Share prices opened higher in Europe on Friday, following mostly positive trading in the US and Asia on the hint of a solution to the political impasse over the US debt limit.
In London, the FTSE 100 index was up 20.17 points, 0.2%, at 7,762.47. The FTSE 250 was up 17.63 points, 0.1%, at 19,315.88, and the AIM All-Share was up 0.49 of a point at 810.43.
The Cboe UK 100 was up 0.2% at 775.80, the Cboe UK 250 was up 0.1% at 16,868.24, and the Cboe Small Companies was up 0.1% at 13,577.61.
In European equities on Friday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.3%.
Top US Republican Kevin McCarthy said he saw ‘the path’ to a breakthrough in talks to avert a looming debt default – suggesting a vote would be possible as early as next week.
The future path of US interest rates also was back in focus as another member of the US Federal Reserve’s rate-setting committee indicated her support for an additional rate hike next month.
‘We haven’t yet made the progress we need to make, and it’s a long way from here to two percent inflation,’ Dallas Fed President Lorie Logan told a banking conference in Texas.
Logan joins three other members of the Federal Open Market Committee – which currently has just 11 voting members – in indicating that the Fed may need to raise rates again on June 13-14.
The dollar had firmed on Thursday, with investors pricing in an increasing likelihood of another rate rise. It gave back some of its gains in early trade in Europe on Friday.
Sterling was quoted at $1.2419, up from $1.2399 at the London equities close on Thursday. The euro was quoted at $1.0787, up slightly from $1.0764. At the same time on Friday last week, the pound had bought $1.2533, while the euro had bought $1.0928.
In the US on Thursday, Wall Street ended in the green, with the Dow Jones Industrial Average up 0.3%, the S&P 500 up 0.3% and the tech-heavy Nasdaq Composite up 1.5%.
In Asia on Friday, the Nikkei 225 index extended its recent rally, closing up 0.8%, adding 4.1% this week. It is up 20% in 2023 so far.
Japan’s consumer prices rose 3.4% on-year in April, in line with market expectations, government data showed. The figure, which excludes volatile fresh food prices, followed a 3.1% rise recorded in both March and February.
Inflation in Japan is lower than the sky-high price increases seen in the US and elsewhere that have prompted central banks to hike interest rates. Yet it remains higher than the BoJ’s 2% target, which has been surpassed every month since April last year.
Against the yen, the dollar was quoted at JP¥138.11 early Friday in London, edging down from JP¥138.64 late Thursday.
The S&P/ASX 200 in Sydney closed up 0.6%.
In China, the mood was less upbeat. The Shanghai Composite closed down 0.4%, while the Hang Seng index in Hong Kong was down 1.2%.
E-commerce, retailer, and technology firm Alibaba fell 5.4%, after on Thursday posting fourth-quarter revenue that missed market expectations, while annual revenue growth slowed to just 1.8%.
Despite the weaker performance of stock markets in China, London’s mining stocks were topping the FTSE 100. Anglo American rose 1.7%. Rio Tinto and Antofagasta both added 1.0%.
Elsewhere in the large-cap index, Smiths Group rose 1.1%.
Smiths lifted its annual guidance, reporting ‘continued strong growth’ in its third quarter. The engineering firm said that, in the nine months period to April 30, organic revenue growth was 13.4%. This was in keeping with the 13.5% seen over the first half.
Consequently, Smiths raised guidance for its financial year to around 10% organic growth, from ‘at least’ 8% provided previously - which had already been upgraded twice. It kept the guidance of ‘moderate’ improvement in margin.
‘The third quarter performance was driven by both good volume and price growth, with strong demand in most of the group’s end markets. We continue to invest in working capital to ensure we meet this strong customer demand,’ Smiths said.
Burberry extended Thursday’s losses, falling 2.4%. The British fashion house fell 6.4% on Thursday, after publishing its annual results.
In the FTSE 250, drinks company C&C announced a leadership shake-up and said it encountered ‘significant challenges’ in implementing a complex enterprise resource planning system upgrade for the Matthew Clark and Bibendum businesses in Great Britain.
‘The implementation process has taken longer and been significantly more challenging and disruptive than originally envisaged, with a consequent material impact on service and profitability within MCB,’ it warned. It expects a one-off hit of €25 million from the ERP disruption in financial 2024.
C&C CEO David Forde has stepped down with immediate effect, but remains available for a handover period. CFO Patrick McMahon becomes CEO and will retain CFO responsibilities until a replacement is found. Chair Ralph Findlay becomes executive chair.
C&C shares plunged 14% in early trading in London.
Shore Capital put its ’buy’ rating on C&C shares ’under review’.
‘We believe that there is a lot to take in with today’s announcement, not only the continued ERP issues and the CEO departure, but also the difficulties the group has faced over the last year, with profit recovery proving more challenging than anticipated at the start of the year,’ said analyst Greg Johnson.
On AIM, Unbound Group fell 18%
It launched a strategic review, including a formal sales process.
Unbound is the parent company for a retail group selling a range of brands focused on the 55+ demographic, including Hotter Shoes. The review is to explore its strategic options, and could include a full sale of the company.
The company warned that any underperformance against its trading expectations could worsen its cash position, and that a temporary working capital shortfall could arise in September and October this year. It continues to work with its advisers and banking partners to raise additional funds or refinance its current facilities.
Unbound also outlined various operational changes, including a temporary halt to its loss-making direct-to-consumer sales in the US and the EU, which brought in some 11% of revenue in financial 2023.
Gold was quoted at $1,962.27 an ounce early Friday, higher than $1,953.31 on Thursday. Brent oil was trading at $76.48 a barrel, up from $76.23.
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