European stocks lacked direction on Friday morning after US consumer price inflation came in hotter-than-expected, while the pound picked up after the UK economy registered August growth.
The FTSE 100 index traded up just 3.89 points at 8,241.62. The FTSE 250 added 21.78 points, 0.1%, at 20,730.15, and the AIM All-Share down just 0.03 of a point at 734.50.
The Cboe UK 100 was up 0.1% at 825.80, the Cboe UK 250 climbed 0.2% at 18,215.35, and the Cboe Small Companies was up 0.1% at 16,732.78.
In European equities, the CAC 40 in Paris rose 0.2%, while Frankfurt’s DAX 40 each fell 0.1%.
Against the dollar, the pound rose to $1.3065 early Friday, from $1.3052 at the time of the London equities close on Thursday.
According to the Office for National Statistics, UK gross domestic product expanded 0.2% on-month in August. The UK economy had tread water in July from June.
The August growth was in line with the FXStreet cited consensus.
US consumer price inflation decelerated more mildly than expected on-year in September. The rate of year-on-year consumer price inflation cooled to 2.4% in September, from 2.5% in August. A slowdown to 2.3% was expected, however.
The rate of core inflation picked up to 3.3%, from 3.2%.
Comments from US central bankers were in focus after the data.
Bloomberg reported that New York Fed President John Williams said progress in moving inflation downward is ‘steady’ though there will be ‘wiggles and bumps in the data’.
Chicago President Austan Goolsbee told CNBC that the trend in inflation is a downward move, while Richmond Fed chief Thomas Barkin said it was ‘definitely headed in the right direction’.
However, Atlanta Fed President Raphael Bostic stood out, putting a pause on the table for the US central bank should inflation continue to land hotter-than-expected.
‘Curb your Fed easing enthusiasm,’ Brown Brothers Harriman analysts commented. ‘US inflation in September was hotter than anticipated and argues for a cautious Fed easing cycle.’
The US Department of Labor reported that in the week ending October 5, the advance figure for seasonally adjusted initial claims rose to 258,000 from 225,000 the previous week. This is the highest level for initial claims since August 5, 2023 when it was 258,000 and notably higher than the consensus of 230,000.
In New York on Thursday, the Dow Jones Industrial Average fell 0.1%, the S&P 500 lost 0.2%, while the Nasdaq Composite fell 0.1%.
Friday has a US producer price index reading at 1330 BST. Before that, US banks take centre-stage.
Swissquote analyst Ipek Ozkardeskaya commented: ‘JPMorgan and Wells Fargo will open the dance, Citi, Morgan Stanley, Goldman and Bank of America will report next week and provide some insights regarding the overall health of the economy. The US bank stocks have performed well this year, they are the second best performers among the S&P500 sub-sectors this year after technology as the Fed rate cuts got delayed to the Q3 while the economic growth remained resilient.
‘Sure, the saving rates and the delinquencies rates rose, but that didn‘t have a material impact so far... And if all goes well, the lower net interest income due to the upcoming Fed cuts will be compensated by improved economic activity and a faster loan and deposit growth, while a potential delay in Fed cut rates should keep the net interest income intact. As such, the bank investors have reason to believe that their bank stocks could extend their gains in both scenarios. Let’s see if the expectations match the reality on the field.’
In Tokyo on Friday, the Nikkei 225 rose 0.6%, though the S&P/ASX 200 fell 0.2% in Sydney. In China, the Shanghai Composite was down 2.6%. Financial markets in Hong Kong are closed for the Double Ninth Festival.
Attention moves to China over the weekend. China’s finance minister will hold a briefing this weekend focused on fiscal policy, authorities had said Wednesday.
The euro rose to $1.0940 early Friday from $1.0929 at the time of the European equities close Thursday. Against the yen, the dollar rose to JP¥148.78 from JP¥148.47.
Brent oil was quoted at $78.37 a barrel, up from $78.23. Gold climbed to $2,643.92 an ounce from $2,620.84.
In London, BP shares fell 0.5%. It said it expects net debt to be higher at the end of the third quarter, primarily due to less profitable refining activities.
In a trading update, the London-based oil major said weaker refining margins will hit earnings in the customers and products segment by between $400.0 million to $600.0 million compared to the prior quarter, and that the oil trading result is expected to be weak.
Brent prices were weaker over the course of the third quarter, BP noted. The North Sea benchmark averaged $80.34 a barrel in the third-quarter, down from $84.97 in the second.
Net debt will also be increased by the re-phasing of around $1 billion of divestment proceeds into the fourth quarter, the firm said.
Sainsbury’s fell 4.4%. Qatar Investment Authority, an investor in the grocer, will trim its stake. Citing a regulatory filing, Reuters reported QIA will sell 109.4 million shares in Sainsbury’s at 280 pence each. The sum represents roughly 5% of its stake in the company. It had around a 14% holding prior to the stake sale.
Elsewhere in London, Saga surged 9.5%. The provider of services to people aged 50 and over, said it is in talks with Belgian insurer Ageas for a 20-year partnership for motor and home insurance. In addition, a deal could see Ageas acquire Saga’s Insurance Underwriting business, Acromas.
Saga said in the partnership, dubbed Affinity, Ageas would pay £80 million upfront and potentially £30 million in a contingent consideration in 2026, and up to £32 million in 2032. The additional considerations will be subject to policy volume and profit targets.
To acquire Acromas, Ageas would pay a total of £67.5 million, meanwhile, Saga added.
Separately, Saga said its pretax loss in the half-year to July 31 stretched to £104.0 million from £77.8 million. Its bottom line was hurt by a £138.3 million impairment in Insurance Broking goodwill. Revenue rose 13% on-year to £404.8 million from £358.1 million.
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