Stock markets were rising and the dollar falling on Friday, after data showing the US economy slipped into a technical recession reduced expectations for further interest rate hikes.
Positive company earnings announcements and plans for big shareholders returns gave the London market an extra boost.
The FTSE 100 was up 30.38 points, or 0.4%, at 7,375.63. The FTSE 250 index was up 135.59 points, or 0.7%, at 19,991.64. The AIM All-Share index was up 3.58 points, or 0.4%, at 916.70.
The Cboe UK 100 index was up 1.5% at 735.47. The Cboe 250 was up 0.6% at 17,202.12. The Cboe Small Companies was up 0.3% at 13,705.61.
In Paris, the CAC 40 stock index was up 0.9%, while in Frankfurt, the DAX 40 was 0.5% higher.
New York finished higher on Thursday after another contraction in the US economy reinforced recession fears but fuelled expectations that the Federal Reserve will slow its pace of interest rate hikes.
‘The odds that there would be only 75 basis points more rate hikes this year - implying perhaps a 50 bps hike in September, a 25 bps hike in November, and no hike in December - increased while the odds of 125 bps more increases diminished,’ Marshall Gittler, head of investment research at BDSwiss, said, explaining market thinking.
However, Gittler said he thinks investors may be making a mistake, as the US economic is ‘nowhere near a recession’ and monetary policy ‘remains profoundly, almost unprecedentedly, stimulative’.
The Dow Jones Industrial Average ended up 1.0%, S&P 500 up 1.2% and Nasdaq Composite up 1.1%.
In London, NatWest was the best large-cap performer early Friday, up 8.0%, after the state-backed lender said it delivered a strong performance in the first half of 2022 against a beneficial backdrop of rising UK interest rates.
For the six months to June 30, total income was £6.22 billion, up from £5.14 billion last year. Operating pretax profit was £2.62 billion, up from £2.32 billion.
Turning to returns, NatWest proposed an interim dividend of 3.5 pence per share, up 17% from last year and a special dividend with share consolidation of £1.75 billion, or 16.8 pence per share. Taken together these will deliver 20.3p of dividends per share, it said. It also noted it has completed the £750 million share buyback programme launched in February.
Looking ahead, NatWest upgraded its outlook for the year, saying it now expects income of £12.5 billion, up from £11 billion previously.
Barclays was up 4.5% after the bank provided further details on the £500 million share buyback that it announced with its interim results on Thursday.
The London-based firm said the new programme will begin either when the £1.00 billion buyback started in May completes, or on October 3, whichever is earlier, and complete it by January 28 next year. Barclays has appointed Citigroup to run the new buyback.
Standard Chartered was up 4.4% after the emerging markets-focused lender said it delivered a strong set of results for the first half of the year and also launched a substantial share buyback.
For the six months to June 30, operating income rose 8% to $8.22 billion from $7.63 billion last year, and pretax profit was $2.77 billion, up 8% from $2.56 billion.
Turning to returns, StanChart proposed an interim dividend of $119 million, equivalent to 4.0 US cents per share
StanChart also announced a $500 million share buyback to start ‘imminently’ and plans to return more than $5 billion to shareholders over the next three years. During the recent half, it completed a $750 million buyback.
International Consolidated Airlines was up 0.1%.
IAG swung to profit in the second quarter of 2022, citing strong demand for premium leisure travel and a continued recovery of business travel from the Covid-19 pandemic.
The British Airways and Iberia owner climbed to a €73 million pretax profit in the three months to June 30 from a whopping €1.12 billion loss a year before. IAG remained in loss for the half-year, though this narrowed to €843 million from €2.34 billion.
IAG said it will fly 80% of 2019 - meaning pre-pandemic - passenger capacity in the third quarter and 85% in the fourth. It said this was down five percentage points from previous guidance and was due to ‘challenges at Heathrow’ airport in London.
Still, IAG said its full-year capacity will be 78% of 2019's and North America will be close to full 2019 capacity by year-end.
At the other end of the large-caps, Intertek was the worst performer, down 6.6%, after the quality-assurance provider issued a disappointing outlook alongside its interim results.
For the six months to June 30, pretax profit was £203.5 million, up 9.2% from £186.3 million last year, on revenue of £1.49 billion, up 13% from £1.32 billion.
Interek declared an interim dividend of 34.2 pence per share, unchanged from last year.
Looking ahead, Intertek said it is targeting robust like-for-like revenue growth with a margin slightly below 2021, reflecting the lockdown restrictions in China in the first half, the expected divisional mix, and investments in growth.
Separately, Intertek said it has agreed to acquire solar energy and energy storage sector services provider Clean Energy Associates for an undisclosed sum. The move forms part of an effort to expand its end-to-end sustainability offering.
AstraZeneca was down 2.5%. The drugmaker said it delivered a strong first-half boosted by demand for its cancer treatments.
For the six months to June 30, revenue jumped to $22.16 billion from $15.54 billion last year with growth coming from all disease areas, including Covid-19 medicines, and from the addition of Alexion Pharmaceuticals. However, pretax profit sank to $800 million from $2.37 billion a year ago.
AstraZeneca declared a $0.93 interim dividend, which it said reflects its intention to increase its payout to $2.90 per share for 2022. It had paid a total of $2.87 for 2021.
Looking ahead, the Cambridge, England-based company raised its full-year revenue guidance, saying it expects it to rise by a percentage in the low twenties rather than the high teens forecast previously.
The pound was quoted at $1.2213 early Friday, up from $1.2129 at the London equities close Thursday. The euro was priced at $1.0238, up from $1.0133. Against the yen, the dollar was trading at JP¥132.95 in London, down from JP¥134.45.
The prospect of US rates not rising as fast as previously expected hit the dollar, which has soared in recent months against most rivals.
Brent oil was quoted at $107.80 a barrel Friday morning, up from $107.47 late Thursday. Gold stood at $1,765.82 an ounce, higher against $1,755.39.
In Asia on Friday, the Nikkei 225 index in Tokyo closed down 0.1%. In China, the Shanghai Composite closed down 0.9%, while the Hang Seng index in Hong Kong was down 2.5%. The S&P/ASX 200 in Sydney ended up 0.8%.
Friday's economic calendar has EU gross domestic product and consumer price index readings at 1000 BST.
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