FTSE 100 profit-taking pulled London’s leading index down 0.33% on Friday, with US cash markets closed for the Independence Day holiday removing the transatlantic cues that drove Thursday’s strong session.
The index had opened higher before gains faded and turned to losses. Thursday’s advance had pushed the FTSE 100 to its highest level since April, leaving it exposed to some light selling once the momentum stalled.
US Jobs Data Set the Stage
The prior session’s rally was driven by the June 2024 US labour market report. The Bureau of Labor Statistics reported that nonfarm payrolls rose by 206,000 in June, broadly in line with the prior 12-month average of 220,000 and ahead of the Dow Jones forecast of 200,000, according to CNBC.
The May figure was revised sharply lower, to 218,000 from an initial estimate of 272,000. The unemployment rate climbed unexpectedly to 4.1%, its highest since October 2021. Average hourly earnings rose 0.3% on the month and 3.9% year-on-year, both in line with expectations.
Dan Coatsworth, head of markets at AJ Bell, said the figures pointed to a softer labour market and raised hopes the Federal Reserve would hold rates. ‘Yesterday’s US jobs data pointed to a softer labour market which has raised hopes that the Fed won’t put up interest rates,’ he said.
Coatsworth added that the shift in rate expectations dragged US Treasury yields lower, reducing the relative appeal of fixed income and prompting some investors to add back gold exposure. ‘The shift in rate expectations led to a drop in US Treasury yields, meaning the opportunity on fixed income was slightly diminished and thereby dampening one of the drivers that’s taken money away from gold this year. Investors might have seen this market shift and decided it was time to add back some more gold,’ he said.
FTSE 100 Profit-Taking Concentrated in Consumer Names
Consumers-facing stocks were the main drag on Friday. InterContinental Hotels Group was the index’s worst performer, falling 2.3%. Tesco, Diageo, Unilever and Games Workshop also closed lower.
Financials bucked the trend. ICG, Aberdeen and Lion Finance all featured among the session’s top risers.
The standout mover was St James’s Place (STJ), which led the FTSE 100 after UBS raised its price target on the stock to 1,530p from 1,520p, according to Yahoo Finance. The revised target implies around 20% upside from the then-current price of approximately 1,277p.
UBS forecasts gross inflows of £5.45 billion and net inflows of £1.45 billion for the quarter, running 7% and 17% below consensus respectively. The bank sees the stock trading at roughly 11 times its 2027 cash earnings forecast, a discount to peers Quilter and AJ Bell, which trade in a range of 14 to 18 times on the same basis.
Friday’s session leaves the FTSE 100 consolidating below its recent high. With US markets reopening on Monday, the direction of Wall Street after the long weekend will be the immediate test of whether Thursday’s rate-driven bid holds.
