European equities ended higher on Friday, with the FTSE 100 extended its win streak to five days, as stocks undone some of the damage from banking sector sell-offs earlier in March.
The mood on Friday was lifted by inflation in the eurozone easing in March and the Federal Reserve’s preferred inflationary gauge ebbing last month.
The FTSE 100 index rose 11.31 points, 0.2%, to 7,631.74 on Friday, rising 3.1% this week.
It has lost 3.1% over the course of March, however. The month started fairly quietly, though the collapse of tech sector lender Silicon Valley Bank led to fears of a global banking crisis. A buyout of Credit Suisse by compatriot UBS, and pressure on Deutsche Bank, transferred the focus of concern to Europe.
For the whole of the first quarter, the FTSE 100 added 2.4%.
The FTSE 250 edged up 20.56 points, 0.1%, to 18,928.30 on Friday. The AIM All-Share added 3.42 points, 0.4%, to 809.26.
For the week, the FTSE 250 added 2.4% and the AIM All-Share rose 1.1%.
The Cboe UK 100 ended 0.2% higher at 763.80, and the Cboe UK 250 closed up 0.3% at 16,547.97. The Cboe Small Companies, however, ended down 0.3% at 13,230.87.
In European equities on Friday, the CAC 40 in Paris closed up 0.8%, while the DAX 40 in Frankfurt rose 0.7%.
‘Markets are certainly not dwelling on the banking sector troubles, based on the green numbers seen on global bourses of late. While the likes of SVB, Credit Suisse and Deutsche Bank dominated the headlines in recent weeks, the absence of any other big names popping up with credit troubles lately has sedated financial markets which now seem to be relishing the prospect of the Fed pausing on interest rate hikes. So, with the absence of ’bad news’ on the banking front, markets have been happy to march higher of late,’ Kohle Capital Markets analyst Tim Waterer commented.
In New York, the Dow Jones Industrial Average was up 0.7% at the time of the closing bell in London. The S&P 500 climbed 0.8%, while the Nasdaq Composite surged 1.0%.
The US core personal consumption expenditures index grew 4.6% on-year in February, slowing from a 4.7% rise in January. The advance fell short of FXStreet cited consensus which had pencilled in another 4.7% hike.
Core PCE is the Fed’s preferred inflationary gauge.
The wider headline PCE index grew 5.0% in February, slowing from 5.3% in January. January’s outcome was downwardly revised from 5.4%.
An advance of 5.3% was also expected for February, according to consensus cited by FXStreet.
Eyes on Friday were also on eurozone inflation data. The single currency area’s annual inflation rate eased to 6.9% in March from 8.5% in February. The figure was shy of the FXStreet-cited consensus of 7.1%.
The core inflation rate - which excludes energy, food, alcohol and tobacco - quickened, however. Coming in at 5.7% in March, it picked up speed from 5.6% in February. This was an outcome that met market consensus.
The euro traded at $1.0863 late Friday in London, down from $1.0900 late Thursday. The pound traded at $1.2370, flat from $1.2371. Against the yen, the dollar was quoted at JP¥132.90, up versus JP¥132.69.
Final figures confirmed the UK economy registered marginal growth in the final quarter of 2022.
According to an estimate from the Office for National Statistics, gross domestic product in the fourth quarter grew 0.1% from the third quarter, which was upwardly revised from an initially reported estimate of no growth.
This follows a contraction of 0.1% seen in the third quarter, which was revised from a 0.2% decline. This means the UK averted a technical recession, which is defined as two consecutive quarters of negative growth.
In London, insurer Beazley and education publisher Pearson ended among the best FTSE 100 performers on broker upgrades.
Exane BNP raised Pearson to ’outperform’, pushing the stock up 3.5%. Beazley added 2.7% after UBS double-upgraded it to ’buy’ from ’sell’.
NCC plunged 34%, the worst mid-cap performer. The cybersecurity firm lowered its adjusted operating profit to a range of £28 million to £32 million, having previously expected £47 million.
It warned buying decision delays and cancellations were being exacerbated by tech sector layoffs. Recent turmoil in the banking sector also has hit market confidence, resulting in a ‘reduced appetite’ for spending on technology, NCC said.
‘The share price has been anticipating weakness, but given the magnitude of the shortfall, the shares are likely to remain under pressure,’ analysts at Jefferies said.
Elsewhere in London, AIM-listed rare earth explorer Pensana plunged 43%. It warned it will need ‘additional immediate term funding’ to settle amounts due to suppliers. It will also need ‘further subsequent additional funding’ to meet planned expenditure commitments.
The company posted interim results, which showed its pretax loss in the half-year to December 31 widened to $4.2 million, from $4.1 million a year earlier. It is in pre-production phase, so is not yet generating revenue from its operations.
On the up on London’s junior market, Jersey Oil & Gas said it is in ‘advanced’ exclusive discussions with an unnamed ‘significant’ UK North Sea operator as part of the Greater Buchan area farm-out process.
The company has agreed heads of terms with the unnamed ‘well-funded industry heavyweight’.
Jersey Oil & Gas Chief Executive Andrew Benitz said: ‘Whilst there can be no guarantees of a successful conclusion, we are aiming to finalise the farm-out in the near future and look forward to updating shareholders shortly.’
Jersey Oil & Gas shares jumped 57%.
Gold was quoted at $1,979.05 an ounce late Friday afternoon, higher than $1,972.45 on Thursday. Brent oil was trading at $79.14 a barrel, up from $78.48.
Monday’s economic calendar has a slew of manufacturing purchasing managers’ index readings, including the eurozone at 0900 BST, the UK at 0930 BST and the US and 1445 BST.
The week picks up pace with a Reserve Bank of Australia interest rate decision on Tuesday, services PMI readings on Wednesday, and the US jobs report on Friday. Financial markets in New York, London, Paris and Frankfurt are closed on Friday, however.
Monday’s local corporate diary has half-year results from traffic and transportation data services firm Tracsis and a trading statement from engineering services Renew Holdings.
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