The FTSE 100 was lower heading into the weekend after the US jobs report missed expectations, almost confirming a rate cut by the Federal Reserve later this month.

One thing is certain: the US economy is slowing. But the slowdown is showing signs of a soft landing—just what equity markets want. However, the 1.4% drop in the S&P 500 today and 0.8% decline in the FTSE 100 indicate that investors are concerned about the growth outlook.

The reduction of borrowing costs later this month is likely to provide the support the economy needs to avoid a recession. It’s very unlikely we will see mass job losses that could harm company earnings materially. Yet, a slowing economy will not be favourable for company outlooks in the next round of earning season.

“All eyes are on the US this afternoon, where August data for non-farm payrolls has revealed 142,000 new jobs were added last month. Unemployment dropped, however, from 4.3% to 4.2%,” said Emma Wall, head of investment analysis and research, Hargreaves Lansdown.

“This mixed data has had a mixed reaction from markets. Bond market yields dropped slightly in anticipation of a potential rate cut from the Federal Reserve, who may see this data as a sign of economic weakness.”

One would expect heightened volatility throughout the rest of the US session, and many will fear the selling will spill into Monday’s European open.

When futures open on Sunday evening, traders will be watching closely for any signs of the sell-off that rocked the equity market globally at the beginning of August.

Most FTSE 100 components were in the red on Friday, although there was some strength in defensive sectors. Airtel Africa, bounced after heavy selling yesterday and was the top riser with a gain of 1.3%.

After topping the FTSE 100 leaderboard yesterday, homebuilder Vistry dropped 5% on Friday to the bottom of the leaderboard, despite JP Morgan raising their price target for the stock.

Berkeley Group shares dipped slightly on Friday after the housebuilding firm said trading had been stable in the first four months of the year.

Berkeley shares were down 0.4% at the time of writing, although the drop was more a result of a drop in the wider market than major disappointment with Berkeley’s update.

After Barratts released a dismal update earlier in the week, a reaffirmation of full-year £525 million pre-tax profit guidance by Berkeley will be music to the ears of investors.

“There wasn’t any news to shake foundations as Berkeley released a short trading update ahead of its Annual General Meeting later today. Business has been stable over the first four months of the year,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“And given that 90% of the planned sales this year are already locked in, management reiterated its full-year pre-tax profit guidance of £525mn, which would mark a decline of around 5% on the prior year. Performance is expected to be weighted to the first half, which should help fund the £229mn of shareholder returns the group has planned in the period.”

Like many in the construction industry, Berkeley said they welcomed the proposed changes to the planning system and Labour’s plans to build 1.5 million homes.

The FTSE 100 was relatively steady on Thursday as investors braced for tomorrow’s Non-Farm Payrolls and potential heightened volatility in equity markets.

Without sounding like a broken record, as we’ve mentioned this a couple of times already this week, tomorrow’s Non-Farm Payrolls hold the keys to the direction of stock markets in the coming weeks as investors react to the leading economic indictor for the world’s largest economy.

Thursday’s trade was relatively benign compared to the start of the week, as investors are likely to have completed all of their positioning ahead of tomorrow’s release.

Ahead of tomorrow’s data, a softer job openings report created a sombre mood in the US overnight. This translated into a range-bound FTSE 100, which was down 10 points at the time of writing on Thursday.

“The US Labor report failed to quell fears about the direction of the world’s largest economy. Job openings fell more than expected to 7.67mn, although hires rose 0.2% month on month to 273,000,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“All eyes now turn to Friday’s pivotal non-farm payrolls count which is expected to show an increase of 161,000 and a small fall in the unemployment rate to 4.2%. Markets are still pricing in a 0.25% rate cut this month, but only just, with the odds of a 0.5% cut now shortening further.”

Nathan continued to explain the star of the AI rally, Nvidia, had a poor session overnight amid concerns about an antitrust investigation. This is important because if Nvidia falls, its very likely broad global equity indices will also fall, such is the fixation with the company currently.

“The recent flagbearer for US markets NVIDIA took a further fall as rumours emerged that it had been subpoenaed by the Justice Department in an antitrust investigation,” Nathan said.

“The chipmaker at the forefront of the AI boom has however since denied these claims. Rival Advanced Micro Devices saw its shares close up 3% on the day.”

Vistry

Vistry was the FTSE 100’s top gainer, up 4%, after releasing surprisingly good results for the first half of the year.

“Vistry looks to be bucking the trend of a housing market slowdown,” said Aarin Chiekrie, equity analyst, Hargreaves Lansdown.

“Its transformation into a Partnerships giant, which specialises in providing affordable housing, has helped it outperform the more traditional housebuilders of late. This strategy of delivering high volumes of affordable housing is well aligned with the new government’s ambitions to address the country’s housing shortage. New home completions landed at just under 8,000 in the first half, giving Vistry the confidence to reiterate its full-year guidance of over 18,000 new homes.”

AB Foods

Primark-owner AB Foods struggled on Thursday, as the retailer reported soft sales growth over the summer due to the weather.

“Primark has had a good run but it is not immune to the vagaries of the British weather and owner Associated British Food’s year-end trading update reveals the retail chain has been hit by the soggy summer,” said Russ Mould, investment director at AJ Bell.

“Blaming poor performance on the weather may not be the greatest look but it is understandable that it will have had an impact on Primark given its reliance on footfall to generate sales in the absence of an online offering, beyond click and collect.

“The operation is at least benefiting from lower costs in some areas which are helping to increase margins, although in certain areas like wages and investment in technology, outlays have gone up.”

AB Foods shares were down 5% at the time of writing.