Stock markets were on the up early Friday, with a recent US producer price index print lifting hope that the end of the Federal Reserve’s hiking cycle is nearing.
Focus later on Friday will be on banking sector earnings, with JPMorgan Chase among those reporting.
The FTSE 100 index opened up 18.70 points, 0.2% at 7,862.08. The FTSE 250 was up 145.77 points, 0.8% at 19,215.90, and the AIM All-Share was up 3.91 points, 0.5%, at 828.71.
The midcap FTSE 250 index was outperforming, thanks to Dechra Pharmaceuticals, with the stock rising nearly 40% on a takeover offer late Thursday.
The Cboe UK 100 was up 0.2% at 786.07, the Cboe UK 250 was up 0.9% at 16,787.28, and the Cboe Small Companies was up 0.2% at 13,242.21.
In European equities, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was 0.3%.
In the US on Thursday, Wall Street rallied, with the Dow Jones Industrial Average ending up 1.1%, the S&P 500 up 1.3% and the Nasdaq Composite up 2.0%.
Sentiment was buoyed by a cooler-than-expected wholesale inflation print.
According to the Department of Labor, producer price inflation eased to 2.7% year-on-year in March, from 4.9% in February, short of the FXStreet cited consensus of 3.4%. February’s figure was upwardly revised from 4.5%.
This caused some to hope the Federal Reserve may be nearing the end of its rate hiking cycle, with some even predicting rate cuts on the horizon later this year.
The dollar was mixed against major currencies, as the pound climbed higher above $1.25, and the euro consolidated gains above $1.10.
Sterling was quoted at $1.2528 early Friday, higher than $1.2519 at the London equities close on Thursday. The euro traded at $1.1063 early Friday, higher than $1.1053 late Thursday. Against the yen, the dollar was quoted at JP¥132.58, up versus JP¥132.41.
Later in the day, investors will hear from US banks, as Wells Fargo, JPMorgan and Citigroup report their quarterly earnings, along with asset manager BlackRock.
Trading was upbeat in Asia on Friday, the Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite added 0.6%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed up 0.5%.
Brent oil stayed above the $86 mark, trading at $86.25 a barrel, down a touch from $87.01 late Thursday. This followed the Organization of the Petroleum Exporting Countries warning of a ‘significant’ shortfall of some 2 million barrels per day by the end of the year.
This will be a result of the production cut from major producers.
Gold was quoted at $2,040.26 an ounce early Friday, little changed from $2,040.03 on Thursday.
In the FTSE 100, National Grid fell 1.2%, as it new UK tax measures for capital expenditure will weigh on earnings per share growth over the next few years.
The electricity infrastructure company said its annual performance was in line with its expectations. It continues to expect underlying earnings per share growth in the middle of its 6% to 8% compound annual growth rate. However, it warned that from financial 2024 to 2026, the UK government’s introduction of ’full expensing’ tax relief for capital expenditure will impact underlying EPS.
It now expects underlying EPS growth between financial 2022 to 2026 to be at the ‘lower end’ of its 6-8% CAGR range.
In the FTSE 250, Dechra Pharmaceuticals surged 38% to 3,830 pence.
Late Thursday, the veterinary pharmaceutical company confirmed that it has entered into discussions with private equity firm EQT for a possible cash takeover offer.
Under the terms of the possible offer, Dechra shareholders would receive 4,070 pence per ordinary share in cash. The offer price is a 49% premium to Thursday’s closing price.
‘There can be no certainty that any firm offer will be made for Dechra,’ the company said.
Dr Martens fell 1.1% as it warned it will miss annual guidance slightly, thanks to weaker wholesale trade and costs from its LA distribution centre.
The bootmaker said that in the year to March 31, revenue was up 10%, with revenue in the fourth quarter up 6%. In January, it had guided for annual revenue growth of between 11% and 13%. During the final quarter, the firm noted strong direct-to-consumer trading led by retail growth, though this was partly offset by a weaker wholesale performance.
It now expects annual earnings before interest, tax, depreciation and amortisation of £245 million, below January’s guidance of between £250 million and £260 million.
The miss is a result of higher-than-expected expenses related to solving operation issues at its LA distribution centre. Dr Martens maintains its guidance of mid-to-high single-digit revenue growth on a constant currency basis in financial 2024.
Polling firm YouGov rose 1.7% as it appointed a former Meta Platforms executive as its new chief executive officer.
Steve Hatch, who served as Meta’s vice president for Northern Europe, will join from August 1.
Last October, YouGov announced plans for its Founder & CEO Stephan Shakespeare to leave his role, and become non-executive chair from August 2023. He will replace current Chair Roger Parry.
Still to come in Friday’s economic calendar, US retail sales are at 1330 BST, with US industrial production at 1500 BST.
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