Share prices in London were essentially directionless on Friday at midday, as traders positioned themselves for three key central bank decisions next week, though one last data point before the close offered the prospect of renewed impetus.
The FTSE 100 index was up 4.52 points, 0.1%, at 7,476.69. The FTSE 250 was up 21.85 points, 0.1%, at 18,845.96, and the AIM All-Share was up 0.11 point at 834.52.
The Cboe UK 100 was marginally lower at 747.8, the Cboe UK 250 up 0.1% at 16,280.16, and the Cboe Small Companies was down 0.6% at 12,868.31.
Trading in the foreign exchange markets was similarly subdued.
Sterling was quoted at $1.2267 at midday in London on Friday, gaining from $1.2218 at the London equities close on Thursday. The euro traded at $1.0560, edging up from $1.0547. Against the yen, the dollar was quoted at JP¥135.85, up from JP¥135.56.
‘Signs of a deterioration in economic activity have been accumulating, with the latest employment data [on Friday last week], reinforcing the view that the central bank will be forced to take its foot off the accelerator in order to avoid a deeper recession. Against this background, there may be scope for further dollar softness,’ said ActivTrades’ Ricardo Evangelista.
In European equities on Friday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.6%.
The US producer price index is due out at 1330 GMT. US factory gate inflation is expected to cool to 7.4% in November from 8.0% in October, according to FXStreet-cited market consensus.
A hotter-than-expected PPI rise is likely to spook investors and extinguish hopes that peak US inflation has passed. The Federal Reserve will be keeping a close eye on the reading, ahead of two-day policy meeting starting on Tuesday, with the interest rate decision to be announced on Wednesday. Also on Tuesday next week is the US consumer price index for November.
The Bank of England and European Central Bank follow with rate decisions of their own on Thursday.
ING said it expects a 50-basis-point interest rate hike by the Fed, slowing from its recent string of 75-point increases. The Dutch bank said the chances of a 75-point hike by the ECB have increased, but it still expects a 50-point rise instead, ‘supported by hawkish communication as a compromise’.
ING expects a 50-point hike by the BoE, followed by the same again in February.
UK Chancellor Jeremy Hunt on Friday launched a raft of major reforms to the UK financial sector to replace EU regulation and cut red tape.
The shake-up will include a commitment to make ‘substantial legislative progress’ on repealing and replacing the Solvency II directive next year, which is expected to unlock more than £100 billion of private investment, according to the Treasury. Solvency II government capital requirements for insurance companies.
Hunt also promised to reform the UK prospectus regime to support stock market listings and capital raises, reform rules on real estate investment trusts, and review provisions on investment research in the UK.
Prime Minister Rishi Sunak sought to defend the measures from criticism. Labour warned of a ‘race to the bottom’, as the changes introduce ‘more risk and potentially more financial instability’.
‘No, the UK has always had and always will have an incredibly respected and robust system of regulation for the financial services sector,’ Sunak told broadcasters during a visit to RAF Coningsby in Lincolnshire.
‘Today’s reforms will ensure the industry remains competitive, we can create more jobs, but of course this will always be a safe place where consumers will be protected.’
In the FTSE 100, oil stocks were down at midday, as crude prices remain weak. BP fell 1.6%, Harbour Energy lost 1.0%, and Shell was 0.7% lower.
Brent oil fetched $76.68 a barrel, edging up from $76.38 late Thursday, but remaining well below $80 a barrel. A week ago, Brent traded above $86.
Associated British Foods, owner of the Primark discount fashion store chain, shed 0.8%, as reiterated its annual outlook.
AB Foods still expects significant sales growth, but adjusted operating profit and adjusted earnings per share to be lower than the previous financial year. Chair Michael McLintock told the company’s annual general meeting he expects ‘further significant’ input cost inflation, but said the volatility of input costs has ‘diminished’.
AB Foods expects the aggregate profit of its Food businesses to be higher than last financial year. Primark trading has been encouraging, he noted, and ABF is on track to open 27 new Primark stores in the year - 10 of these in the run-up to Christmas, with 6 already opened.
‘Amid the current consumer turmoil, for a retailer to stick to its guidance is an achievement in itself. Primark-owner Associated British Foods’ in-line trading update will provide a healthy dose of reassurance to its shareholders - even coming, as it does, just weeks after full year results,’ considered AJ Bell’s Russ Mould.
‘There’s no mention of the success or otherwise of Primark’s new click and collect trial as it finally dips its toe in the e-commerce waters,’ he added.
Anglo American fell 2.5%. The miner moderated its production growth plans over the near term as it battled with economic volatility, extreme weather, and other localised disruptions at its operations.
It now expects production to drop by 3% this year, with poor ore grades in Chile, and lower production from Kumba Iron Ore and platinum group metals operations marginally offset by Quellaveco copper ramp-up in Peru and strong diamond production.
Gold was quoted at $1,795.37 an ounce at midday on Friday, higher than $1,787.73 late on Thursday
Pendragon plunged 28%.
The car dealership’s largest shareholder Hedin Mobility says it does not intend to make a takeover offer, three months after publicly floating the idea. Sweden-based mobility provider Hedin gave as reasons challenging market conditions and an uncertain economic outlook. In response, Pendragon says it is confident about its long-term prospects and that the process ‘highlighted the value of Pendragon and the board will continue to explore opportunities to maximise value for its shareholders’.
‘Car retailers were in strong demand during the pandemic as a shortage of new vehicles and a sudden jump in demand for used cars made the market red hot. That bubble now seems to have burst as people watch their pennies and find ways to keep their existing motor running for longer rather than seeking an upgrade or changeover,’ said Mould.
Offers abounded on AIM, however.
Industrial equipment supplier Crestchic rose 12%, as it agreed a £122 million takeover offer from Aggreko, a Scottish mobile and modular power generation supplier and former London listing. The offer of 410p is a premium of 13% to Thursday’s closing price.
‘Crestchic has become a retail investor favourite this year because of the positive news flow and an impressive share price hike, up 122% year-to-date. Comments on social media suggest its army of fans don’t want to see it taken over, at least not at the price offered by Aggreko,’ Mould noted.
Business-focused media firm Bonhill jumped 18%. It has received a conditional offer of £6.6 million cash for the assets and trade of its Asia and UK businesses. The offer comes from a privately owned UK media company, which Bonhill didn’t name. It also gets offers for its US business, InvestmentNews, and said it will provide a further update further once a buyer has been selected.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.2% and the S&P 500 index and Nasdaq Composite both up 0.4%.
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