London close: Stocks fall after better-than-expected US payrolls

(Sharecast News) - London stocks ended the week lower, with investors reacting to a better-than-expected US nonfarm payrolls report during the afternoon.

The FTSE 100 index fell 0.86% to close at 8,248.49 points, while the FTSE 250 underperformed further, dropping 1.36% to 19,733.94 points.

In currency markets sterling was last down 0.65% on the dollar to trade at $1.2228, as it edged down 0.16% against the euro, changing hands at €1.1932.

"US stock indices are taking a battering as stronger-than-forecast US jobs growth leads to only one Fed rate cut being priced in by the markets," said IG senior technical analyst Axel Rudolph.

"A fall in US consumer sentiment spurred on further selling with European stock indices joining their US peers in negative territory for the day.

"They nonetheless had a decent start to the year, though, something which cannot be said for their US counterparts as the US 10-year Treasury yield hits a 14-month high near the 5% mark."

Rudolph added that oil prices had rallied by more than 3% amid concerns that US sanctions might disrupt Russian oil supplies.

"US natural gas prices rose by over 5%, close to their two-year high, driven by colder weather forecasts and increased heating demand.

"Gold and silver prices also rose by around a percentage point despite a strong US dollar."

Non-farm hiring in the US accelerates in December

In economic news, hiring in the US accelerated in December, surpassing expectations and signaling continued strength in the labour market.

The Department of Labor reported a seasonally adjusted gain of 256,000 non-farm payrolls for the month, far exceeding the consensus forecast of 165,000.

However, revisions to the prior two months resulted in a net reduction of 8,000 jobs.

Average hourly earnings rose by 0.3% on a monthly basis, matching forecasts, while the unemployment rate dipped to 4.1% from 4.2%.

The labour force participation rate remained unchanged at 62.5%.

The services sector drove the hiring surge, adding 231,000 jobs, compared to 148,000 in November.

In contrast, goods-producing industries cut 8,000 positions, while government employment grew by 33,000.

Commenting on the data, Thomas Ryan at Capital Economics noted how the year-on-year rate of increase in earnings growth had dipped from 4.0% in November to 3.9%.

That, he said, would reassure the Fed after the high level of services inflation and the increase in the ISM services prices paid index seen during the last week.

"Nevertheless, the odds have increased that the Fed is close to being finished with its loosening cycle, particularly if the incoming Trump administration pushes ahead with a stagflationary mix of tariffs and immigration curbs."

Sainsbury's falls despite strong Christmas, oil majors in the green

On London's equity markets, J Sainsbury dropped 3.19% despite reporting strong Christmas-quarter sales and raising its full-year profit guidance.

Sales over the four weeks to 4 January increased by 3.8%, with grocery sales up 4.1%.

However, general merchandise and clothing were flat, and Argos sales fell 1.4%, while the company also announced a 5% wage increase for staff.

On the upside, Clarkson surged 9.9% after the shipping services firm said it expects full-year pre-tax profit to come in "slightly ahead" of market expectations at no less than £115m, up from £109.2m the previous year.

Oil majors BP and Shell rose 2.32% and 1.84%, respectively, as oil prices climbed on concerns over potential supply disruptions due to heightened sanctions on Russia.

In broker note action, Reckitt Benckiser gained 0.55% following an upgrade to 'overweight' by Morgan Stanley, while InterContinental Hotels Group added 1.39% after Bernstein upgraded it to 'market perform.'

Elsewhere, Persimmon fell 1.37% despite UBS upgrading the housebuilder to 'buy.'

Haleon dropped 2.93% after Morgan Stanley cut its rating to 'equalweight,' and Serco Group slid 0.99% following a downgrade to 'hold' by Jefferies.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,248.49 -0.86% FTSE 250 (MCX) 19,733.94 -1.36% techMARK (TASX) 4,577.24 -0.66%

FTSE 100 - Risers

InterContinental Hotels Group (IHG) 10,025.00p 1.39% Flutter Entertainment (DI) (FLTR) 20,470.00p 1.29% Standard Chartered (STAN) 1,025.00p 1.08% International Consolidated Airlines Group SA (CDI) (IAG) 315.90p 0.99% Scottish Mortgage Inv Trust (SMT) 996.80p 0.87% Centrica (CNA) 133.75p 0.83% BP (BP.) 425.10p 0.57% Reckitt Benckiser Group (RKT) 4,950.00p 0.55% BAE Systems (BA.) 1,192.00p 0.46% Smith (DS) (SMDS) 570.00p 0.44%

FTSE 100 - Fallers

Schroders (SDR) 303.80p -4.35% Sainsbury (J) (SBRY) 252.00p -4.26% Diageo (DGE) 2,446.50p -4.25% Beazley (BEZ) 780.50p -4.23% Entain (ENT) 624.20p -3.79% Croda International (CRDA) 3,201.00p -3.73% BT Group (BT.A) 138.30p -3.59% JD Sports Fashion (JD.) 96.68p -3.03% Marks & Spencer Group (MKS) 335.00p -2.98% Barclays (BARC) 258.05p -2.93%

FTSE 250 - Risers

Clarkson (CKN) 4,275.00p 9.90% Syncona Limited NPV (SYNC) 94.00p 3.07% Playtech (PTEC) 705.00p 2.77% 4Imprint Group (FOUR) 4,815.00p 2.45% HarbourVest Global Private Equity Limited A Shs (HVPE) 2,565.00p 2.19% Raspberry PI Holdings (RPI) 604.25p 1.82% Kainos Group (KNOS) 749.00p 1.35% NB Private Equity Partners Ltd. (NBPE) 1,536.00p 1.19% Senior (SNR) 160.60p 1.13% Baltic Classifieds Group (BCG) 315.50p 1.12%

FTSE 250 - Fallers

CMC Markets (CMCX) 232.00p -8.84% Wizz Air Holdings (WIZZ) 1,229.00p -7.59% Jupiter Fund Management (JUP) 81.00p -7.41% Alpha Group International (ALPH) 2,180.00p -6.84% Kier Group (KIE) 130.20p -5.92% Greggs (GRG) 2,082.00p -5.79% Morgan Advanced Materials (MGAM) 253.50p -5.76% Lancashire Holdings Limited (LRE) 612.00p -5.70% Just Group (JUST) 138.00p -5.35% PayPoint (PAY) 696.00p -4.40%