London close: Share price gains capped by disappointing US jobs report

London stocks finished lower as investors on either side of the Atlantic digested what at first glance appeared to be a disappointing US non-farm payrolls report for the month of December.

America's economy generated 145,000 new hires in December (consensus: 160,000) and average hourly earnings rose at a just a 0.1% month-on-month clip (consensus: 0.3%), with wage growth for non-supervisory and production workers at its weakest since October 2017.

Ian Shepherdson at Pantheon Macroeconomics said the trend for job gains was "much better" than what the surveys had been suggesting in late summer and fall and was likely to extend further, with wages likely set to revive over the next few months.

Nonetheless, "wage gains are still too low to prompt meaningful inflation risk, but the Dec number is an outlier [...] we can't see why the Fed would ease if the recent payroll gains are sustained."

"On the face of it, this looks like an inconsequential, uninteresting payroll report. But nothing could be further from the truth [...] the surveys are wrong; labor demand remains strong enough to continue pushing down the unemployment rate."

The FTSE 100 finished the session 10.27 points or 0.14% lower to 7,587.85 and 34.55 points lower for the week.

It was a similar story on the FTSE 250 which ended Friday's session off by 76.40 points or 0.35% to 21,566.67, but over the course of week the second-tier index shed 421.52 points.

Josh Mahony, market analyst at IG, said: "While we have seen a clear shift away from the US-Iran story, todays jobs report has seen the stock market rally hit the buffers.

"However, with a week ahead that will be dominated by Wednesday’s US-China signing ceremony, Trump looks likely to take centre stage once again in a big to bolster market confidence."

On the corporate front, airlines and retailers were in the spotlight.

EasyJet, IAG and Wizz Air all flew higher after Ryanair lifted its full-year profit guidance after a stronger-than-expected Christmas and New Year.

Paper and packaging firm Mondi was weaker after announced that chief executive Peter Oswald would step down and leave the group on March 31.

JD Sports Fashion was in the green as it said full-year profits were set to be in the upper quartile of expectations after positive like for like Christmas sales, especially from its overseas operations.

However, B&M European Value Retail was under the cosh as its third-quarter UK stores like-for-like sales growth came in at 0.3%, missing market expectations for a 2.5% increase. The company attributed the weaker performance to a "challenging" broader retail market and its decision not to engage in any early discounting.

Superdry shares tumbled after it warned that full-year profits could be wiped out after a disappointing performance over the Christmas period. In an update for the 10 weeks to 4 January, the company said that despite a strong Black Friday event, its peak trading performance was lower than expected as its continue its "strategic transition to a full price stance".

Meanwhile, AIM-listed fashion brand Joules was also under the cosh as it issued a profit warning after its Christmas trading performance was hit by stock availability issues. The company said it now expects to report FY20 underlying pre-tax profit "significantly" below market expectations of £16.7m after sales over the Christmas period missed expectations, falling 4.5% against the prior year.

Watches of Switzerland fell sharply after private equity firm Apollo Global Management sold 33m shares in the luxury watch retailer.

In broker note action, Polymetal was boosted by an upgrade to ‘buy’ from ‘hold’ at Berenberg. Diploma, PageGroup and Restaurant Group were knocked lower by downgrades at RBC Capital Markets.

Market Movers

FTSE 100 (UKX) 7,587.85 -0.14%
FTSE 250 (MCX) 21,566.67 -0.35%
techMARK (TASX) 4,189.04 -0.27%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 664.00p 4.63%
easyJet (EZJ) 1,499.00p 4.21%
Polymetal International (POLY) 1,234.00p 2.07%
Just Eat (JE.) 901.00p 1.92%
Coca-Cola HBC AG (CDI) (CCH) 2,661.00p 1.29%
Antofagasta (ANTO) 945.20p 1.13%
Smith & Nephew (SN.) 1,866.00p 1.03%
SSE (SSE) 1,425.00p 1.03%
Anglo American (AAL) 2,165.00p 0.98%
Rio Tinto (RIO) 4,488.00p 0.83%

FTSE 100 - Fallers

Kingfisher (KGF) 209.90p -3.26%
Hargreaves Lansdown (HL.) 1,844.50p -2.56%
Lloyds Banking Group (LLOY) 60.33p -2.46%
Morrison (Wm) Supermarkets (MRW) 187.90p -2.41%
Centrica (CNA) 85.96p -2.01%
Mondi (MNDI) 1,678.00p -1.99%
Sainsbury (J) (SBRY) 220.00p -1.92%
St James's Place (STJ) 1,139.00p -1.60%
Tesco (TSCO) 249.40p -1.54%
Smurfit Kappa Group (SKG) 2,818.00p -1.53%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 469.70p 15.32%
Tullow Oil (TLW) 59.00p 7.66%
Wizz Air Holdings (WIZZ) 4,119.00p 6.77%
Galliford Try (GFRD) 158.40p 4.55%
Hochschild Mining (HOC) 169.70p 4.17%
Convatec Group (CTEC) 212.20p 3.82%
Vivo Energy (VVO) 121.20p 3.41%
Capita (CPI) 167.45p 2.32%
Plus500 Ltd (DI) (PLUS) 910.00p 2.13%
PPHE Hotel Group Ltd (PPH) 1,930.00p 2.11%

FTSE 250 - Fallers

Restaurant Group (RTN) 150.10p -6.89%
B&M European Value Retail S.A. (DI) (BME) 373.00p -6.09%
Sanne Group (SNN) 646.00p -4.86%
Vesuvius (VSVS) 472.00p -4.52%
Watches of Switzerland Group (WOSG) 364.00p -4.16%
Jupiter Fund Management (JUP) 385.90p -3.96%
PureTech Health (PRTC) 277.00p -3.79%
Pets at Home Group (PETS) 265.00p -3.64%
TI Fluid Systems (TIFS) 253.50p -3.62%
Diploma (DPLM) 1,930.00p -3.31%