European equities went into Friday afternoon on the up, with measures to support China’s property sector and a forecast-defying final-quarter for luxury goods juggernaut LVMH lifting the mood.
Focus in the afternoon will be on the Federal Reserve’s favoured US inflation gauge. A cooler than expected reading could swing the pendulum back in favour of a March rate cut.
The FTSE 100 index was up 92.54 points, 1.2%, at 7,622.27. It is up over 2% so far this week.
‘The FTSE 100 is still down year-to-date, but it is doing its best to play catch-up,’ AJ Bell analyst Russ Mould commented.
The FTSE 250 was up 38.30 points, 0.2%, at 19,261.40 and the AIM All-Share was up 1.23 points, 0.2%, at 749.33.
The Cboe UK 100 was up 1.2% at 761.48, the Cboe UK 250 was up 0.3% at 16,711.86, and the Cboe Small Companies was up 0.6% at 15,003.04.
In European equities on Friday, the CAC 40 in Paris was up 2.2%, supported by luxury retail, while the DAX 40 in Frankfurt was up 0.3%.
Stocks in New York are called to open lower on Friday, though it has been a decent week for equities on Wall Street. The Dow Jones Industrial Average is called down 0.1%, the S&P 500 0.2% lower and the Nasdaq Composite down 0.6%.
So far this week, the Dow has added 0.5%, the S&P 500 has risen 1.1% and the Nasdaq up 1.3%. Decent earnings have given US markets a boost.
AJ Bell’s Mould added: ‘While there have been a few exceptions including Intel, and Tesla’s warning certainly created a headwind, investors still seem optimistic overall. That positivity fed through to a decent showing from Europe on Friday.’
The next event for equities to negotiate is the afternoon’s core personal consumption expenditures reading at 1330 GMT.
The annual core PCE reading is expected to have eased to 3% in December, according to FXStreet cited consensus, from 3.2% in November.
Data on Thursday had showed US economic growth was markedly stronger than expected at the end of last year, suggesting the world’s largest economy was coping well with historically high interest rates.
The data, coupled with a cooler PCE reading for December, would suggest that the US economy could be on track for a ’soft landing’ - where inflation is brought back down to target, without causing economic hurt.
In the UK, consumer confidence reached its highest level in two years, according to a long-running survey.
GfK’s consumer confidence index rose by three points to minus 19 this month – its best headline score since January 2022.
The sterling was quoted at $1.2739 on Friday at midday, higher than $1.2695 on Thursday at the London equities close. The euro traded at $1.0871 higher than $1.0835. Against the yen, the dollar was quoted at JP¥147.71, up slightly versus JP¥147.66.
China will offer more bailout loans for its struggling real-estate sector with the first funds expected to become available in the coming days, its housing ministry said, in the latest move to help kickstart stuttering growth.
Troubles in the property industry have been one of the main headwinds facing the world’s second-largest economy, with a government clampdown on excessive borrowing in 2020 leaving several developers grappling with massive debt and flagging demand.
The measures helped support the mining sector, with Anglo American among the best of the lot, up 1.8% in London. China is a major buyer of minerals.
Vodafone rose 1.4%, though the UK competition watchdog said it was launching a phase one investigation looking into the merger of Three UK and Vodafone’s UK business.
The UK Competition & Markets Authority said it will be looking at whether the proposed deal could damage competition for consumers and businesses.
Burberry rose 2.9% in a positive read-across from LVMH Moet Hennessey Louis Vuitton, which jumped 12% in Paris.
The Paris-based luxury goods company reported an acceleration in fourth quarter sales as it exited a problematic year in a brighter mood. Organic sales grew 10% to €23.95 billion in the quarter ending December 31, improving from organic growth of 9% in the previous quarter.
Back in London, oil majors were on the up, tracking Brent higher. Shell and BP each rose 1.8%.
Brent oil fetched $81.45 a barrel on Friday at midday, higher than $81.37 late Thursday, rising in response to strong US economic data, and potential of supply disruption amid escalations in the Red Sea.
In the FTSE 250, WH Smith lost 2.3%, despite reporting a ‘strong’ start to its financial year, ahead of its annual general meeting.
Total sales in the first 20 weeks to January 20 rose 8% year-on-year, climbing 13% in the Travel arm alone. Its High Street offering was less robust, with sales in that division declining 4% on a year earlier. The firm ends its financial year in August.
On a like-for-like basis, sales were up 5%, driven by a 10% jump in Travel, partly offset by a 3% fall in High Street.
Elsewhere in London, Wickes rose 6.4%, after the building supplies retailer said adjusted profit for 2023 will be at the top end of market expectations, despite a slight slip in like-for-like sales.
Adjusted pretax profit in the 52 weeks that ended December 30 is expected to be at the upper end of the market consensus range, which it put at £44.9 million to £48.3 million. This will be down from £75.4 million in 2022. Like-for-like sales were down 0.3% in 2023 from 2022, Wickes says, but Wickes said it exercised strong cost and stock control.
Gold was quoted at $2,023.31 an ounce on Friday at midday, higher than $2,015.06 on Thursday.
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