Stock prices in London were in the green on Friday morning, as UK hiring activity decreased in August, suggesting that the Bank of England’s interest rate increases are working.
The FTSE 100 index opened up 5.73 points, 0.1%, at 7,447.45. The FTSE 250 was up 54.54 points, 0.3%, at 18,438.39, and the AIM All-Share was up 0.07 of a point at 735.75.
The Cboe UK 100 was up 0.1% at 741.56, the Cboe UK 250 was up 0.3% at 16,061.43, and the Cboe Small Companies was up 0.2% at 13,536.23.
The pound has slumped in the past few days, as investors anticipate that the Bank of England is close to the end of its rate hiking cycle, amid dovish rhetoric from the central bank and recent weak economic data.
The pound was quoted at $1.2488 early on Friday in London, lower compared to $1.2493 at the equities close on Thursday.
On Friday, there was some new evidence that showed that interest rates were doing their job. Figures showed that the UK jobs market slowed sharply in August as the weaker economic outlook depressed recruitment activity.
The KPMG and REC UK report on jobs showed permanent hires fell at the sharpest pace in three years, while temp billings contracted for the first time since July 2020.
In European equities on Friday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.4%.
Consumer price inflation in Germany cooled a bit in August, in line with preliminary data, the Federal Statistics Office confirmed on Friday.
On an annual basis, the consumer price index rose 6.1% in August, cooling slightly from a 6.2% rise in July. This matched the FSO’s first estimate.
Core inflation - which excludes items such as food and energy - was 5.5% in August on an annual basis, unchanged from the month prior and in line with preliminary data.
Ruth Brand, president of the Federal Statistical Office, said: ‘The increases in energy and food prices exceed overall inflation and keep the inflation rate high. The base effect stemming from last year’s 9-euro ticket was also apparent in August, when it drove inflation up and reduced the dampening effect of the Germany ticket on prices. This base effect will cease to apply from the next month onwards.’
The euro stood at $1.0714, higher against $1.0702. Against the yen, the dollar was trading at JP¥147.37, up compared to JP¥147.23.
In the FTSE 100, Convatec lost 4.5%, making it the worst performer on the index Friday morning.
The medical products and technologies company said that it has agreed to end the relationship agreement with Novo Holdings. Consequently, Non-Executive Director Sten Scheibye will be stepping down from the board, having served since 2018.
ConvaTec added that Novo ‘remains an important shareholder’.
Novo Holdings said ‘Given the increasing momentum in Convatec’s growth and margin trajectory and the high regard and confidence we have in management, we no longer feel a need to occupy a board position at the company. As shareholders, we are very excited by the opportunity we see for further value creation by the company.’
Next rose 2.2%. Socgen raised the clothing, footwear and home products retailer to ’buy’ from ’hold.’
In the FTSE 250, Computacenter rose 7.0%.
The computer services firm reported that revenue in the first half of 2023 rose 27% to £3.58 billion from £2.83 billion a year earlier. Pretax profit jumped 14% to £122.8 million from £107.8 million.
It upped its dividend by 2.3% to 22.6p from 22.1p.
Looking ahead, Chief Executive Mike Norris said: ‘Coupled with this first half performance, we have seen good progress in Q3 to date. Due to the industry returning to normal supply conditions we have seen a significant generation of cash as our inventory has reduced in the first half of 2023. We expect this to continue in the second half which will leave Computacenter with a strong balance sheet by the end of the year.’
Shares in Round Hill Music surged 62% to $1.11.
Round Hill said it has agreed a cash takeover offer with Alchemy Copyrights. The offer is for $1.15 a share; a premium of 67% to Thursday price and values Round Hill Music at $468.8 million.
Chair Robert Naylor said: ‘The board is pleased to present this opportunity for liquidity at a premium to both the share price and the IPO price, as well as at a narrow discount to economic net asset value per share. The recommended offer represents excellent value for shareholders.’
On London’s AIM, SIMEC Atlantis Energy jumped 22%.
It said that it has secured four contracts for difference for the MeyGen site.
In Asia on Friday, the Nikkei 225 index in Tokyo closed down 1.2%%. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong was down 1.3% in late trade. The S&P/ASX 200 in Sydney closed down 0.2%.
In the US on Thursday, Wall Street ended mixed, with the Dow Jones Industrial Average up 0.2%, the S&P 500 down 0.3% and the Nasdaq Composite down 0.9%.
Brent oil was quoted at $89.75 a barrel early in London on Friday, down from $90.31 late Thursday. Gold was quoted at $1,924.83 an ounce, higher against $1,919.30.
Still to come on Friday’s economic calendar, there are US export sales and wholesale trade readings.
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