Stocks in London closed in the green on Friday, as Chinese stimulus measures continued to give equities a boost.
The FTSE 100 index ended up 35.85 points, 0.4%, at 8,320.76. The FTSE 250 closed up 230.12 points, 1.1%, at 21,240.56, and the AIM All-Share added 4.00 points, 0.5%, at 745.65.
For the week, the FTSE 100 rose 1.1%, the FTSE 250 added 2.0%. The AIM was unmoved from this time last week.
The Cboe UK 100 ended 0.4% higher at 832.81 on Friday. The Cboe UK 250 added 0.9% to 18,690.63, and the Cboe Small Companies rose 0.8% to 16,949.70.
In European equities on Friday, the CAC 40 in Paris added 0.6%, while the DAX 40 in Frankfurt ended up 1.2%.
‘China announced a mix bag of monetary and fiscal measures this week to prop up its economy and bring investors back to its shattered markets. This explosive cocktail of monetary and fiscal measures was what investors were demanding since years. And the satisfaction is clear – at least in the short run,’ Swissquote analyst Ipek Ozkardeskaya commented.
‘Could this euphoria last? Maybe. The structural and balance sheet challenges, heavy local debt burden, the ageing population, deflation and loss of confidence are hard to reverse. Enthusiasm could fade rapidly if the economy doesn’t react.’
China on Friday cut the amount banks must hold in reserve, releasing an estimated $142.6 billion in liquidity into the financial market. This added to monetary policy measures the People’s Bank of China unveiled this week.
The move by the People’s Bank of China comes a day after President Xi Jinping and other top officials admitted to ‘new problems’ in the world’s second-largest economy and outlined plans to get it back on track.
Beijing has this week unveiled a raft of measures to boost the economy, which it has targeted to grow five percent this year – an objective analysts say is optimistic given the many headwinds it faces.
Also Friday, the bank cut the seven-day reverse repo rate – the short-term interest paid by the central bank on loans from commercial lenders – from 1.7% to 1.5%.
The pound was quoted at $1.3399 at the time of the London equities close, lower compared to $1.3412 on Thursday. The euro stood at $1.1166, down against $1.1179. Against the yen, the dollar was trading at JP¥142.81, down compared to JP¥144.69.
The US core personal consumption expenditures index accelerated to a 2.7% annual increase in August from 2.6% in July. This was in line with FXStreet-cited market consensus.
On a monthly basis, core PCE inflation ticked down to 0.1% in August from 0.2% in July. The FXStreet-cited consensus had expected it to remain unchanged at 0.2%, however.
The core reading is the Federal Reserve’s preferred inflation gauge.
The headline PCE reading showed the pace of annual inflation eased to 2.2% in August, from 2.5% in July, and shy of the FXStreet cited consensus of 2.3%.
Next week, the US labour market moves back into focus.
‘The Federal Reserve’s favoured price measure is on the correct glidepath to 2% annual inflation. This allows officials to focus more on the growth and jobs backdrop. With income growth looking tepid and households noticing a downshift in the jobs market, pricing for substantial Fed policy easing looks set to persist,’ ING analysts commented.
In London, Burberry rose 7.0%, among the best mid-cap performers, rounding off a strong week for the luxury retail sector which has been boosted by the measures in China.
Over in Milan, Moncler jumped 11% after larger Paris-listed luxury goods peer LVMH agreed a deal to buy into the Stone Island owner.
LVMH has purchased a 10% stake in Double R, Remo Ruffini’s investment vehicle, which itself owns 15.8% of Moncler, thereby owning 1.6% of Moncler indirectly. The transaction was revealed late Thursday.
LVMH rose 3.5% in Paris.
Back in London, Rightmove rose 0.5%. Suitor REA Group issued another acquisition proposal to the property portal’s board, urging the company to engage in dialogue and extend the offer deadline.
The Melbourne, Australia-based REA, majority owned by Rupert Murdoch’s News Corp, issued its fourth proposal in an attempt to acquire the Milton-Keynes, England-based Rightmove
It follows offers previously rejected earlier in September that initially valued Rightmove at £5.6 billion before REA upped its offer to £6.1 billion.
The terms of the fourth proposal outline that Rightmove shareholders would receive for each share owned, 346 pence in cash and 0.0417 of a new REA share. This would be supplemented by a 6p per share special dividend meaning the fresh offer values individual Rightmove shares at 781p each, implying a total company value of £6.2 billion.
Elsewhere in London, Ceres Power jumped 27%. The clean energy technology developer said its pretax loss in the first-half of 2024 narrowed to £10.8 million from £26.2 million a year before. Revenue jumped to £28.5 million from £11.7 million.
Ceres backed its outlook. It still expects annual revenue between £50 million and £60 million.
Brent oil was quoted at $71.20 a barrel late on Friday afternoon in London, down from $71.58 late Thursday. Gold fell to $2,653.93 an ounce against $2,669.65 on Thursday.
Monday’s UK corporate calendar has half-year results from gambling software firm Playtech.
The economic calendar has a PMI reading from China overnight, UK gross domestic product data at 0700 BST, before a German inflation reading at 1300.
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