The FTSE 100 was rising again early Friday, promising a positive end to a traumatic week for markets, amid signs that inflation pressure is plateauing and expectations that another key fiscal initiative by the still-new UK government will be reversed.
The latest US inflation reading reported on Thursday came in slightly higher than expected, initially spooking equities, though stocks found some poise and the FTSE 100 snapped a six-day losing streak.
The FTSE 100 index rose 62.49 points, or 0.9%, to 6,912.76 on Friday morning. It had closed up 0.4% on Thursday.
The FTSE 250 was up 159.35 points, or 0.9%, to 17,088.61. The AIM All-Share added 3.69 points, 0.5%, at 779.46.
The Cboe UK 100 opened 0.9% higher at 690.76, the Cboe UK 250 rose 0.7% at 14,594.08, and the Cboe Small Companies traded 0.1% higher at 12,148.72.
In European equities on Friday morning, the DAX 40 in Frankfurt surged 1.6%, while the CAC 40 in Paris added 1.1%.
Stocks that have suffered in recent trading sessions were on the up on Friday. Barclays traded 1.9% higher early Friday. Its 5.1% share price rise on Thursday had ended a six-day streak of lower finishes.
Housebuilders were on the up, with Barratt Developments climbing 2.8%. The sector suffered following the UK's mini-budget announcement last month, as mortgage rates rose sharply and some offers were pulled. Since the measures were announced, Barratt shares have fallen some 15%.
The mini-budget rocked markets and deepened divisions in the UK Conservative party.
Chancellor Kwasi Kwarteng is returning to London ahead of schedule for urgent talks with Prime Minister Liz Truss as expectations grow that they will scrap parts of their mini-budget to reassure markets.
Kwarteng was set to travel back from the International Monetary Fund's annual meeting in Washington DC this weekend but is now due to land in the UK on Friday morning. He is likely to find a significant section of his mini-budget redrawn after days of open revolt among Tory MPs and an emerging market consensus that another U-turn is on the cards.
The PM's key pledge to scrap the planned increase in corporation tax from 19% to 25% is widely seen as a likely casualty in the coming days, as Truss seeks to save her embattled premiership.
The pound was lifted by hopes of a government U-turn on Thursday, but returned some gains on Friday morning.
Sterling fell to $1.1274 shortly after the London equities open, down from $1.1340 late Thursday.
The euro fetched $0.9761 early Friday, down from $0.9772 at the European equities close on Thursday. Against the yen, the dollar was trading at JP¥147.50 early Friday UK time, up from JP¥147.19 at the London equities close on Thursday.
In London, shares in International Distributions Services tumbled 10%. The recently renamed FTSE 250 company warned of an interim loss at its Royal Mail arm in the UK, as well as more job cuts as it counts the cost of strike action.
For the six months to September, Royal Mail suffered a £219 million adjusted operating loss, swinging from £235 million profit a year earlier. Revenue fell 11% to £3.65 billion from £4.07 billion. IDS reported a £70 million profit hit from industrial action.
There could be more strikes to come to, as it has been threatened, but not yet ‘formally notified’ of a further 16 days of industrial action in November and December, around the key Christmas period.
Based on current estimates, Royal Mail may need to undertake between 5,000 and 6,000 redundancies between now and August 2023. IDS explained Royal Mail's workforce will have roughly 10,000 fewer roles on August 2023 than it did a year earlier.
For the full-year, IDS predicted a £350 million adjusted operating loss for Royal Mail, though the loss could stretch as far as £450 million.
Outside the UK, the GLS business is faring better, trading in line with expectations. Royal Mail division is IDS's UK-focused arm, delivering letters and parcels, and includes Parcelforce Worldwide. GLS is an international operation, based in Oude Meer, Netherlands and working across the US, Canada and Europe.
IDS said a separation remains an option should Royal Mail's trading not improve.
Online-only supermarket firm Ocado continued to be supported by deal-making in the US grocery sector. Shares rose 2.9% after an 11% surge on Thursday.
Bloomberg on Thursday reported Kroger Co is in talks to merge with Albertsons. Between them, Kroger and Albertsons operate around 5,000 stores in the US. Ocado's burgeoning warehouse technology arm counts Kroger as one of its partners.
Elsewhere on the Main Market, NARF Industries jumped 16% in early trade as the cybersecurity firm won its largest contract to date.
NARF said it has won a ‘large’ research & development pact with a US government agency. The deal, with the Defense Advanced Research Projects Agency begins immediately and is worth $6.3 million.
Brent oil was quoted at $94.66 a barrel early Friday, up from $94.07 late Thursday. Gold traded at $1,665.06 an ounce, flat from $1,665.31.
Friday's economic calendar has US retail sales figures at 1330 BST.
Still to come on the corporate front, JPMorgan Chase and Wells Fargo reveal third-quarter earnings before the New York market open.
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