first-quarter revenue but flagged continued weakness in its medical segment due to ongoing destocking by customers.

Marks & Spencer lost 2.01% following news that Richard Price, managing director of clothing, home, and beauty, would leave the retailer to pursue a portfolio career.

He was set to be replaced by John Lyttle, the former CEO of Boohoo Group, who previously held a senior role at Associated British Foods subsidiary Primark.

Ashmore Group slipped 1.86% despite reporting stable assets under management of $48.8bn for the six months to 31 December.

The asset manager cited improved net flows and lower redemptions as factors mitigating market volatility.

On the upside, Legal & General jumped 2.6% after agreeing to sell its US protection business to Japan's Meiji Yasuda for $2.3bn.

The deal included a 5% stake in L&G and would establish a long-term strategic partnership.

L&G said it planned to launch a £1bn buyback once the transaction was completed, expected by the end of 2025.

Elsewhere, Drax Group gained 2.25% amid renewed deal speculation in the sector.

Reports suggested Abu Dhabi National Energy Company was considering reviving a bid to acquire a stake in Spain's Naturgy Energy Group, lifting sentiment across the industry.

Ferrexpo soared 8.51% as investors continued to buy back into the stock following a sharp selloff earlier in the week on news of a £3bn civil claim in Ukraine.

In broker note action, International Workplace Group rose 3.18% after Barclays upgraded the stock to 'overweight,' while Wizz Air edged up 0.4% following an upgrade to 'buy' from HSBC.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,700.53 -0.31% FTSE 250 (MCX) 20,807.84 -0.79% techMARK (TASX) 4,715.09 -0.66%

FTSE 100 - Risers

Pershing Square Holdings Ltd NPV (PSH) 4,224.00p 1.77% Fresnillo (FRES) 765.00p 1.59% Coca-Cola HBC AG (CDI) (CCH) 3,036.00p 1.54% Vodafone Group (VOD) 68.94p 1.38% Antofagasta (ANTO) 1,806.50p 1.29% Legal & General Group (LGEN) 241.70p 1.17% Glencore (GLEN) 358.60p 1.17% BAE Systems (BA.) 1,197.00p 1.01% BP (BP.) 433.25p 0.99% Compass Group (CPG) 2,759.00p 0.91%

FTSE 100 - Fallers

Barratt Redrow (BTRW) 434.80p -4.02% Mondi (MNDI) 1,261.00p -3.48% JD Sports Fashion (JD.) 82.30p -2.88% Taylor Wimpey (TW.) 116.50p -2.84% Berkeley Group Holdings (The) (BKG) 3,716.00p -2.62% Intermediate Capital Group (ICG) 2,318.00p -2.61% GSK (GSK) 1,443.00p -2.47% Unite Group (UTG) 846.50p -2.31% Smith & Nephew (SN.) 1,001.50p -2.29% Land Securities Group (LAND) 580.00p -2.19%

FTSE 250 - Risers

Ferrexpo (FXPO) 95.20p 9.43% Wizz Air Holdings (WIZZ) 1,545.00p 3.21% International Workplace Group (IWG) 181.90p 3.18% Babcock International Group (BAB) 590.50p 2.85% Drax Group (DRX) 635.00p 2.25% Foresight Solar Fund Limited (FSFL) 74.10p 1.65% NextEnergy Solar Fund Limited Red (NESF) 69.10p 1.62% European Opportunities Trust (EOT) 882.00p 1.61% Fidelity China Special Situations (FCSS) 237.00p 1.50% Bakkavor Group (BAKK) 140.00p 1.45%

FTSE 250 - Fallers

Indivior (INDV) 773.00p -8.79% Aston Martin Lagonda Global Holdings (AML) 107.80p -3.92% Oxford Instruments (OXIG) 1,928.00p -3.84% Vistry Group (VTY) 579.50p -3.82% Moonpig Group (MOON) 217.00p -3.77% PPHE Hotel Group Ltd (PPH) 1,325.00p -3.64% Wood Group (John) (WG.) 68.40p -3.59% Kainos Group (KNOS) 781.00p -3.58% Raspberry PI Holdings (RPI) 739.50p -3.40% Bellway (BWY) 2,520.00p -3.37%