London's benchmark stock index early Friday was in line to end the week and the month of April in positive territory, with confident updates from packaging firm Smurfit and education publisher Pearson lending support.
The FTSE 100 index was up 21.60 points, or 0.3%, at 7,530.79 early Friday. The FTSE has risen 0.1% since the close last week Friday and is up 0.4% so far in April.
Despite the hit the market took last month from Russia's invasion of Ukraine, the FTSE 100 remains up 0.5% in 2022.
The mid-cap FTSE 250 index was up 181.19 points, or 0.9%, at 20,800.81 early Friday. The AIM All-Share index was up 7.88 points, or 0.8%, at 1,022.74.
The Cboe UK 100 index was up 0.5% at 750.05. The Cboe 250 was up 0.9% at 18,326.95. The Cboe Small Companies climbed 0.1% to 15,130.27.
In mainland Europe, the CAC 40 in Paris rose 0.7% and the DAX 40 in Frankfurt rose 1.0% early Friday.
From company updates, attention will shift later Friday to inflation readings in both Europe and the US.
The eurozone consumer price index is reported at 1000 BST, alongside first-quarter economic growth figures for the single currency area.
‘After yesterday's stronger-than-expected German inflation data for April, there are upside risks to our forecast for the flash estimate of eurozone annual headline CPI. It may only be slightly lower than or broadly steady at March's final reading of 7.4%. Inflation will remain above the 2% target at least through this year and some ECB rate-setters have voiced concerns about whether it will fall back to the target in the medium term,’ analysts at Lloyds Bank commented.
In the US, core personal consumption expenditures, the Fed's preferred inflation measure, is due at 1330 BST. Core PCE is expected to slow to 5.3% in March from 5.4% in February, the Lloyds analysts forecast. The US central bank is not expected to change course, however.
‘There are signs that inflation may be peaking, but it is expected to fall back only slowing in the coming quarters, so the pressure for the Fed to tighten monetary policy remains, with a 50bp increase expected to be announced next week,’ Lloyds said.
The Fed had lifted the federal funds rate range by 25 basis points to 0.25% to 0.50% at its March meeting. The next interest rate decision is on Wednesday next week.
Ahead of the inflation readings, the dollar was weaker early Friday in London. The pound was quoted at $1.2539, up from $1.2458 late Thursday. The euro stood at $1.0557, up from $1.0524. Against the yen, the dollar was trading at JP¥130.17, down from JP¥131.00.
The weaker dollar was good news for gold. The precious metal rose to $1,911.09 an ounce from $1,887.75 late Thursday.
In the Asia Pacific region, stocks were largely higher on Friday. The S&P/ASX 200 closed up 1.1% in Sydney. The Shanghai Composite closed up 2.4%. The Hang Seng in Hong Kong was up 3.4% in late trade. Financial markets in Japan were closed on Friday for the Showa Day holiday.
In London, packaging firms were among the best large-cap performers. Smurfit Kappa rose 3.1% and Mondi added 3.6%.
Smurfit said first-quarter revenue jumped by a third to €3.02 billion. Earnings before interest, tax, depreciation and amortisation rose at the same pace to €514 million.
‘As we enter the second quarter, demand continues to be good with progressive corrugated price recovery. Cost increases and supply constraints remain a feature of our business which is being dealt with through the dedication of our people and through active price recovery. We remain confident in the future prospects of our business and our first quarter performance, together with our ongoing investment program, sets a strong foundation for 2022 and beyond,’ Smurfit said.
Pearson climbed 1.9%. The education publisher said underlying sales rose by 7% year-on-year in the first quarter. It reaffirmed its guidance for adjust operating profit in 2022.
It also announced a new acquisition.
Pearson has agreed to buy Mondly, an online language learning platform. It provided no financial details, but said it expects the purchase to accelerate revenue growth for its English Language Learning division from 2023 onward. It expects mid-teens margins for the division by 2025.
Computacenter was the worst mid-cap performer, down 3.2%. It warned adjusted pretax profit in the first half of 2022 will fall year-on-year.
Profit growth in the first quarter alone was ‘more modest’ than recently seen as a large customer ‘diluted our overall margin’.
AO World tumbled 18%. The electrical goods seller said it is ‘cautious’ about its revenue and profit outlook, amid supply chain pressures and the impact of inflation.
In the year ended March 31, group revenue fell 6% year-on-year, though was up 52% from two years prior.
A strategic review launched in January is continuing, AO World added.
Shares in building materials firms SIG and Kingspan were on the up.
SIG jumped 13% as it forecast its full-year performance to be ‘significantly ahead of previous expectations’.
Sales rose by 25% in the first quarter on a like-for-like basis. ‘This represented a performance well ahead of previous expectations, with this momentum continuing into the month of April to date,’ SIG added.
Kingspan climbed 5.0%. It said first-quarter revenue surged, though inflationary pressures, which had ebbed slightly at the turn of the year, have returned in recent weeks.
Kingspan's revenue in the first quarter of 2022 jumped 47% year-on-year to €1.89 billion.
‘Raw material inflation which had eased considerably at the turn of the year has returned sharply over the past six weeks and the associated recovery effort is ongoing,’ it cautioned.
‘The group's trading outlook for the second quarter is positive with a strong order backlog on hand and decent activity in most end-markets. Raw material inflation remains an issue to be firmly managed, coming on the back of a highly inflationary year in 2021.’ As a result, margins are likely to see a ‘lag’, Kingspan said.
Brent oil was quoted at $107.52 a barrel early Friday, rising from $106.55 late Thursday.
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