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LONDON MARKET CLOSE: FTSE 100 finishes strong as US job growth slows

Markets were sunny at the time of London’s closing bell on Friday, with investors across the pond enthused by renewed hopes for a Federal Reserve interest rate cut.

The FTSE 100 index closed up 41.34 points, 0.5%, at 8,213.49. The FTSE 250 ended up 112.21 points, 0.6%, at 20,164.54, and the AIM All-Share closed up 3.42 points, 0.5%, at 771.53.

Over the course of the week, they were up 0.9%, 1.7%, and 2.0%, respectively.

The Cboe UK 100 ended up 0.5% at 819.94, the Cboe UK 250 closed up 0.8% at 17,485.45, and the Cboe Small Companies ended up slightly at 15,785.78.

In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt ended up 0.5%.

Stocks in New York were higher at the London equities close, with the DJIA and the S&P 500 index were both up 0.9%, and the Nasdaq Composite up 1.7%.

The FTSE 100 and stocks in New York got a boost on Friday, as investors sighed a breath of relief amid hopes for earlier than expected interest rate cuts in the US.

Data on Friday depicted a softer than expected labour market in the US.

According to the Bureau of Labor Statistics, nonfarm payroll employment rose by 175,000 in April. This was below a FXStreet consensus of 243,000 and lower than the average monthly gain of 242,000 over the prior 12 months.

The February total was revised down by 34,000, to 236,000 from 270,000, while the total for March was revised up by 12,000, to 315,000 from 303,000. With these revisions, employment in February and March combined was 22,000 lower than previously reported.

In April, average hourly earnings for all employees on private nonfarm payrolls increased by 0.2% to $34.75. Over the past 12 months, average hourly earnings have increased by 3.9%.

The unemployment rate in April was 3.9%, rising from 3.8% in March.

‘Job creation was weaker, unemployment higher and wage growth more subdued than expected in the April employment report. With Fed Chair Powell leaning dovish at Wednesday’s press conference this has breathed new life into Federal Reserve interest rate cut calls,’ said James Knightley at ING.

Knightley added that he is sticking to his September Federal Reserve interest rate cut call.

Interest rates were left unchanged on Wednesday by the US Federal Reserve, on a ‘lack of progress’ towards its inflation target.

Fed Chair Jerome Powell downplayed fears that the next move on interest rates could be upwards, suggesting policy will prove restrictive enough to lower inflation. However, he also dashed hopes for a near-term rate cut noting it was taking longer to gain confidence that inflation was on track to hit the central bank’s 2% target.

The pound was quoted at $1.2549 at the London equities close Friday, up compared to $1.2487 at the close on Thursday. The euro stood at $1.0769 at the European equities close Friday, higher against $1.0690 at the same time on Thursday.

Against the yen, the dollar was trading at JP¥152.89, lower compared to JP¥154.05 late Thursday.

In the FTSE 100 index, the biggest loser was InterContinental Hotels Group, down 2.5%.

The Berkshire, England-based hotel operator said first quarter revenue per available room rose 2.6% on-year. It noted an 8.9% rise in the Europe, the Middle East, Asia & Africa region, and a 2.5% rise in Greater China. In the Americas, revPAR fell 0.3%.

‘The Americas, having already recovered very strongly, was broadly flat due to some adverse calendar timing,’ IHG said.

In the FTSE 250, Trainline jumped 6.6%.

The rail ticketing platform painted an optimistic picture, though possible rail sector upheaval in the UK hangs over it.

Revenue in the year ended February 29 rose 21% to £396.7 million, from £327.1 million. Revenue topped the ‘previous guidance range’. Pretax profit jumped to £48.1 million from £22.1 million.

Trainline announced a £75.0 million share buyback programme. It recently completed a £50.0 million buyback which kicked off in September.

On AIM, Fletcher King shot up 27%.

The chartered surveyors firm reported a ‘strong second half business performance’, a turnaround from the more ‘cautionary business outlook’ it gave back in December.

Revenue for the year ended April 30 ‘is now expected to be materially higher than management expectations’. Pretax profit is expected to be between two and three times higher than the £192,000 it reported for the prior year.

Brent oil was quoted at USD a barrel at the London equities close Friday from $83.40 late Thursday.

Gold was quoted at USD an ounce at the London equities close Friday against $2,303.10 at the close on Thursday.

Whilst markets in the UK will be shut on Monday for Early May bank holiday, there is composite PMI data out for China, the eurozone and Germany.

In Tuesday’s UK corporate calendar, there are first quarter results from oil major BP.

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