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London stocks ended the week on the back foot, as weak US payroll figures and a fresh wave of tariffs announced by President Trump rattled global sentiment and fuelled rate cut speculation. The FTSE 100 index closed down 64.23 points, 0.7%, at 9,068.58. The FTSE 250 closed 263.49 points lower, 1.2%, at 21,699.34, and the AIM All-Share closed down 4.34 points, 0.6%, at 757.16. For the week, the FTSE 100 fell 0.6%, the FTSE 250 was down 1.9% and the AIM All-Share lost 2.6%. The Cboe UK 100 ended down 0.7% at 905.49, the Cboe UK 250 fell 1.2% to 19,056.30, and the Cboe Small Companies closed down 0.5% at 17,306.77. The Bureau of Labor Statistics said nonfarm payrolls grew by 73,000 in July, shy of the FXStreet-cited consensus of 110,000. It was also short of the 147,000 initially reported for June. However, June’s number was sharply revised downwards to just 14,000. What’s more, May’s reading was lowered to 19,000 from 144,000. June’s reading now represents the weakest month for the US labour market in four-and-a-half years. The last reading that was weaker was in December 2020, when 183,000 jobs were lost, according to BLS data. The unemployment rate edged up to 4.2% in July from 4.1% in June, as expected. ‘This was an unexpectedly weak report,’ said Kathleen Brooks at XTB. ‘Tariffs have yet to meaningfully kick in, so the fact that job growth has been anaemic at this early stage is worrying,’ she added. ‘A new narrative about the US economy is emerging. It is one where the labour market is rapidly softening, where wage growth remains strong, which could pressurize corporate margins down the line, and where the US economy needs interest rate cuts.’ Brooks added. ING said the ‘huge downward revisions to May and June that have put a completely different light on the health of the US economy,’ reigniting the prospect of imminent US rate cuts. On Wednesday, the Federal Reserve left interest rates unchanged despite two officials voting for a cut. On Friday, in similar statements outlining their dissents, Federal Reserve Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller argued that the inflationary effects of Trump’s tariffs were temporary and that the central bank should focus on fortifying the economy to avert further economic weakening. Both Bowman and Waller were appointed by Trump, who has repeatedly lambasted Fed Chair Jerome Powell for not cutting rates. The jobs shock added to the already downbeat market mood after Trump reignited the trade war, hitting dozens of US trading partners with tariffs. Trump raised tariffs on Canada to 35%, India was hit with a rate of 25% and Switzerland with 39%. The tariff rates for 92 nations range from 10% to 41%. Mexico received a reprieve with a 90-day extension, while China faces a separate deadline of August 12. However, in a minor reprieve that opens the door to further negotiations, the White House said these measures will take effect on August 7, not Friday as previously expected. Russ Mould at AJ Bell said investors have been ‘caught off guard’, having previously hoped Trump would ‘kick the new tariff levels down the road’. In Europe on Friday, the CAC 40 in Paris tumbled 2.9%, while the DAX 40 in Frankfurt slid 2.7%. In New York, the Dow Jones Industrial Average was down 1.4%, the S&P 500 was 1.6% lower, and the Nasdaq Composite slumped 2.1%. The US jobs data put the US dollar on the back foot while bond yields tumbled. The pound rose to $1.3247 late on Friday afternoon in London, compared to $1.3230 at the equities close on Thursday. The euro traded at $1.1538, higher against $1.1442. Against the yen, the dollar was trading lower at JP¥148.12 compared to JP¥150.48. The yield on the US 10-year Treasury was at 4.24%, trimmed from 4.34%. The yield on the US 30-year Treasury was at 4.81%, narrowed from 4.87%. In London, pharmaceutical stocks weighed on the blue-chip FTSE 100 index after Trump demanded that drug companies lower prices for American consumers. GSK fell 1.2% and AstraZeneca dipped 1.8%. ‘Widespread share price declines among pharma stocks are the market‘s way of saying it doesn’t like the prospect of Trump effectively declaring war with the sector,’ said AJ Bell’s Mould. Faring better, Pearson and Melrose, up 6.3% and 4.9% respectively. London-based publisher of digital and virtual learning materials, Pearson, raised its dividend and said it is on track to deliver guidance, expressing confidence in stronger growth in the second half of the year. Chief Executive Omar Abbosh said: ‘We are making rapid progress with bringing AI-powered products to market and are scaling and enhancing our enterprise business with a range of new partnerships and deals.’ Aerospace engineering company Melrose said all of its end markets were growing structurally amid rapidly increasing demand in the defence sector, as it increased its dividend amid a swing to profit. The Birmingham-based company reported pretax profit of £379 million in the first half of 2025, swinging from a loss of £105 million. Adjusted pretax profit climbed 22% to £248 million from £204 million. But IAG fell 1.6% despite a strong performance in the first half of 2025, with the British Airways owner expecting ‘good earnings growth and margin progression’ for the full year. Brent oil was quoted lower at $69.78 a barrel in London on Friday, down from $71.11 late Thursday. Gold firmed to $3,349.92 an ounce against $3,292.45. The biggest risers on the FTSE 100 were Pearson, up 67.50 pence at 1,140.00p, Melrose Industries, up 25.20p at 537.40p, Fresnillo, up 39.00p at 1,439.00p, Unilever, up 122.00p at 4,530.00p and British American Tobacco, up 85.00p at 4,125.00p. The biggest fallers on the FTSE 100 were Intertek, down 338.00p at 4,602.00p, Weir, down 162.00p at 2,504.00p, Rentokil Initial, down 19.00p at 360.50p, Anglo American, down 89.00p at 2,059.00p and Barclays, down 15.30p at 356.00p. Monday’s local corporate calendar has half-year results from shipping and offshore services provider Clarkson. Later in the week, half-year results are due from oil major BP, Guinness owner Diageo and life insurance firm Legal & General. The global economic calendar on Monday has US factory orders data. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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