London close: FTSE ends up, gold rises as Fed rate hike fears ease

(Sharecast News) - London stocks ended up on Friday after the latest US non-farm payrolls tempered US rate cut expectations, but gains were unspectacular as a survey showed the UK private sector shrank again in June, with trade quiet as Wall Street was closed for Independence Day.

The FTSE 100 ended 0.3% higher at 10,679.03, having surged on Thursday after figures from the Bureau of Labor Statistics showed that non-farm payrolls rose 57,000 in June, coming in below expectations for a 110,000 to 115,000 jump and down from 129,000 added in May. Meanwhile, the readings for May and April were revised lower.

Kathleen Brooks, research director at XTB, said: "A sharp slowdown in US payrolls for last month, and a fall in the unemployment rate caused by a drop in the participation rate has caused traders to scale back expectations that rates will rise in the US later this year.

"There is now virtually no chance of a rate hike in July, expectations have fallen from near 40% to 17% on the back of the data, according to the CME's Fedwatch tool. There is now less than 50% chance of a rate hike by December, before payrolls there was a 50% chance of two hikes by the end of the year."

On home shores, a survey showed that activity in the service sector fell in June to the greatest extent for nearly three-and-a-half years. The S&P Global UK services PMI dipped to 48.8 from 49.3 in May, remaining below the 50.0 mark that separates contraction from expansion.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Strong cost pressures, lacklustre demand and business uncertainties arising from the Middle East conflict were the most prominent themes highlighted by service sector firms in June. This led to fragile investment sentiment, elevated risk aversion among clients and squeezed consumer budgets, which in turn contributed to the fastest reduction in new work for just over three-and-a-half years.

"There was better news on the inflation front, as the latest increase in input prices was the slowest since March and well below April's recent peak. This was largely due to lower fuel prices, but there were still many reports of suppliers passing on higher transport, wage and raw material costs in June. "Service sector business optimism improved since May, but remained much softer than at the start of 2026. The marginal uplift in confidence was supported by hopes of a durable US-Iran ceasefire agreement and positivity towards business development plans. However, many firms noted worries about broader UK economic prospects."

UK corporate news was scare, but precious metals miner Fresnillo and gold miner Hochschild both shone as gold and silver prices rose.

Dan Coatsworth, head of markets at AJ Bell, said: "The precious metal had a disappointing time in the first half of the year and recently dipped below $4,000 as investors were tempted away by attractive yields on bonds and lapped up stocks as the AI boom carried on. Gold has today rebounded, trading just below $4,200 per ounce and taking the likes of Fresnillo and other gold miners along for the ride.

"Yesterday's US jobs data pointed to a softer labour market which has raised hopes that the Fed won't put up interest rates. 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."

Close Brothers surged after an upgrade to 'buy' from 'hold' at Shore Capital, which lifted the price target to 495p from 490p as it pointed to favourable risk versus reward.

Johnson Matthey rallied after it received regulatory approval from China for the sale of its Catalyst Technologies business to Honeywell. This was the final approval needed.

Harbour Energy was in focus after founder EIG said it had sold its remaining stake in the oil company via a secondary placing of 54.77 million shares to institutional investors by way of an accelerated bookbuild.

Market Movers

FTSE 100 (UKX) 10,679.03 0.25%

FTSE 250 (MCX) 23,538.80 0.52%

techMARK (TASX) 6,031.50 -0.07%

FTSE 100 - Risers

Weir Group (WEIR) 2,508.00p 2.62%

ICG (ICG) 1,776.00p 2.19%

St James's Place (STJ) 1,303.00p 2.08%

Metlen Energy & Metals (MTLN) 42.74p 2.05%

SSE (SSE) 2,507.00p 1.91%

Abrdn (ABDN) 258.40p 1.89%

Melrose Industries (MRO) 502.80p 1.84%

Airtel Africa (AAF) 343.40p 1.78%

Smiths Group (SMIN) 2,634.00p 1.74%

Lion Finance Group (BGEO) 11,750.00p 1.64%

FTSE 100 - Fallers

Entain (ENT) 528.60p -2.11%

Babcock International Group (BAB) 1,039.00p -1.66%

DCC (CDI) (DCC) 6,090.00p -1.62%

Games Workshop Group (GAW) 21,140.00p -1.58%

Tesco (TSCO) 466.60p -1.48%

Autotrader Group (AUTO) 503.40p -1.45%

Pearson (PSON) 1,226.50p -1.41%

Compass Group 11 (CPG) 32.71p -1.36%

Imperial Brands (IMB) 2,792.00p -1.13%

InterContinental Hotels Group (IHG) 167.55p -1.09%

FTSE 250 - Risers

Close Brothers Group (CBG) 439.80p 7.90%

Johnson Matthey (JMAT) 2,014.00p 4.95%

Bridgepoint Group (Reg S) (BPT) 292.80p 4.35%

RHI Magnesita N.V. (DI) (RHIM) 2,890.00p 4.14%

Kier Group (KIE) 228.60p 4.10%

Balfour Beatty (BBY) 899.00p 3.39%

IntegraFin Holding (IHP) 387.50p 3.33%

Renishaw (RSW) 5,050.00p 2.89%

Baillie Gifford Japan Trust (BGFD) 1,014.00p 2.84%

Ashmore Group (ASHM) 218.40p 2.82%

FTSE 250 - Fallers

Baltic Classifieds Group (BCG) 173.00p -8.42%

Oxford Biomedica (OXB) 619.00p -3.88%

Patria Private Equity Trust (PPET) 618.00p -3.74%

Hansa Investment Company Limited (DI) (HAN) 326.00p -3.55%

The Schiehallion Fund Limited NPV (MNTN) 2.08p -3.50%

PPHE Hotel Group Ltd (PPH) 1,602.00p -3.38%

Bytes Technology Group (BYIT) 397.20p -2.74%

Oxford Nanopore Technologies (ONT) 120.40p -2.67%

Kainos Group (KNOS) 781.00p -2.62%

HGCapital Trust (HGT) 387.50p -2.15%