Equities in Europe traded mixed heading into Friday afternoon, with US banking earnings rounding off a jam-packed week for markets.
Early numbers from JPMorgan impressed and the bank’s boss hailed a resilient US economy, though he cautioned on ‘salient risks’ as consumers slowly exhaust ‘their cash buffers’.
All-in-all, and despite a slower morning on Friday, the mood in global equities is positive as investors believe the end of the Federal Reserve’s hiking cycle is in sight.
The FTSE 100 index was up 10.56 points, 0.1%, at 7,450.77. The FTSE 250 was down 72.62 points, 0.4%, at 18,559.09, and the AIM All-Share was up 1.36 points, 0.2%, at 751.65.
The Cboe UK 100 was up 0.1% at 743.37, the Cboe UK 250 was down 0.4% at 16,290.27, and the Cboe Small Companies was up 0.1% at 13,127.29.
The mood this week has been generally upbeat, with stock market investors celebrating an easing of US inflation. While the Federal Reserve must negotiate the final part of the journey of getting the yearly US inflation rate back down to 2%, from 3.0% currently, investors are confident the central bank will only hike once more.
With the US labour market also in rude health, there is hope the nation may avoid a ‘hard landing’.
This afternoon focus will be on the health of the US corporate sector. The slew of earnings begins with the likes of JPMorgan Chase & Co, Wells Fargo and Citi.
Asset manager BlackRock kicked things off on Friday, meanwhile. It said its assets under management improved 11% on-year to $9.425 trillion at the end of June. It reported total net flows of $80 billion, fading from the $110 billion recorded in the first-quarter.
Revenue edged down 1.4% to $4.46 billion from $4.53 billion, though net income increased 27% to $1.37 billion from $1.08 billion.
JPMorgan, meanwhile, posted ‘another quarter of strong results’, Chair and Chief Executive Officer Jamie Dimon said.
Reported net revenue increased 34% on-year to $41.31 billion, from $30.72 billion. Net income surged 67% to $14.47 billion from $8.65 billion.
Dimon added: ‘The US economy continues to be resilient. Consumer balance sheets remain healthy, and consumers are spending, albeit a little more slowly. Labour markets have softened somewhat, but job growth remains strong. That being said, there are still salient risks in the immediate view.
‘Consumers are slowly using up their cash buffers, core inflation has been stubbornly high (increasing the risk that interest rates go higher, and stay higher for longer), quantitative tightening of this scale has never occurred, fiscal deficits are large, and the war in Ukraine continues, which in addition to the huge humanitarian crisis for Ukrainians, has large potential effects on geopolitics and the global economy. While we cannot predict with any certainty how these factors will play out, we are currently managing the Firm to reliably meet the needs of our customers and clients in all environments.’
JPMorgan shares traded 3.3% higher in pre-market dealings in New York. BlackRock was down 0.6%.
In European equities on Friday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was down 0.2%.
The pound was quoted at $1.3108 at midday on Friday in London, slightly higher compared to $1.3102 at the equities close on Thursday. The euro stood at $1.1218, higher against $1.1192. Against the yen, the dollar was trading at JP¥138.66, up compared to JP¥138.12.
In the FTSE 100, Spirax-Sarco Engineering was up 2.8%, making it one of the top performers. UBS raised its rating to ’buy’ from ’neutral’.
Burberry lost 0.3%, meanwhile, despite largely upbeat quarterly numbers amid a boost from China.
In the 13 weeks that ended July 1, London-based Burberry said overall comparable store sales rose 18% from a year earlier, including a positive performance across several global divisions.
Comparable store sales for the group excluding Mainland China were up 11%. Within that, Europe, Middle East, India and Africa sales were up 17%, South Asia Pacific up 39%, Japan up 44% and South Korea up 6%. The Americas division was an outlier, falling 8%.
Burberry also reported a ‘strong recovery’ in Mainland China, where comparable store sales rose 46%.
Looking into sales in the Americas, AJ Bell’s Danni Hewson questioned: ‘Does Burberry have the necessary cachet?’
Hewson noted that the firm is likely to face ‘a big test of its luxury credentials in the coming months’.
‘When economic times are tough, sales of true luxury goods are often relatively unaffected as the wealthy clientele who buy them are insulated from the worst of the impact,’ Hewson explained.
In the FTSE 250, Liontrust Asset Management lost 8.1%.
The London-based asset manager said in the three months to June 30, its assets under management and advice at June 30 were £29.51 billion, down 6.1% from £31.43 billion at April 1. This fell by a further 1.7% to £29 billion as of Wednesday.
Nevertheless, Liontrust said its business is in ‘robust health, noting the benefits of the proposed acquisition of Zurich-listed GAM Holding, suggesting the opportunity will offer ’a strong platform‘ for future growth’, as well as diversify its funds and increase its investment talent.
ITV lost 1.1%, after it said it is no longer actively exploring the possible acquisition of All3Media.
Responding to a story by Reuters on Friday, the London-based television broadcaster and content producer said it continues to monitor the potential acquisition, but noted that it assesses all possible mergers and acquisitions against ‘strict’ financial criteria, and its capital allocation framework.
All3Media is a TV, film and digital production company based in London and jointly owned by Warner Bros Discovery and Liberty Global. The firm produces shows including Fleabag and Midsomer Murders.
On AIM, Zoo Digital plummeted 27%.
It said trading in the first three months of the financial year has been affected by cost-savings measures and the ongoing strike at the Writers Guild of America.
The provider of cloud-based localisation and digital distribution services said its revenue for the first three months to June 30 will now be lower than expected as a result.
Stocks in New York were called mixed. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index down marginally, and the Nasdaq Composite down 0.1%.
Brent oil was quoted at $81.29 a barrel at midday in London on Friday, higher from $80.65 late Thursday. Gold was quoted at $1,956.32 an ounce, largely flat against $1,956.63.
Still to come on Friday’s economic calendar, there are US import and export price data at 1330 BST.
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