The FTSE 100 (^FTSE) closed marginally higher on Friday, finishing up 7.73 points, or 0.1%, at 10,368.05 despite pressure from falling mining stocks.
The FTSE 250 ended the session down 241.91 points, or 1.0%, at 23,060.74, while the AIM All-Share fell 10.99 points, or 1.4%, to 797.27.
For the week as a whole, the FTSE 100 dropped 0.4%, the FTSE 250 declined 1.6%, and the AIM All-Share lost 2.6%.
European markets also struggled, with the CAC 40 in Paris closing down 0.3% and Frankfurt’s DAX 40 finishing 0.8% lower.
Wall Street bore the brunt of the day’s selling, with the S&P 500 (^GSPC) falling 1.2%, the Nasdaq Composite (^IXIC) dropping 2.2%, and the Dow Jones Industrial Average shedding 0.3%.
The sell-off was triggered by a stronger-than-expected US jobs report, with non-farm payrolls rising by 172,000 in May, more than twice the FXStreet-cited consensus forecast of 85,000.
April’s payrolls figure was also sharply revised upward to 179,000 from 115,000, while March was revised to 214,000 from 185,000, with the unemployment rate holding steady at 4.3%.
Analysts at TD Economics said: “From the Fed’s standpoint, the narrative has clearly shifted from when they’ll cut again to if their next move is even a cut.”
TD Economics added: “At a minimum, this suggests the FOMC will drop its easing bias at its next policy announcement on June 17th and perhaps even strike a more hawkish tone given the labour market is now showing signs of reaccelerating.”
The leisure and hospitality sector led job creation, adding 70,000 roles in May, well above its average monthly gain of 14,000 over the past year.
Diane Swonk, chief economist at KPMG, noted: “That gain was the largest since January 2023 and had an extra lift from hiring triggered by the upcoming World Cup matches.”
The strong data sent bond yields climbing, with the US 10-year Treasury yield rising to 4.54% from 4.47% on Thursday and the 30-year yield widening to 5.01% from 4.97%.
The pound fell to 1.3371 dollars on Friday afternoon from 1.3436 on Thursday, while the euro weakened to 1.1542 against the dollar from 1.1624 the previous session.
Oil prices edged lower after Lebanese parliament speaker Nabih Berri, who acts as Hezbollah’s mediator, signalled conditional willingness to withdraw forces south of the Litani River if Israel also pulled back.
Brent crude for August delivery traded at 93.70 dollars a barrel on Friday, down from 94.88 at the London equities close on Thursday.
Back in the UK, Bank of England data showed firms expect to raise prices by 4% over the next 12 months, down 0.4 percentage points from April’s prediction, though still elevated.
Barclays (BARC.L) said the data showed no signs of accelerating inflation expectations, while the employment outlook continues to look weak.
Barclays added: “We think this is consistent with there having been a level shift in near-term expectations at the onset of the conflict, but no further acceleration, and in fact, some signs of the unwind of an initial overshoot.”
Among the biggest FTSE 100 (^FTSE) risers were AstraZeneca (AZN.L), up 304.0p at 13,858.0p, and London Stock Exchange Group (LSEG.L), up 222.0p at 9,384.0p.
The sharpest fallers included Fresnillo (FRES.L), down 198.0p at 2,986.0p, Antofagasta (ANTO.L), off 240.0p at 3,970.0p, and Anglo American (AAL.L), which dropped 210.0p to 3,856.0p.