Stocks in London fell on Friday as the eagerly-anticipated US nonfarm payrolls report unnerved investors, with another chunky Federal Reserve rate hike all but certain.

US employment figures advanced faster than expected on Friday, signalling that the economy was still running too hot for the Fed to take its foot off the gas.

The nonfarms figure was a bitter blow as investors had hoped rate hikes might begin to slow. For now, the Fed might have the impetus to continue to lift rates by large increments, without fear of slowing the jobs markets.

The FTSE 100 index closed down 6.18 points, or 0.1% at 6,991.09 - though the index closed the week 1.4% higher.

The FTSE 250 ended down 279.36 points, or 1.6%, at 17,353.28, finishing the week up 1.1%. The AIM All-Share closed down 5.98 points, or 0.7% at 810.22, ending 0.6% higher over the past five days.

The Cboe UK 100 ended down 0.1% at 698.41, the Cboe UK 250 closed down 1.4% at 14,823.77, and the Cboe Small Companies ended down 0.3% at 12,185.63.

According to the Bureau of Labor Statistics, nonfarm payroll employment increased by 263,000 in September, beating expectations of 250,000, according to consensus cited by FXStreet.

The unemployment rate fell to 3.5% in September from 3.7% in August. It had been expected to remain at 3.7%, according to FXStreet.

Stocks in New York were firmly in the red at the London equities close, with the Dow Jones Industrial Average down 1.7%, the S&P 500 index down 2.2%, and the Nasdaq Composite 3.1% lower.

An already weak sterling was forced lower as the dollar strengthened on the latest jobs data.

The pound was quoted at $1.1130 at the London equities close Friday, down slightly from $1.1191 at the close on Thursday.

In another blow to the currency, September saw the slowest retail sales growth in the UK since shops reopened post-Covid. A combination of inflation, the cost-of-living crisis and an unexpected bank holiday all slowed retail sales, figures showed.

Total in-store and online sales increased by just 2.8% in September on last year, according to BDO's High Street Sales Tracker.

This follows a similarly poor set of results in August, which was the previous lowest post-Covid performance for retail sales.

It was a similar story for the euro. The currency stood at $0.9779 at the European equities close Friday, lower against $0.9837 at the same time on Thursday.

Against the yen, meanwhile, the dollar was trading at JP¥145.15 late Friday, higher compared to JP¥144.81 late Thursday.

In London, JD Wetherspoon shares hopped. It ended 9.5% higher, the FTSE 250's best performer, as investors toasted improved annual results.

In addition, the pub chain said like-for-like sales have improved in the first nine weeks of its new financial.

Revenue in the 53 weeks to July 31 came in at £1.74 billion, up significantly from £772.6 million the year prior. Compared to financial 2020, however, revenue was down 4.3% from £1.82 billion.

Its pretax loss before exceptional items narrowed significantly to £30.4 million from a loss of £167.2 million the year before.

Looking further ahead, the pub chain warned that firm predictions about its financial performance are difficult to make, owing to rising costs of labour and repairs, but it is ‘cautiously optimistic’.

At the other end of the FTSE 250, landscaping products firm Marshalls dropped 17%.

The firm warmed its full-year outturn will be below the bottom end of market forecasts. Consensus stands at a range of £95.1 million to £101.0 million.

The guidance cut is due to the ‘combined impact of the accelerated rate of revenue contraction in Marshalls Landscape Products in the third quarter and the reduction in efficiency resulting from lower manufacturing output in this reporting segment’, it explained.

Elsewhere, Superdry climbed 11% as the clothing retailer swung to an annual profit in the 2022 financial year.

In the year ended April 30, Superdry posted a pretax profit of £17.9 million compared to a loss of £36.7 million a year prior, as revenue grew 9.6% to £609.6 million from £556.1 million.

Looking forward, the firm said: ‘Although we remain cautious on the macroeconomic outlook and the impact of inflation, we are confident that our strategy is positioning the brand for future success.’

In European equities on Friday, the CAC 40 in Paris closed down 1.2%, while the DAX 40 in Frankfurt down 1.6%.

Brent oil was quoted at $97.09 a barrel at the London equities close Friday, up sharply from $94.30 late Thursday.

Gold was quoted at $1,702.27 an ounce at the London equities close Friday, down against $1,712.13 at the close on Thursday.

In the UK corporate calendar on Monday, student accommodation provider Unite Group will publish a trading statement.

Coming next week, there's UK unemployment on Tuesday followed by a GDP reading on Wednesday.

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Issue Date: 07 Oct 2022