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London’s blue chip index ended the day lower on Friday, despite earlier advances, as a weaker-than-expected US employment report sparked fears that its jobs engine might be stalling. ‘The [US] labour market is in a precarious position,’ said analysts at Wells Fargo, putting the Federal Open Market Committee in a position ‘where it will imminently start cutting the federal funds rate.’ The FTSE 100 index closed down 8.66 points, 0.1%, at 9,208.21. It had earlier traded as high as 9,253.53. The FTSE 250 ended 100.86 points higher, 0.5%, at 21,575.54 and the AIM All-Share finished up 3.63 points, 0.5%, at 765.63. For the week, the FTSE 100 rose 0.2%, the FTSE 250 fell 0.1% and the AIM All-Share firmed 0.2%. The Cboe UK 100 ended down 0.1% at 923.42, the Cboe UK 250 closed 0.4% higher at 18,855.21 and the Cboe Small Companies slightly higher at 17,052.42. In New York, at the time of the London equities market close, the Dow Jones Industrial Average was down 0.7%, as was the S&P 500, while the Nasdaq Composite dropped 0.5%. Friday saw another weak jobs report in the US with growth in nonfarm payrolls well below market expectations, while the unemployment rate moved higher. According to the Bureau of Labor Statistics, nonfarm payroll employment increased by 22,000 in August, easing from 79,000 in July. The July reading was upwardly revised from 73,000, however, June’s reading was knocked down to a net loss of 13,000 jobs from a gain of 14,000 previously reported. The latest data fell short of the FXStreet cited consensus of 75,000. The jobless rate edged up to 4.3% in August, as expected, from 4.2% in July. Thomas Feltmate, senior economist at TD Economics, said: ‘There’s no escaping that the labour market is softening, and quickly.’ ‘Fed officials have become increasingly concerned about the downside risks to the labour market, and this morning’s report will not assuage those fears. We maintained an out-of-consensus view since April that the Federal Reserve would need to deliver 75 basis points in rate-relief this year, and our conviction remains high that it will occur.’ Bank of America agreed. ‘The August jobs report is likely to amplify the Fed’s concerns about labour market weakness. Job growth was anaemic on the month, the unemployment-rate ticked up to 4.3% and weaker-than-expected hours worked led to a slowdown in income growth. There is now clearer evidence of deterioration in labour demand, not just supply.’ BofA now expects the Fed to make two quarter point rate cuts this year, in September and December. It had previously forecast that the US central bank would leave rates on hold for the rest of 2025. Wells Fargo said the jobs engine, that has been integral to US economic growth defying expectations for the past four years, is ‘stalling.’ ‘With elevated risk of further downward revisions, the recent pace of hiring is dangerously close to crossing into negative territory, where job market weakness quickly becomes self-reinforcing,’ the broker warned. The report put pressure on the dollar and saw bond yields ease further. The pound jumped to $1.3527 late on Friday afternoon in London, compared to $1.3432 at the equities close on Thursday. The euro firmed to $1.1743, against $1.1641. Against the yen, the dollar was trading lower at JP¥146.94 compared to JP¥148.74. The yield on the US 10-year Treasury was quoted at 4.07%, narrowed from 4.20% on Thursday. The yield on the US 30-year Treasury was quoted at 4.79%, eased from 4.90%. In Europe, the CAC 40 in Paris ended down 0.6%, while the DAX 40 in Frankfurt closed 0.9% lower. In London, political developments saw Keir Starmer shake-up his front bench after Angela Raynor quit the government after she was found to have breached the ministerial code over her underpayment of stamp duty on a seaside flat. Raynor has resigned as UK deputy prime minister, housing secretary and deputy leader of the Labour Party. With speculation rife as to the future of some ministers, reports said Rachel Reeves will be staying put as chancellor. Reports suggested Home Secretary Yvette Cooper would replace David Lammy as Foreign Secretary. Lammy is understood to have been appointed as deputy prime minister. In an ironic twist, housebuilder Berkeley Group welcomed the UK government’s ‘positive’ stance on planning reform, amid stable trading. Shares in the Cobham-based housebuilder rose 3.0% as it said it is on track to report pretax earnings in line with its £450 million forecast for the financial year ending April 30, 2026, and down 15% from £528.9 million in financial 2025. Berkeley said it has already secured 85% of its guided pretax earnings through exchange sales contracts, and that the firm remains on target to achieve a similar level of profit in financial 2027. Berkeley’s update came as the Halifax house price index found that the average UK house price increased by 0.3% to a new record high of £299,331 in August. ‘Affordability remains a challenge, but there are signs of improvement,’ said Amanda Bryden, head of mortgages at Halifax. Other housebuilders took heart from the news. Persimmon rose 2.8%, Barratt Redrow by 2.1% and Taylor Wimpey by 2.2%. Aviva climbed 1.6% as Goldman Sachs restarted coverage of the insurer with a ’buy’ rating and 736 pence price target. But Admiral fell 3.0% as Peel Hunt downgraded to ’sell’ from ’reduce’ believing the outlook for underwriting margins in the UK motor space is ‘starting to deteriorate’. A sharp drop in the oil price saw BP and Shell drop 2.6% and 2.3% respectively. A barrel of Brent traded at $65.14 late Friday afternoon, down from $67.02 on Thursday. Next rose 0.8% after UK retail sales accelerated ahead of expectations in July following continued good weather. Total retail sales volumes are estimated to have risen by 0.6% in July, accelerating from an increase of 0.3% in June and comfortably beating an FXStreet-cited consensus for 0.2% growth in July. Food store sales rose 2.5% in July to their highest level since February 2022, boosted by good weather and events such as the Union of European Football Associations Women’s Euro 2025 tournament. Food store sales had increased 0.7% in June. The ONS noted that the UK had its fifth-warmest July on record this year, according to the Met Office climate summaries. Gold advanced to $3,589.49 an ounce on Friday against $3,543.56 on Thursday. The biggest risers on the FTSE 100 were Entain, up 28.00p at 864.40p, Berkeley Group, up 108.00p at 3,690.00p, Ashtead, up 152.00p at 5,538.00p, Persimmon, up 30.00p at 1,100.00p and Melrose, up 16.00p at 616.00p. The biggest fallers on the FTSE 100 were Admiral, down 102.00p at 3,342.00p, BP, down 11.25p at 415.65p, Barclays, down 9.20p at 361.05p, NatWest, down 12.00p at 506.00p and Shell, down 60.50p at 2,627.50p. Monday’s local corporate calendar has half year results from insurer Phoenix Group. The global economic calendar on Monday has China trade data. Later in the week, US inflation figures and the ECB interest rate decision, both on Thursday, will be closely watched. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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