LONDON (ShareCast) - (Sharecast News) - London's stock markets closed on a mixed note on Friday, with investors reacting to a stronger-than-expected US non-farm payrolls report and corporate deal activity driving selective gains.
The FTSE 100 index declined 0.49% to close at 8,308.61 points, while the FTSE 250 gained 0.28% to settle at 21,059.00 points.

In currency markets, sterling was last down 0.14% on the dollar to trade at $1.2741, while it gained 0.08% against the euro, changing hands at €1.2063.

"The pound managed to touch $1.28 this afternoon, continuing its recovery, but it was unable to hold its gains," said IG chief market analyst Chris Beauchamp.

"The dollar briefly weakened in the wake of the payrolls report, but the return of solid job growth in the US meant that investors have resumed flocking to the greenback.

"Another slow news day in London meant that investors continued to take profits on the recent rally in the FTSE 100."

Beauchamp noted that last month's "payrolls shocker" was not completely revised away, but added that the return of more than 200,000 jobs reminded investors about the strength of the US at a time when political turmoil seemed to be springing up "almost everywhere else".

"An ideal combination of rising earnings, a strong economy and falling interest rates provides a compelling response to those still wondering why the US stock market seems to win out over its competitors."

US economy adds more jobs than expected in November

In economic news, the US added 227,000 non-farm jobs in November, surpassing forecasts of 214,000, according to the Labor Department.

Adjustments to previous months added another 56,000 positions, pushing the three-month average job gain to 173,000.

Despite the robust hiring data, the unemployment rate edged up to 4.2%, in line with expectations, reflecting a slight contraction in the labour force participation rate to 62.5%.

Average hourly earnings increased by 0.4% month-on-month, beating the projected 0.3%, signaling wage growth amid ongoing labour market tightness.

"Growth in nonfarm payrolls rebounded more than expected in November, and upward revisions to October and September pushed trend job growth higher," said Nancy vanden Houten, lead US economist at Oxford Economics.

"The household data was weaker, with employment falling sharply for a second month in a row and the unemployment rate ticking higher.

"There is nothing in the report to change our call for the Federal Reserve to lower rates by 25 basis points at the 18 December FOMC meeting, but we expect the FOMC to proceed more cautiously in 2025 and skip cutting rates in January."

The University of Michigan's US consumer confidence index meanwhile rose to 74.0 in December, marking its fifth consecutive monthly increase and exceeding expectations of 73.0.

The surge was driven by an improved assessment of current conditions, particularly for durable goods purchases, as Americans aimed to preempt potential price hikes.

Inflation expectations for the year ahead rose to 2.9%, the highest in six months but within the pre-pandemic range, while long-term expectations dipped slightly to 3.2%.

On home shores, UK house prices rose for the fifth consecutive month in November, hitting a record average of £298,083, according to lender Halifax.

Monthly prices increased by 1.3%, accelerating from October's 0.4% rise.

Annually, prices climbed 4.8%, marking the strongest growth since late 2022, underscoring resilient demand despite broader economic uncertainties.

"Latest figures continue to show improving levels of demand for mortgages, as an easing in mortgage rates boost buyer confidence," said Amanda Bryden, head of mortgages at Halifax.

"However, despite these positive trends, many potential buyers and movers still face significant affordability challenges and buyer confidence may be tested against a changeable economic backdrop.

"As we move towards the end of the year and into 2025, positive employment figures and anticipated decreases in interest rates are expected to continue supporting demand."

On the continent, the eurozone economy expanded by 0.4% in the third quarter, doubling the previous quarter's growth rate, according to Eurostat.

Germany narrowly avoided a recession, posting a modest 0.1% rebound in GDP after a prior contraction.

Ireland also contributed significantly, with a surge in aggregate demand.

However, the region's performance was tempered by a 1.5% drop in exports.

Direct Line jumps on takeover deal, water utilities in the red

On London's equity markets, Direct Line Insurance Group soared 6.61% after agreeing to an improved takeover offer from Aviva.

The revised deal, priced at 275p per share, valued Direct Line at £3.6bn, and followed last week's rejection of a 250p cash-and-share bid.

Aviva shares themselves closed down 1.39%.

AO World added 1.49% as Deutsche Bank initiated coverage of the stock with a 'buy' rating, bolstering investor confidence in the online electricals retailer.

On the downside, Berkeley Group Holdings slipped 0.82% after reporting a 7.7% decline in pre-tax profit to £275.1m for the six months to October.

Water utilities United Utilities Group and Severn Trent dropped 3.06% and 3.14%, respectively, following downgrades to 'hold' by Jefferies.

The firm noted that current valuations presented a more balanced risk-reward scenario, while maintaining a 'buy' on Pennon.

Spirax Group fell 2.94% after JPMorgan downgraded the stock to 'neutral.'

Similarly, AJ Bell declined 5.29% following a downgrade to 'hold' by Deutsche Bank, adding to the stock's recent pressure.

Serco faced significant losses, plunging 5.08% as UBS downgraded the outsourcing firm to 'sell' from 'buy,' citing valuation concerns.

Retailer Frasers Group dropped 3.63% after announcing a voluntary offer to acquire all remaining shares in Norwegian sporting goods retailer XXL at NOK10 per share.

The offer valued XXL at approximately NOK 246.36 million but failed to impress investors.

Oil producers were under pressure as OPEC+ delayed production cuts until March 2024.

Energean fell 4.56%, while Harbour Energy lost 2.57%.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,308.61 -0.49%
FTSE 250 (MCX) 21,059.00 0.28%
techMARK (TASX) 4,706.84 -0.11%

FTSE 100 - Risers

B&M European Value Retail S.A. (DI) (BME) 361.50p 2.67%
JD Sports Fashion (JD.) 104.65p 2.20%
Rentokil Initial (RTO) 408.70p 1.74%
Intermediate Capital Group (ICG) 2,206.00p 1.66%
Rightmove (RMV) 675.20p 1.50%
Schroders (SDR) 316.00p 1.48%
Convatec Group (CTEC) 234.80p 1.47%
Croda International (CRDA) 3,409.00p 1.19%
Barratt Redrow (BTRW) 434.40p 1.14%
Halma (HLMA) 2,772.00p 1.13%

FTSE 100 - Fallers

Frasers Group (FRAS) 638.00p -3.63%
United Utilities Group (UU.) 1,090.50p -3.41%
Severn Trent (SVT) 2,656.00p -3.14%
Spirax Group (SPX) 7,275.00p -2.94%
Next (NXT) 10,000.00p -2.25%
Tesco (TSCO) 366.90p -2.03%
DCC (CDI) (DCC) 5,545.00p -1.60%
National Grid (NG.) 958.20p -1.54%
Pershing Square Holdings Ltd NPV (PSH) 3,850.00p -1.53%
Melrose Industries (MRO) 569.40p -1.49%

FTSE 250 - Risers

Kier Group (KIE) 156.00p 7.59%
Direct Line Insurance Group (DLG) 249.20p 5.59%
Bridgepoint Group (Reg S) (BPT) 371.40p 4.33%
SSP Group (SSPG) 188.10p 4.10%
Burberry Group (BRBY) 929.80p 3.75%
Discoverie Group (DSCV) 721.00p 3.59%
Wizz Air Holdings (WIZZ) 1,381.00p 3.45%
Raspberry PI Holdings (RPI) 383.80p 3.35%
XPS Pensions Group (XPS) 363.00p 3.13%
SDCL Energy Efficiency Income Trust (SEIT) 58.00p 3.02%

FTSE 250 - Fallers

Serco Group (SRP) 147.50p -5.08%
AJ Bell (AJB) 460.50p -4.46%
Energean (ENOG) 944.50p -4.35%
CMC Markets (CMCX) 285.50p -2.73%
Endeavour Mining (EDV) 1,492.00p -2.55%
Harbour Energy (HBR) 246.80p -2.45%
Bellevue Healthcare Trust (Red) (BBH) 135.20p -2.03%
Indivior (INDV) 862.50p -1.99%
Telecom Plus (TEP) 1,790.00p -1.97%
Carnival (CCL) 1,875.00p -1.91%

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