European stocks pushed higher on Friday, with an ease in inflationary pressure in the US, UK and the eurozone providing a supportive backdrop for equities.
Interest rate sensitive stocks continued to climb in London, with the likes of housebuilder Barratt, up 2.0% and insurer Admiral, rising 1.0%, among its better large-cap performers.
‘The FTSE 100 shrugged off a weak showing for Asian shares overnight and softer than expected UK retail sales to trade firmly higher on Friday, shaking off the ennui it had shown on Thursday in the wake of Wednesday’s exuberance,’ AJ Bell analyst Russ Mould commented.
The FTSE 100 index was up 61.18 points, 0.8%, at 7,472.15. The FTSE 250 was up 222.84 points, 1.2%, at 18,574.32, and the AIM All-Share was up 4.79 points, 0.7%, at 718.08. On Thursday, they had closed down 1.0%, 1.7% and 0.3%, respectively.
The Cboe UK 100 was up 0.8% at 745.33, the Cboe UK 250 was up 1.4% at 16,074.02, and the Cboe Small Companies was marginally higher at 13,340.42.
In European equities, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.8%.
UK retail sales declined last month despite expectations of a month-on-month increase, and declined faster than expected on an annual basis, official numbers on Friday showed.
According to the Office for National Statistics, retail sales volumes declined 2.7% year-on-year in October, quickening from a 1.3% decline in September. The September figure was downwardly revised from a previous 1.0% decline.
The October read came in worse than feared, with market expectations of a 1.5% decline, according to FXStreet-cited consensus.
Retail sales declined 0.3% in October from September, falling short of consensus. A monthly increase of 0.3% was forecast, according to FXStreet. In September, retail sales had fallen 1.1% from August, downwardly revised from a previously reported 0.9% decline.
‘While the onset of this inflation boom saw consumers ramp up their spending in a bid to maintain their quality of living, their ability to pay more has been stretched to the point where spending is largely flat, but consumers instead receive less for their money... Nonetheless, the strength of the FTSE 100 highlights the hope that this weak spending environment helps drive down inflation, with the Bank of England undoubtedly happy to see consumers put pressure on businesses to compete on price once again,’ Scope Markets analyst Joshua Mahony commented.
The pound was quoted at $1.2424 at midday on Friday in London, higher than $1.2417 at the equities close on Thursday. The euro stood at $1.0863, higher against $1.0855. Against the yen, the dollar was trading at JP¥149.49, lower than JP¥150.54.
This week, readings from the US and UK have showed that inflationary pressure cooled last month, taking some sting out of interest rate expectations for the Federal Reserve and Bank of England.
Eurozone inflation in October, meanwhile, was confirmed to be cooling towards the European Central Bank’s 2% target, data on Friday showed.
The eurozone harmonised index of consumer prices rose by 2.9% annually in October, slowing from a 4.3% increase in September. In October 2022, the inflation rate stood at 11.5%.
In London’s FTSE 100, AstraZeneca rose 0.7%.
The pharmaceutical firm said its Truqap treatment for patients with advanced hormone receptor positive breast cancer, in combination with Faslodex, has been approved by the US Food & Drug Administration.
This follows the results from its CapItello-291 phase 3 trial published earlier this year, which showed reduced risk of disease progression or death by 50% compared to Faslodex alone.
Oil majors also helped support the FTSE 100, as Brent prices edged higher. BP rose 1.4%, while Shell was up 1.1%.
Brent oil was quoted at $78.44 a barrel at midday in London on Friday, higher than $77.44 late Thursday. A barrel of Brent had fetched $80.75 this time last week, however.
‘The [3.6 million] barrel increase in the US inventories last week served as a good excuse to sell the top, along with the rising worries of global slow down. No one cares about the Middle East carnage or OPEC cuts. At the current levels, oil is oversold, and we could see another correction attempt, but gains will likely remain limited,’ Swissquote analyst Ipek Ozkardeskaya commented.
Back in London, FirstGroup rose 2.3%.
The transport company said it agreed to a strategic decarbonisation partnership with Hitachi, forming a new 50:50 joint venture called NextGen AssetCo.
NextGen AssetCo will purchase up to 1,000 electric bus vehicles valued at around £100 million as part of First Bus’ expanding electric bus fleet.
FirstGroup anticipates this will contribute around £3 million annually to its adjust earnings by its financial 2026 before any operational benefits.
Hill & Smith rose 3.0%, after the sustainable infrastructure products and services provider acquired pipe and drain infrastructure systems designer and manufacturer United Fiberglass for a £11.4 million in cash.
It said it will keep the United Fiberglass management team in place, incorporating the firm into Hill & Smith’s composites business, Creative Composites Group, within its Engineered Solutions division.
Hill & Smith expects the purchase to be earnings-enhancing next year.
‘Hill & Smith’s recent acquisitions have performed well (three of the four ahead of expectations) and we expect the market will welcome this well-timed/priced transaction,’ analysts at Jefferies commented.
Elsewhere, Record lost 7.1%, after it reported half-year profit fell, and it outlined succession plans with its chief executive officer retiring.
In the six months that ended September 30, the currency and derivatives manager said pretax profit fell 16% to £6.3 million from £7.5 million a year earlier. Revenue declined 2.7% to £21.5 million from £22.1 million, although it still upped its interim dividend by 4.9% to 2.15 pence per share from 2.05p.
Record also said CEO Leslie Hill will retire in March after 31 years at the company and four years in the role.
Jan Witte will succeed Hill and be appointed onto the board as CEO-elect on January 1, with the intention of being formally appointed as CEO on April 1. Witte is currently CEO of two Record subsidiaries, Record Currency Management and Record Asset Management.
On AIM, Parkmead surged 26% as revenue increased, with exploration and evaluation expenses and a one-off impairment accounting for its swing to a loss. It also set out a confident outlook.
In the financial year that ended June 30, the Netherlands and UK-focused gas explorer swung to a pretax loss of £35.3 million from a profit of £4.0 million a year earlier, but revenue increased to £14.8 million from £12.1 million.
This was because exploration and evaluation expenses widened to £33.0 million from £1.1 million, while it incurred a one-off impairment of property, plant and equipment of £13.0 million.
Executive Chair Tom Cross said: ‘Parkmead has delivered promising results through a period of significant change, as we build a balanced energy portfolio. The company remains in a healthy cash position with valuable revenue streams from our onshore producing Dutch gas fields and our onshore UK renewable energy assets. Together these will provide long term, low risk core revenues for the group.’
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.2%, and the Nasdaq Composite flat.
Gold was quoted at $1,988.92 an ounce at midday in London on Friday, higher than $1,983.48 late Thursday.
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