The FTSE 100 gave back early gains to close lower on Friday as a weak US jobs report boosted hopes of rate cuts, but also raised fears the world’s biggest economy was slowing.
“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%.
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 non-farm payrolls well below market expectations, while the unemployment rate moved higher.
According to the Bureau of Labour Statistics, non-farm 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.”
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 1.35 dollars late on Friday afternoon in London, compared to 1.34 at the equities close on Thursday. The euro firmed to 1.17.
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%.
