The FTSE 100 and European stocks finished mixed as traders digested the messages from the Bank of England and jobs data fuelled higher rate worries in Wall Street.
Across the pond, stocks were in the red after data showed the economy added jobs at a rapid pace last month, feeding into fears that the Federal Reserve could keep interest rates higher for longer in its fight against inflation.
Mike Bell, global market strategist at J.P. Morgan Asset Management, said: “The much stronger than expected job gains took US equity futures lower, this is evidence that the big risk to markets this year is not a recession but a labour market that remains robust.
"This would mean the Fed cannot deliver the rate cuts that the market is pricing in.“Ultimately, we still expect unemployment to rise this year and think that equity markets should deliver positive returns as they look ahead to the Fed cutting rates and potential economic recovery in 2024. But today’s data show the risks of being overweight growth stocks if the labour market remains strong," he added.
Back in London, Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said yesterday’s optimism was specifically on “renewed hope we’ve reached peak inflation, which will cement central banks’ ability to pause interest rate hikes.”
British Gas owner Centrica (CNA.L) was one of the biggest fallers after it was revealed that debt collectors working for the energy provider broke into customers' homes to fit prepayment energy meters.
The industry regulator has asked energy companies to suspend the forced installation of prepayment meters. Ofgem also told suppliers to review the use of court warrants to enter the homes of customers in arrears.
Meanwhile, Brent crude (BZ=F) was trading at around $82/barrel as markets await for signs of China’s demand recovery.
In Asia, Tokyo’s Nikkei 225 (^N225) closed higher, climbing 0.39% to 27,509 points, while the Hang Seng (^HSI) in Hong Kong lost 1.56% to 21,615. The Shanghai Composite (000001.SS) also retreated, losing 0.68% to 3,263 points.
Watch: Stocks open lower following blowout January jobs report