© Reuters. Signage for the London Stock Exchange Group is seen outside of offices in Canary Wharf in London, Britain, August 3, 2023. REUTERS/Toby Melville/File Photo
By Sruthi Shankar and Khushi Singh
(Reuters) -Britain’s slipped on Friday, as stronger-than-expected U.S. jobs data pushed up the dollar and yields, sparking a sell-off in commodity stocks.
Most airline stocks rose, however, after Wizz Air (LON:) reported a jump in January traffic.
The blue-chip FTSE 100 ended 0.1% lower, while the mid-cap added 0.2%. Both indexes logged weekly declines.
Bets of early rate cuts are under check after U.S. jobs growth accelerated in January and wages increased by the most in nearly two years. This comes after the Federal Reserve already on Wednesday shot down market expectations of early interest rate cuts.
“In the short term there’s going to be a little bit of a digestion phase because the market had been expecting the Fed to cut sooner, but in the medium term it could still be a good thing because generally a resilient labour market, strong economy is good for stock prices,” said Kevin Gordon, senior investment strategist at Charles Schwab (NYSE:).
Investors also trimmed bets on the extent of interest rate cuts from the Bank of England after the central bank’s Chief Economist Huw Pill said the right time for a rate cut is “still some way off”.
Yields on the benchmark 10-year UK government bond rose, tracking moves in U.S. Treasuries as investors moved away from higher risk assets. also jumped against all major currencies.
Precious metal miners dropped 3.2% leading sectoral declines, while industrial metal miners lost 1.7%, as prices of most metals dropped following a stronger dollar and rise in yields.
Oil and gas shares also fell 1.4% due to lower crude prices.
The index was also impacted by a 1.5% sell-off in BP (LON:) shares after the energy company shut down the Whiting, Indiana refinery of hydrocarbons.
Among individual stocks, Wizz Air rallied 10.3% to the top of FTSE 250 after the carrier reported a 14.2% increase in passenger traffic in January. Shares in EasyJet added 2.9% and British Airways-owner IAG (LON:) climbed 0.9% in sentiment.
Sainsbury and Tesco (LON:) gained 3.0% and 2.8%, respectively, after Morgan Stanley (NYSE:) upgraded the UK grocers.
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