The FTSE 100 edged into the red on Friday, weighed down by banking stocks, as NatWest shares came under selling pressure following a cut to annual guidance and the bank’s admission of ‘serious failings’ in the handling of Nigel Farage’s Coutts account.
The FTSE 100 index opened down 4.91 points, 0.1%, at 7,349.66. The FTSE 250 was up 17.35 points, 0.1%, at 16,800.44, and the AIM All-Share was up 3.50 points, 0.5%, at 673.34.
The Cboe UK 100 was down 0.2% at 732.51, the Cboe UK 250 was down slightly at 14,518.31, and the Cboe Small Companies was fractionally lower at 12,542.83.
Asian markets managed to shake off a weak close on Wall Street, as investors looked ahead to a key US inflation figure release later.
In Asia on Friday, the Nikkei 225 index in Tokyo closed up 1.3%. In China, the Shanghai Composite closed up 1.0%%, while the Hang Seng index in Hong Kong closed up 2.1%. The S&P/ASX 200 in Sydney closed up 0.2%.
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.8%, the S&P 500 down 1.2% and the Nasdaq Composite down 1.8%.
According to FXStreet, markets are expecting the personal consumption expenditures index in September to rise by 3.4% annually, cooling from a 3.5% hike in August. Month-on-month, the index is expected to cool to 0.3% from a 0.4% rise a month earlier.
‘However, given the gloomy market forecast, it’s uncertain how investors will ultimately react to positive data, but if the print comes in hot, it won’t be pretty,’ Stephen Innes at SPI Asset Management warned.
On Thursday, new data showed that US economic growth picked up markedly in the third quarter, logging the sharpest growth in almost two years.
According to the Bureau of Economic Analysis, quarter-on-quarter gross domestic product in the US grew 4.9% on an annualised basis in the three months to September 30. In the second-quarter, GDP had risen 2.1%.
The latest reading topped a market estimate, with growth of only 4.2% expected in the third-quarter, according to consensus cited by FXStreet.
It was the chunkiest quarter-on-quarter GDP rise since a 7.0% increase in the fourth-quarter of 2021.
In the FTSE 100, NatWest plummeted 17% in early trade. It was by far the worst performer on the index.
NatWest reported that in the third quarter of 2023, total income rose to £3.49 billion from £3.23 billion a year earlier. Operating pretax profit rose to £1.33 billion from £1.09 billion.
The firm cut its margin outlook for the year, however. It now expects a full-year bank net interest margin ‘to be greater than 3%’. It had previously predicted an outcome below 3.20% ‘with a current view of around 3.15%’.
Eyes were also on the Travers Smith review, which oversaw of the controversial closure of Nigel Farage’s Coutts account.
It said the decision to close Farage’s bank account was ‘lawful’. However, it identified a ‘number’ of shortcomings in how the decision was reached, how the bank communicated with Farage and how it treated his confidential information.
Chair Howard Davies said: ‘This report sets out a number of serious failings in the treatment of Mr Farage.’
Competitor banks also traded lower. Lloyds was down 2.7% and Barclays shed 2.0%.
International Consolidated Airlines fell 3.3%
IAG reported that revenue in the third quarter of 2023 rose to €8.65 billion from €7.33 billion a year earlier. Pretax profit climbed 57% to €1.58 billion from €1.01 billion.
Looking ahead, IAG said it expects ‘2023 to be a year of strong recovery’. It added that overall customer bookings for the fourth quarter are as expected.
In the FTSE 250, Digital 9 Infrastructure rose 9.0%, after it said it is assessing a divestment of its entire stake in the Verne Global group of companies.
‘The company received indicative offers from interested parties for the proposed transaction during the competitive process to syndicate a majority stake in Verne Global to a strategic capital partner and executed terms are expected to be announced in Q4 2023,’ Digital 9 said.
Earlier in October, the investor said it would be retaining Goldman Sachs International as a financial adviser to support the development of ‘a set of actions focused on maximising shareholder value’. At the time, it had said the move followed consultation with shareholders after some had given feedback about the company’s dividend policy and ‘future direction’.
On AIM, FireAngel shares surged to 6.28 pence, up from 2.10p.
FireAngel said it has reached an agreement with Intelligent Safety Electronics for its takeover. ISE is a company incorporated in Singapore and wholly-owned by Siterwell Electronics.
ISE currently holds about 17.5% of FireAngel’s issued shares.
Under the terms of the offer, FireAngel shareholders will receive 7.40p per share in cash. This values the company at about £27.7 million.
FireAngel Chair Andrew Blazye said: ‘FireAngel has a longstanding relationship with ISE through Siterwell, initially as a valued manufacturing partner and more recently as a major shareholder, and the Board is confident that it can provide a supportive environment for FireAngel’s long term success.’
In European equities on Friday, the CAC 40 in Paris was down 0.8%, while the DAX 40 in Frankfurt was down 0.1%.
The pound was quoted at $1.2123 early on Friday in London, higher compared to $1.2105 at the equities close on Thursday. The euro stood at $1.0558, up against $1.0527. Against the yen, the dollar was trading at JP¥150.17, lower compared to JP¥150.48.
Brent oil was quoted at $88.30 a barrel early in London on Friday, up from $87.74 late Thursday. Gold was quoted at $1,987.52 an ounce, higher against $1,978.13.
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