Stocks end week mixed on soft US employment data

(Alliance News) - Stock prices in London closed mixed on Friday, as some soft US data seemingly confirmed that the central banks are done with interest rate hikes, at least for now.

The FTSE 100 index closed down 28.80 points, 0.4%, at 7,417.73. The FTSE 250 ended up 216.54 points, 1.2%, at 17,983.84, and the AIM All-Share closed up 6.91 points, or 1.0%, at 697.25. Over the course of the week they closed up 1.7%, 6.6%, and 3.2% respectively.

The Cboe UK 100 ended down 0.5% at 739.04, the Cboe UK 250 closed up 1.2% at 15,653.34, and the Cboe Small Companies ended up 1.1% at 12,913.10.

Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.8%, the S&P 500 index up 1.1%, and the Nasdaq Composite 1.4%.

The US economy added fewer jobs than expected in October and the unemployment rate edged higher, painting a soft picture of the US jobs market.

According to data from the Bureau of Labor Statistics, non-farm payrolls rose by 150,000 payrolls in October, slightly below FXStreet-cited consensus of 180,000. The October read was also below the 297,000 registered in September.

The unemployment rate rose to 3.9% in October. FXStreet-cited consensus expected the figure to remain steady at September's reading of 3.8%.

The employment report comes just two days after the Federal Reserve's latest interest rate decision. The Fed decided against a rate hike, keeping the federal funds rate range between 5.25% and 5.50%.

However, eyes have quickly turned onto the next interest rate decision.

"One thing that is sure is that today's non-farm payroll numbers don't provide a strong impetus for a Fed rate hike in December, suggesting a soft landing scenario is currently supported as doves' dreams come true," said SPI Asset Management's Stephen Innes.

On Thursday, the Bank of England followed in the Federal Reserve's footsteps, by pausing interest rate again.

The BoE kept bank rate at 5.25%. It is the second-successive hold, following one in September, which ended a streak of 14 successive hikes since December 2021. The BoE had rapidly shot up the bank rate from a Covid-19-induced low of 0.10%.

However, Bank of England Governor Andrew Bailey on Thursday pushed back on hope that it will soon cut rates, believing there is still some "distance to travel yet" in the fight against inflation.

The pound was quoted at USD1.2369 at the London equities close Friday, up compared to USD1.2176 at the close on Thursday. The euro stood at USD1.0730 at the European equities close Friday, higher against USD1.0613 at the same time on Thursday. Against the yen, the dollar was trading at JPY149.37, lower compared to JPY150.48 late Thursday.

In the FTSE 100, oil majors suffered. Shell closed down 3.8% and BP down 2.1%. They both reported quarterly results earlier this week.

Brent oil was quoted at USD86.44 a barrel at the London equities close Friday, down from USD86.38 late Thursday.

"Oil is dropping as investors pare back concerns about a wider war in the Middle East. Comments from Hezbollah's leader seemed to indicate that the group had no plans to intervene in the conflict, easing fears that escalation could get out of hand," said IG's Chris Beauchamp.

BT continued to build on Thursday's gains. It closed up 5.3%, having risen by 5.7% on Thursday.

The telco said that in the six months ended September 30, revenue rose to GBP10.41 billion from GBP10.37 billion a year earlier. Pretax profit jumped 29% to GBP1.08 billion from GBP831 million.

In the FTSE 250 index, Currys jumped 4.1%.

It said it has struck a deal to sell Dixons South East Europe, the holding company of its Greece and Cyprus retail business, which trades as Kotsovolos.

The London-based consumer electronics retailer said the unit will be sold to Public Power Corp SA for EUR200 million, or GBP175 million, on a debt-free, cash-free basis. It will exclude lease liabilities.

"The disposal will simplify the group's structure enabling it to focus on its larger markets of the UK & Ireland and Nordics, while simultaneously strengthening Currys' balance sheet, increasing flexibility to invest and grow the business and improve shareholder returns," the firm said.

On AIM, Surface Transforms plummeted 34%.

The carbon-ceramic automotive brake disc manufacturer said that while some technical problems have been overcome, it is still seeing challenges in its production line.

"These challenges, which are being resolved, are hindering us from creating sufficient capacity resilience and are constraining our production ramp up," it explained.

In the light of these challenges, Surface Transforms said sales guidance for 2023 is GBP8.6 million, which it said was a cut.

Capital Metals surged 24%.

The company extended gains after it said Thursday that it reached a milestone after securing more than one billion advertising impressions.

In European equities on Friday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt ended up 0.3%.

Gold was quoted at USD1,990.11 an ounce at the London equities close Friday, higher against USD1,981.27 at the close on Thursday.

In Monday's UK corporate calendar, there are half-year results from budget airline Ryanair, as well as a trading statement from building materials supplier Kingspan.

The economic calendar for Monday has a slew of services PMIs from the EU, Germany and the US. On Tuesday, there is the UK Halifax house price index at 0700 GMT.

By Sophie Rose, Alliance News senior reporter

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