US jobs data sparks Wall Street sell-off while pound slump continues

A sell-off on Wall Street has followed fresh US jobs figures, while the pound continued to slump as a downbeat mood prevailed in UK markets on Friday.

Global stock markets were in the red on Friday as investors reacted to stronger-than-expected labour market data from the world’s largest economy.

The FTSE 100 fell 71.2 points, or 0.86%, to close at 8,248.49.

The number of jobs added by US employers in December soared past the expectations of analysts, according to official figures, which pointed to a strengthening labour market.

Richard Flax, chief investment officer at Moneyfarm, said: “The unexpectedly strong data from the US labour market in December, showing payrolls surging by 256,000 against a forecast of 164,000, has deepened a global bond sell-off and raised concerns about persistent inflationary pressures in the US.

“The robust jobs data fuelled a rally in the US dollar, pushing borrowing costs higher and sending the pound to a 13-month low.

“With the Federal Reserve less likely to ease interest rates significantly in 2025, markets are recalibrating expectations, reflecting fears that a sustained tight monetary policy could become the norm as inflation risks linger.”

On Wall Street, the S&P 500 had dropped about 1.7%, and the Dow Jones was down 1.6% by the time European markets closed.

The downbeat mood was also felt in markets across Europe. In Paris, the Cac 40 closed 0.79% lower, and in Frankfurt, the Dax was down 0.5%.

Meanwhile, turbulence in the UK bonds market continued on Friday with the yield on long-term gilts nearing the peak of Thursday’s sell-off.

The pound continued to slump in value, falling to a new 13-month low against the US dollar on Friday. By the time European markets closed, it was down about 0.7% , at 1.222.

Sterling was also down about 0.2% against the euro at 1.193.

In oil markets, the price of Brent crude oil soared by 3%, to about 79 US dollars per barrel, after Centrica said UK gas stores had fallen to “concerningly low” levels.

In company news, shares in Sainsbury’s faltered despite the supermarket reporting its “biggest ever” Christmas, with sales rising over the latest quarter, driven by strong momentum in its grocery business.

Sainsbury’s said it was on track to meet its profit guidance for the year, with  retail underlying operating profits likely to be towards the middle of its £1.01 billion to £1.06 billion range.

Aim-listed pharmaceuticals firm Alliance Pharma said it had agreed to a £350 million takeover by DBAY Advisors, its biggest shareholder.

DBAY Advisors, an investment firm based in the Isle of Man, already holds a 27.9% stake in the pharma company. Shares in Alliance Pharma surged 37.8% on Friday after the news.

The biggest risers on the FTSE 100 were Intercontinental Hotels Group, up 137p to 10,025p, Standard Chartered, up 11p to 1,025p, IAG, up 3.1p to 315.9p, Scottish Mortgage Investment Trust, up 8.6p to 996.8p, and Centrica, up 1.1p to 133.75p.

The biggest fallers on the FTSE 100 were Schroders, down 13.8p to 303.8p, Sainsbury’s, down 11.2p to 252p, Diageo, down 108.5p to 2,446.5p, Beazley, down 34.5p to 780.5p, and Entain, down 24.6p to 624.2p.