Despite a feeble start to equities trading on the final day of March, the FTSE 100 stands poised to end the first quarter of 2023 in the green.
The large-cap index opened up 1.21 points at 7,621.64 on Friday. The FTSE 250 was down 35.99 points, 0.2% at 18,871.75. The AIM All-Share was down 0.3% at 803.85.
The Cboe UK 100 was marginally higher at 762.09, the Cboe UK 250 was down 0.2% at 16,471.34, and the Cboe Small Companies was up 0.1% at 13,294.21.
The FTSE 100 is up 0.9% in the year-to-date, though the mid-cap FTSE 250 is down 1.4% and the AIM All-Share down 4.2%.
In European equities on Friday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.1%.
Still to come on Friday’s economic calendar, there is a eurozone inflation reading at 1000 BST. Annual inflation is expected to slow sharply to 7.1% in March from 8.5% in February
Wall Street ended higher on Thursday, with the Dow Jones Industrial Average up 0.4%, the S&P 500 up 0.6% and the Nasdaq Composite up 0.7%.
The pound was slightly stronger in early exchanges. Sterling was quoted at $1.2385 early Friday, higher than $1.2371 at the London equities close on Thursday.
The euro traded at $1.0894, down slightly from $1.0900. Against the yen, the dollar was quoted at JP¥132.99, up versus JP¥132.69.
Final figures confirmed the UK economy registered marginal growth in the final quarter of 2022. According to an estimate from the Office for National Statistics, gross domestic product in the fourth quarter grew 0.1% from the third quarter, which was revised up from an initial estimate of no growth.
This follows a contraction of 0.1% seen in the third quarter, which was revised from a 0.2% decline. This means the UK avoided a technical recession, which is defined as two consecutive quarters of negative growth.
‘As growth goes it‘??s pretty feeble but remember this was the moment the UK had been expected to enter a recession, so the fact GDP figures have been revised upwards is something to celebrate,’ said AJ Bell’s head of financial analysis, Danni Hewson.
Meanwhile, UK house prices saw their steepest fall in over a decade in March, according to figures from mortgage lender Nationwide.
UK house prices fell 3.1% annually in March, which was the largest annual decline since July 2009. It shows the pace of decline accelerated from the 1.1% fall seen the month before. The March reading was worse than FXStreet-cited market consensus of a 2.2% fall.
On a monthly basis, house prices fell 0.8%, speeding up from a 0.5% fall in February. It was also steeper than the 0.3% fall expected by the market.
‘We believe further house price falls are likely given that the full impact of Bank of England rate hikes has yet to be felt,’ said Davy Research. ‘The effective rate on new mortgage lending in February was only 4.24% and will soon rise.’
In the FTSE 100, online grocer and warehouse technology provider Ocado added 1.6%.
Late Thursday, Ocado celebrated another legal win in a patent dispute against AutoStore.
The UK High Court verdict concerned two patents. Autostore back in October 2020 had claimed online grocer and warehouse technology firm Ocado infringed on six of its patents, though two of those claims were invalidated by the European Patent Office before a judgment was made.
Another two were withdrawn by Autostore before a hearing started. The remaining two patents were invalidated by a judge in Thursday’s verdict. Autostore had said it sued and filed complaints in the US and the UK, accusing Ocado’s Smart Platform of infringing Autostore’s patented technology. Ocado Smart Platform is a storage and picking system used in fulfilment centres.
Beazley added 4.1%, as UBS raised the specialist insurer’s stock to ’buy’ from ’sell’. British Airways parent International Consolidated Airlines rose 1.8%, after Deutsche Bank raised the stock to ’buy’ from ’hold’.
In the FTSE 250, NCC plunged 45%.
The cybersecurity firm lowered annual guidance for the financial year ending on May 31, as it faces a ‘further deterioration in the macro-economic and market environment’.
NCC lowered its adjusted operating profit to a range of £28 million to £32 million, having previously expected £47 million. NCC said market volatility was hitting its near-term revenue and profit, particularly in the North American tech sector.
Buying decisions delays and cancellations were being exacerbated by tech sector layoffs, and the recent turmoil in the banking sector has hit market confidence, resulting in a ‘reduced appetite’ for spending on technology, NCC said. Interest rate challenges are also causing further inflationary challenges in the US and UK, it noted.
‘These economic headwinds and current challenges to the group’s cyber security revenues, which the board expects will persist into the next financial year, reinforce the need to implement the next chapter of the NCC Group strategy,’ the firm said, adding it will look to cut costs.
On AIM, Emis Group dropped 20% on news that the UK competition watchdog has referred its acquisition by US healthcare insurer UnitedHealth to a phase 2 investigation.
Earlier this month, as part of its phase 1 probe, the UK Competition & Markets Authority found competition in the fields of population health management and medicines optimisation software would be hurt by the deal. Both Emis and UnitedHealth-owned Optum Health Solutions (UK) provide software services to GPs in the UK.
The CMA had said it was concerned that, if the merger went ahead, Optum could choose to limited digital connections to data that is held by Emis, which it said would ‘unfairly undermine competing businesses’, which would leave the NHS facing fewer options and higher prices or lower quality offerings.
In response, UnitedHealth proposed a remedy to divest of Optum UK’s Medicines Optimisation and Population Health Management businesses in the UK
The CMA rejected the remedy, and confirmed it would refer the acquisition for a phase 2 investigation. Emis and UnitedHealth said they were ‘disappointed’ with the decision, believing the divestment would directly address the CMA’s competition concerns.
In Asia on Friday, the Nikkei 225 index in Tokyo closed up 0.9%. The S&P/ASX 200 in Sydney closed up 0.8%.
Chinese equities also were performing well, with the Shanghai Composite up 0.4% and the Hang Seng index in Hong Kong up 0.8%.
China’s manufacturing activity slowed in March, official figures showed, while growth in the services and construction sectors surged to a 12-year high.
The world’s second-largest economy is slowly rebounding after posting some of its weakest growth in decades in 2022. The official manufacturing purchasing managers’ index - a key gauge of Chinese factory output - beat expectations but fell to 51.9 points in March, from 52.6 in February, data from the National Bureau of Statistics showed.
The official non-manufacturing PMI, which measures growth in the services and construction sectors, rose to 58.2 in March - the highest since May 2011 - and up from 56.3 in February.
In Hong Kong, JD.com rose 7.8%. The Beijing-based online retailer announced it will spin off its industrial and property units and take them both public.
The move is the latest reorganisation of a major Chinese tech firm. It follows news earlier this week that rival Alibaba will split itself into six different business units, with separate public listings expected.
Gold was quoted at $1,982.41 an ounce early Friday, higher than $1,972.45 on Thursday. Brent oil was trading at $79.21 a barrel, up from $78.48.
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