Equities in London had a sluggish morning on Friday, though the mood was somewhat calmer after a rocky couple of days following a US credit rating cut.
After the Bank of England decision on Thursday, US data takes centre-stage on Friday. The latest jobs report is posted at 1330 BST.
The FTSE 100 index was down 8.47 points, 0.1%, at 7,520.69. The FTSE 250 was up 22.81 points, 0.1%, at 18,856.46, and the AIM All-Share was up 1.55 points, 0.2%, at 761.09.
The Cboe UK 100 was down marginally at 749.98, the Cboe UK 250 was up 0.1% at 16,532.34, and the Cboe Small Companies was up 0.2% at 13,802.08.
‘Markets have started to stabilise after a chaotic week led by the US debt downgrade and further interest rate hikes in the UK,’ said Dan Coatsworth, analyst at AJ Bell.
‘Pre-market indicative prices suggest US markets will also move higher. Non-farm payrolls numbers in the US released later today are expected to show a robust jobs market.’
The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.5%.
The US economy is expected to have added 200,000 jobs last month, according to FXStreet cited consensus, slowing slightly from June’s 209,000.
Markets have been rocked this week by a US credit rating downgrade from Fitch. It was the first such downgrade by a major ratings company in more than a decade, and the events evoke memories of 2011, when another debt ceiling impasse in 2011 saw S&P lower Washington’s AAA rating.
There has also been some key monetary policy decisions. Notably, the Bank of England lifted UK interest rates by 25 basis points on Thursday. It took the benchmark bank rate to 5.25% from 5.00% previously, with a majority of Monetary Policy Committee members voting for the hike.
There was some positive news about the UK construction sector on Friday.
The S&P Global/CIPS UK construction purchasing managers’ index rose to 51.7 points in July, from 48.9 points in June. Rising above the 50-point no-change mark, the survey reading shows the sector in expansion territory.
The reading marks the highest level for five months.
John Glen, chief economist at the Chartered Institute of Procurement & Supply, commented: ‘Although the sector showed a slight uplift in activity in July, there is a question mark over the sustainability of this growth and the challenges that lie beneath the floorboards.’
The pound was quoted at $1.2699 at midday on Friday in London, lower compared to $1.2719 at the equities close on Thursday. The euro stood at $1.0942, lower against $1.0951. Against the yen, the dollar was trading at JP¥142.83, up compared to JP¥142.22.
In the FTSE 100, the worst performer was WPP. It lost 6.4%.
The company reported first-half revenue of £7.22 billion, up 6.9% from £6.76 billion a year prior. Pretax profit, however, slumped 51% to £204.3 million from £418.6 million. WPP reported finance costs of £230.7 million, a 59% rise from £144.9 million.
‘Our performance in the first half has been resilient with Q2 growth accelerating in all regions except the USA, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects. This was felt primarily in our integrated creative agencies. China returned to growth in the second quarter albeit more slowly than expected. In the near term, we expect the pattern of activity in the first half to continue into the second half of the year,’ Chief Executive Mark Read said.
WPP now expects like-for-like revenue growth, less pass-through costs, of 1.5% to 3.0% for 2023, its guidance cut from a range of 3% to 5%. Its headline operating margin target of ‘around 15%’ was maintained, however. Its headline operating profit margin in 2022 had climbed to 14.8% from 14.4%.
Rolls-Royce was up 3.2%, adding to Thursday’s gains of 4.2%.
On Thursday, the London-based maker of power and propulsion systems said it swung to a pretax profit of £1.42 billion from a loss of £1.75 billion a year prior.
It seems that Rolls-Royce is now a world away from the criticism once levelled at it by Chief Executive Officer Tufan Erginbilgic. He had described Rolls-Royce as a ‘burning platform’ just days into his stint as CEO.
In the FTSE 250 index, Capita plummeted 16%.
The London-based provider of business process services on Friday said it swung to a statutory pretax loss of £67.9 million in the first half of 2023, from a £100,000 profit the previous year. Adjusted for items like business exits and amortisation, its pretax profit increased 34% to £33.1 million from £24.7 million.
Capita said the reported loss was due to business exits, non-core portfolio goodwill impairment, and costs associated with a cyberattack in March which disrupted some clients’ services. However, Capita said that the incident only had a minimal impact on its growth momentum.
On AIM, Ilika jumped 11%.
The solid-state battery technology company said it has signed a 10-year manufacturing licence with Cirtec Medical for the manufacturing and commercialisation of miniature Stereax solid-state batteries. Cirtec is a Brooklyn Park, Minnesota-based full-service outsource partner, which provides end-to-end product design, development and manufacturing of Class III and II medical devices and components.
In European equities on Friday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was marginally higher.
The annual decline in eurozone retail sales slowed in June, figures from Eurostat showed on Friday.
On an annual basis, the calendar-adjusted retail sales index fell by 1.4% in the euro area, slowing from a 2.4% drop in May. The figure came in better than the FXStreet-cited consensus of a 1.7% decrease.
The seasonally adjusted volume of retail trade in the eurozone fell by 0.3% month-on-month in June, after registering a 0.6% increase in May from April. The figure came in below FXStreet-cited consensus of a 0.2% increase.
Brent oil was quoted at $85.85 a barrel at midday in London on Friday, up from $84.90 late Thursday. Gold was quoted at $1,931.83 an ounce, lower against $1,937.55.
Copyright 2023 Alliance News Ltd. All Rights Reserved.
