Stocks in London were in the green going into Friday afternoon, as investors kept their eyes on US inflation data due out this afternoon.
The FTSE 100 index traded up 58.40 points, or 0.7%, at 8,244.06. The FTSE 250 was up 221.33 points, 1.1%, at 21,105.17, while the AIM All-Share rose 3.17 points, 0.4%, at 776.20.
The Cboe UK 100 was up 0.8% at 823.02, the Cboe UK 250 rose 1.1% to 18,493.38, and the Cboe Small Companies advanced 0.7% to 17,132.07.
The CAC 40 in Paris jumped 1.0%, while Frankfurt’s DAX 40 traded 0.3% higher.
‘As we progress through the European session, there are signs that risk appetite is returning. The major European stock indices are mostly higher, US stock index futures are sharply higher, and the dollar is stabilizing,’ said Kathleen Brooks, research director at XTB.
Focus in the afternoon turns to US data, with the release of the Federal Reserve’s preferred inflation gauge, just days before its next interest rate decision.
Brooks pointed out economists expect core PCE to rise 0.1% [on-month], and for the annual index to moderate to 2.4% from 2.6% in May.
Ahead of the data, in New York, the Dow Jones Industrial Average is called to open 0.6% higher, the S&P 500 up 0.8% and the Nasdaq Composite up 1.0%.
The Federal Reserve announces an interest rate decision next week Wednesday. It is expected to maintain the federal funds rate range at 5.25% to 5.50%.
‘With encouraging inflation data and the labor market showing signs of moderation, we expect the [Federal Open Market Committee] to hint at a September rate cut. But with key data to come in the next several weeks and markets having already priced in a September cut, we see little upside for the FOMC to provide a strong signal,’ Barclays said.
The pound was quoted at $1.2869 at Friday lunchtime, down from $1.2882 at the time of the London equities close Thursday. The euro stood at $1.0855, fading slightly from $1.0857. Against the yen, the dollar was trading at JP¥154.58, up from JP¥153.44.
NatWest was the star performer in the FTSE 100, rising 5.9%, after raising annual guidance and buying a mortgage portfolio from Metro Bank.
The lender reported total income of £7.13 billion for the first-half of 2024, down 7.7% on-year from £7.73 billion. Net interest income alone dropped 5.6% to £5.41 billion.
Pretax profit declined 16% to £3.03 billion from £3.59 billion. In the second-quarter alone, total income fell 5.0% annually to £3.66 billion, but beat company-compiled consensus of £3.41 billion. Pretax profit, which declined 14% to £1.70 billion, beat consensus of £1.26 billion.
NatWest said the deal with Metro Bank will see it snap up a £2.5 billion portfolio of prime UK residential mortgages.
Chief Executive Paul Thwaite pointed to growth across the business.
‘We have attracted over 200,000 new customers and our acquisition from Sainsbury’s Bank is expected to add around one million customer accounts on completion,’ he noted.
He hailed ‘positive momentum and progress in the first half’, and said customers are ‘beginning to feel more confident, with activity increasing and asset quality remaining strong.’
‘The combination of a high quality [second quarter] earnings beat, guidance upgraded ahead of consensus and what we consider conservative unchanged medium term targets should support continued stock outperformance,’ banking analysts at Bank of America remarked.
Metro Bank said the deal will ‘earnings, net interest margin and capital ratio accretive’. Shares in the high street lender were 3.0% higher.
IMI rose 2.2% after what broker Peel Hunt called a ‘robust’ set of interim results.
The Birmingham-based engineering firm declared a 10% improved interim dividend and announced a £100 million share buyback, following a rise in half-year profit.
IMI said pretax profit was £162.5 million, up 17% from £138.5 million a year before, as revenue inched up 1.3% to £1.10 billion from £1.08 billion.
The firm also said Chief Financial Officer Daniel Shook will leave next year, though no earlier than May, after nine years with the company.
Peel Hunt noted organic revenue growth of 5% compared to 4% in the first quarter, making IMI one of the few companies in the sector that has seen an acceleration.
Rightmove was up a more modest, 0.4%.
The property portal owner said that for the first six months of 2024, pretax profit rose 1.8% to £132.7 million from £130.3 million the year before. Basic earnings per share rose 2.5% to 12.4 pence from 12.1p.
Rightmove also said revenue increased by 7.1% to £192.1 million from £179.5 million ‘as both agents and new homes developers renewed contracts, upgraded their packages and invested in additional products’.
Rightmove meanwhile declared an interim dividend of 3.7 pence per share for the half year, up 2.8% from 3.6p for the first half of 2023.
‘We’re pleased to deliver a strong set of H1 results, and to be progressing in executing our plan to build an even more valuable digital platform for the UK property industry,’ commented Chief Executive Officer Johan Svanstrom.
Miner Anglo American was also among those to climb, adding 4.3% after UBS raised it to ’buy’ from ’neutral’.
Segro, however, fell 3.0%.
The London-based property investment company said its net asset value per share decreased slightly to 874 pence at June 30, from 886p at December 31.
Segro did however increase its dividend for the first half of 2024, by 4.6% to 9.1p per share from 8.7p the prior year.
In the FTSE 250, Drax powered 13% to the good as it announced a £300 million share buyback and predicted full-year adjusted earnings before interest, tax, depreciation and amortisation will hit the top end of a consensus range of £881 million to £996 million.
The electricity generator said its half-year revenue fell 19% to £3.16 billion from £3.89 billion. Pretax profit, however, shot up 37% to £463.2 million from £338.1 million.
Among London’s small caps, Record rose 2.2%.
The currency and asset manager said it has made a ‘solid start to the year’. Assets under management increased to $102.7 billion at its June 30 first-quarter end, from $102.2 billion in March. It suffered a total net outflow of $500 million, but got a $100 million boost from foreign exchange movements, and a $900 million tailwind for movements in global stock and other markets.
On AIM, Brighton Pier Group fell 17% after stating footfall has suffered due to a wet start to the UK summer.
The leisure and entertainment business, which operates Brighton Palace Pier, said footfall for the four weeks to July 21 was down 29% on-year.
The group now anticipates that full year sales for the pier will be lower than previously expected.
Brent oil was quoted at $81.90 a barrel at Friday lunchtime, climbing from $81.75 at the time of the London equities close Thursday. Gold was quoted at $2,373.42 an ounce, up from $2,366.60.
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