Stocks in London ended Friday on the front foot as weaker than expected US job figures saw rate bets pared back across the pond, supporting a rebound in bonds.
Susannah Streeter, chief investment strategist, Wealth Club said: “There’s been a ripple of relief on financial markets as hopes rise that the Fed won’t have to go so hard and fast in raising interest rates. Treasury and gilt yields have eased off, and equity markets are on a rising tide, as the rush of worry has started to recede.”
In London, the FTSE 100 index ended up 33.68 points, 0.3%, at 10,461.95. The FTSE 250 rose 51.03 points, 0.2%, to 24,194.24, and the AIM all-share firmed 1.71 points, 0.2%, to 783.75.
For the week, the FTSE 100 was down 2.2%, the FTSE 250 was down 0.3% and the AIM all-share was up slightly.
Stocks received a boost early afternoon London time after a weaker-than-expected US jobs report saw markets price in a reduced chance of an interest rate increase at the Federal Reserve’s October meeting.
US non-farm payroll employment increased by 29,000 in September, slowing sharply from a downwardly revised 133,000 increase in August and below the FXStreet consensus of 90,000.
July’s change was revised down by 31,000 to a decline of 10,000 jobs from an initially reported increase of 21,000, while August’s gain was cut by 29,000 to 133,000 from 162,000.
ING said the weaker-than-predicted figures have further diminished the chances of an October interest rate hike in the US.
The CME FedWatch tool now puts a 80% probability on the Federal Reserve leaving rates on hold in October, compared to 76% on Thursday, and just 36% a week ago.
TD Economics economist Thomas Feltmate called it a “Goldilocks employment report” from the Fed’s standpoint.
“While job growth moderated relative to August, the three-month moving average suggests hiring is still running close to the break-even rate,” he pointed out.
Mr Feltmate thinks that overall, the labour market remains in a “good spot”.
“Hiring has improved since last year, but not by so much that it’s adding to inflationary pressures. This reduces the urgency for the Fed to follow up with another hike in October,” he added.
The data saw the dollar give back some of its recent gains against most leading currencies, although it held firm against the yen.
The pound was quoted at 1.3233 dollars on Friday, up from 1.3204 at the same time on Thursday. Against the euro, sterling firmed to 1.1750 euros from 1.1739.
In European equity markets on Friday, the Cac 40 in Paris ended up 0.8%, while the Dax 40 in Frankfurt closed 1.2% higher.
In Europe, investors weighed figures that showed eurozone inflation accelerated sharply in September.
Preliminary figures from Eurostat showed annual inflation in the euro area rose to 3.8% in September from 3.2% in August, ahead of the FXStreet consensus of 3.6%. On a monthly basis, consumer prices increased 0.6%.
Energy prices recorded the highest annual inflation rate, accelerating to 18.8% from 14.3% in August.
In New York, markets also advanced. The Dow Jones Industrial Average was up 0.3% at the time of the closing bell in London. The S&P 500 was 0.7% higher, and the Nasdaq Composite advanced 1.2%.
The yield on the US 10-year Treasury was quoted at 5.26% on Friday, trimmed from 5.30% at the same time on Thursday. The yield on the US 30-year Treasury was quoted at 5.61%, down from 5.63%.
Wealth Club’s Ms Streeter said the US job figures have helped after the “jolt of deep unease” which had hit bond markets this week over the prospects of inflation bedding in and prompting a rapid hiking cycle.
On the FTSE 100, BT Group rose 2.9% as the Financial Times said it has opened talks with UK Government officials over the possibility of buying TalkTalk.
BT chief executive Allison Kirkby met with officials in the Department for Digital, Culture, Media & Sport to gauge whether a possible bid for TalkTalk would lead to a lengthy competition watchdog probe, the FT reported.
Glencore was also in the green, up 3.0%, after announcing it has received approval for Minera Agua Rica Alumbrera in Argentina, and increasing full-year marketing adjusted earnings before interest and tax guidance.
But it was a day to forget for shareholders in IG Group.
Shares in the trading platform plummeted 23% as it said full-year revenue and earnings will be below market expectations.
In a trading statement, London-based IG said it now expects total revenue growth to be in a mid-single-digit per cent range year-on-year in 2026.
According to a company-compiled consensus, analysts forecast revenue of £1.26 billion in 2026, which would be up 12% from 2025’s £1.12 billion.
Chief executive Breon Corcoran said: “Lower Q3 revenue reflected reduced [over-the-counter] revenue retention in less supportive market conditions, and I remain confident in meeting our medium-term guidance.”
The warning saw shares in industry peer CMC Markets drop 4.4% on the FTSE 250.
Plus500 shares were as much as 11% lower after the IG update, though shares recovered some lost ground to close down 5.6%, after a mid-morning statement in which it announced it is trading in line with market expectations amid a “strong” cash position.
Also on the FTSE 250, investors raised a glass to pub operator JD Wetherspoon. Shares surged 12% as it reported strong current trading alongside full-year results.
Like-for-like sales in the nine weeks to September 27 rose 8.6%, helped by “exceptional weather”, the firm said.
Brent oil was quoted at 100.50 dollars a barrel in London on Friday at the time of the equity market close, down from 101.71 dollars late on Thursday.
G7 countries said on Friday there would be no ban on diesel exports between them and called on other powers to refrain from such restrictions.
EU chief Ursula von der Leyen on Friday welcomed the deal that saw off a US threat to impose a ban on diesel exports by coordinating the release of fuel reserves.
Gold was quoted at 4,143.18 dollars an ounce, down from 4,163.35.
The biggest risers on the FTSE 100 were Halma, up 136.00p at 3,600.00p, Antofagasta, up 112.00p at 3,802.00p, Anglo American, up 118.00p at 4,097.00p, Glencore, up 16.10p at 561.40p and BT Group, up 5.45p at 196.30p.
The biggest fallers on the FTSE 100 were IG Group Holdings, down 289.00p at 990.00p, Babcock International Group, down 27.00p at 922.20p, WPP, down 10.20p at 372.70p, Lion Finance Group, down 280.00p at 13,260.00p and ICG, down 32.00p at 1,763.00p.
Next week’s local corporate calendar has a trading statement from oil major Shell and half-year results from grocer Tesco.
Monday’s global economic calendar has a slew of services and composite PMI reports, including the UK at 0930 BST and the ISM services PMI at 1500 BST.
Contributed by Alliance News.
