The FTSE 100 managed to edge higher on Friday despite a heavy sell-off in mining stocks, while Wall Street retreated after unexpectedly strong US jobs data prompted investors to reassess the outlook for interest rates.
London’s blue-chip index closed 0.1% higher at 10,368.05, outperforming much of Europe. The FTSE 250 struggled, falling 1.0% to 23,060.74, while the CAC 40 in Paris lost 0.3% and Frankfurt’s DAX 40 dropped 0.8%.
On Wall Street, the sell-off intensified into the close, with the Nasdaq Composite tumbling 4.18%, the S&P 500 falling 2.64% and the Dow Jones Industrial Average ending 1.35% lower.
Sentiment deteriorated sharply after the latest US labour market figures painted a far stronger picture than economists had anticipated.
Nonfarm payrolls rose by 172,000 in May, comfortably ahead of forecasts for an 85,000 increase, while revisions added a further 93,000 jobs to March and April’s combined totals. The unemployment rate remained unchanged at 4.3%.
The figures fuelled speculation that the US Federal Reserve may not be finished tightening monetary policy. Bond yields jumped following the release and traders moved to fully price in a rate increase before the end of the year, marking a significant shift from recent expectations that policymakers would eventually resume cutting rates.
Hiring in the leisure and hospitality sector stood out, with employers adding 70,000 jobs during May, far above the industry’s average monthly gain over the previous year. Economists pointed to increased recruitment linked to this summer’s World Cup fixtures being hosted in the United States.
The stronger dollar that followed the payrolls report put pressure on precious metals, triggering sharp losses among London-listed miners.
Fresnillo fell 6.2% and Endeavour Mining dropped 5.9%, while weaker silver and copper prices added to the pressure. Antofagasta lost 5.7%, Anglo American declined 5.2% and Glencore slipped 3.3%.
Oil prices also eased after comments from Lebanese parliament speaker Nabih Berri suggested a possible path towards de-escalation between Israel and Hezbollah.
Brent crude traded at $93.70 a barrel, down from $94.88 at Thursday’s London market close, after Berri indicated Hezbollah would withdraw from territory south of the Litani River if Israeli forces also pulled back and a comprehensive ceasefire was agreed.
Back in London, among individual movers, Raspberry Pi surged 25% after forecasting annual earnings significantly ahead of market expectations following a strong first half performance.
Bodycote tumbled 13% after Apollo Global Management confirmed it would not proceed with a takeover offer for the engineering group. The company responded by reiterating confidence in its growth strategy and long-term prospects.
DiscoverIE Group also came under pressure, falling 7.9% after RBC downgraded the stock, arguing that its share price rally of roughly 50% since late March had reduced upside potential.