On Friday, British equities experienced a downturn, largely affected by declines in the mining and real estate sectors.
This movement came in response to a robust U.S. jobs report, which dampened expectations for a rate cut from the Federal Reserve in September.
The FTSE 100, a collection of blue-chip stocks, fell by 0.5%, marking its fourth consecutive weekly loss—a trend not observed since 2020.
Similarly, the mid-cap FTSE 250 dropped by 0.8%, recording its second consecutive weekly decline.
The trigger for these market movements was the latest U.S. nonfarm payrolls data, indicating that the American economy added significantly more jobs than anticipated in May.
This development led to a recalibration of expectations regarding the Federal Reserve’s monetary policy.
Tim Graf, head of macro strategy EMEA at State Street, noted the market’s reaction: “We had a pretty strong reaction in markets to the data and that is feeding through into all the usual suspects, like a much stronger dollar and stocks are under a bit of pressure as a result of that.”
Significant losses were seen among precious metal miners, with the sector falling by 5.2% as spot gold prices plummeted by more than 2%.
This marked the worst performance day for the sector in over seven weeks. Real estate shares and real estate investment trusts were similarly affected, each declining by over 2%.
Attention is now turning to the Bank of England, especially following the initial rate cuts announced by the European Central Bank and the Bank of Canada earlier in the week.
Despite these developments, Graf emphasized the independent nature of central banks: “All of these central banks act independently of the Fed, so (the jobs data) won’t affect the BoE’s trajectory.
“They are not priced to be doing anything in August; it’s a pretty good chance to cut rates.”
In individual stock news, C&C Group emerged as a notable loser in the FTSE 250, its shares down by 0.5%.
This followed an announcement that Group CEO Patrick McMahon would immediately step down due to accounting errors discovered over his tenure as CFO in the past three years.