Published by Global Banking and Finance Review
Posted on February 7, 2025
(Reuters) - UK stocks were lower on Friday, with the FTSE 100 easing from a record high, as tariff uncertainty added to investor nerves after data showed weaker-than-expected U.S. jobs growth.
The FTSE 100 lost 0.3%, while the mid-cap FTSE 250 slipped 0.8% and was set to end the week marginally higher.
The FTSE 100 was set to end the week 0.6% higher and closed at a record high on Thursday, lifted by upbeat corporate earnings and hopes for further rate cuts from the Bank of England after the central bank cut rates by 25 basis points.
However, highlighting the challenges faced by the UK economy, policymakers halved their 2025 economic growth outlook while flagging that inflation would be nearly double the bank's 2% target this year.
BoE Chief Economist Huw Pill said that recent strong pay growth was a reason for "caution" towards future interest rate cuts.
"Forecasts were hawkish – embedding, we think, a fair degree of inflation persistence, the messaging was dovish – centering on downside risks to growth and reaffirming that the MPC will look through the near-term spike in inflation," Morgan Stanley analysts wrote.
"We see a further cut in May and Bank Rate at 3.5% by year-end."
Meanwhile, Wall Street's indexes dropped after data showed the U.S. economy generated fewer jobs than expected in January, while a Reuters report stating that President Donald Trump might impose reciprocal tariffs added to worries.
An index of homebuilder stocks led sectoral declines, down 3.1%. Data from mortgage lender Halifax showed British house prices rose by more than expected last month as some buyers rushed to complete sales before an increase in property purchase taxes at the start of April.
Shares of Legal & General gained 1.2% after the insurer sold its U.S. protection business to Japan's Meiji Yasuda for $2.3 billion in cash. The Japanese firm will also take a 5% stake in L&G.
Precious metal miners gained 0.7% on the day and were on pace for weekly gains of nearly 6%, the best week since October, as gold prices hovered at record highs.
(Reporting by Lisa Mattackal and Medha Singh in Bengaluru; Editing by Tasim Zahid and Sharon Singleton)
