Gold was the big winner on Friday at the end of a week of small-to-large interest rate hikes and mixed-to-dismal economic data.
Gold was quoted at $1,782.79 an ounce at midday in London, sharply higher against $1,776.01 at the equities close on Thursday.
The safe-haven Japanese yen also was faring well. The dollar was trading at JP¥137.01, down JP¥137.70.
‘Appetite towards riskier assets decreased after renewed hints of an uncertain economic outlook this week, reviving recession fears in Europe as well as in the US, as the fight against inflation remains the priority for central bankers,’ said Pierre Veyret at ActivTrades.
Central banks in the US, UK, EU and Switzerland raised interest rates by half a percentage point this week, while the Norwegian central bank hiked by a quarter point.
The FTSE 100 index was down 88.51 points, or 1.2%, at 7,337.66 midday Friday. The FTSE 250 was down 302.87 points, or 1.6%, at 18,590.92, and the AIM All-Share was down 7.07 points, or 0.9%, at 821.38.
The Cboe UK 100 was down 1.2% at 733.81, the Cboe UK 250 was down 1.8% at 16,044.54, and the Cboe Small Companies was down 1.3% at 12,848.36.
The UK private sector saw its downturn ease in December, though employment slipped into decline, survey results from S&P Global and the Chartered Institute of Procurement & Supply showed.
The flash composite purchasing managers’ output index rose to a three-month high of 49.0 in December from 48.2 in November. Any reading under the 50-point threshold signals market contraction.
The December data adds to the likelihood that the UK is in recession, said S&P, with the purchasing managers’ index indicating a 0.3% gross domestic product contraction in the fourth quarter.
The data comes as retail sales in the UK unexpectedly fell in November against the previous month.
Retail sales volumes are estimated to have fallen by 0.4% in November, after a revised 0.9% rise in October. Market consensus, as cited by FXStreet, had expected a 0.3% increase in November.
Compared with the same period a year earlier, retail sales volumes fell by 5.9% in November. The market had expected a 5.6% fall.
The pound was quoted at $1.2198 at midday on Friday in London, lower compared to $1.2210 at the close on Thursday.
In European equities on Friday, the CAC 40 in Paris was down 1.4%, while the DAX 40 in Frankfurt was down 0.9%.
The eurozone has seen its own economic downturn ease and inflation pressures fall, as supply improved in December, survey results from S&P Global showed.
The flash composite purchasing managers’ output index rose to a four-month high of 48.8 points in December from 47.8 in November.
‘While the further fall in business activity in December signals a strong possibility of recession, the survey also hints that any downturn will be milder than thought likely a few months ago’ said Chris Williamson, chief business economist at S&P Global Market Intelligence.
The euro stood at $1.0635, essentially unchanged against $1.0637 late Thursday.
‘ECB President Christine Lagarde delivered a very hawkish message, suggesting interest rates would have to continue to ’rise significantly at a steady pace’ to ensure they prove sufficiently restrictive for inflation to return to the 2% target,’ commented RBC Wealth Management about Thursday’s announcement.
‘We think that statement suggests two further 50-basis-point hikes are possible.’
In London, Bunzl was down 3.2%, after Barclays cut the distribution and outsourcing firm to ’underweight’ from ’equal-weight’.
RS Group was down 1.2%. The industrial and electronics products distributor said that its chief executive officer resigned with immediate effect, while the chief financial officer will be acting CEO.
CEO Lindsley Ruth agreed with the board to step down immediately due to personal reasons. CFO David Egan will lead RS Group as acting CEO until a permanent successor is found.
Shell was down 1.2%. On Thursday, it said it had won a bid to develop a 760 megawatt offshore wind power project in the Netherlands, alongside Rotterdam-based natural gas producer Eneco.
In the FTSE 250, Games Workshop jumped 15%. It reached an agreement in principle with Amazon Content Services, a subsidiary of Amazon.com, to develop its intellectual property in film and television productions.
The games manufacturer and retailer said the rights will initially be granted to develop the Warhammer 40,000 brand universe. It added that the project is ‘wholly dependent’ on, and subject to, contracts being agreed and entered into, which it said the firms are working towards.
Currys was down 5.4%. On Thursday, the electricals retailer had reported a sharp swing to a loss in the six months that ended October 29, due to an impairment and increasing costs and as revenue declined amid disruption in the Nordic region.
The London-based electronics retailer posted a pretax loss of £548 million, swinging from a profit of £48 million in the previous year. Revenue fell 6.5% to £4.47 billion from £4.79 million.
Elsewhere in London, Rank Group dropped 9.1%.
Rank disclosed on Friday that like-for-like net gaming revenue in the five months that ended November 30 was up just 1% compared to the same period last year. It said this was due to a decline at its Grosvenor venues, with its trading in its second quarter weaker than expected.
‘We had expected Grosvenor venues to have continued to improve throughout Q2 and then into the second half of the year, but this improvement has not yet materialised, driven by lower customer spend per visit,’ Rank explained.
As a result, Rank now expects like-for-like underlying operating profit for the year ending June 30 to be in the range of £10 million to £20 million.
Hollywood Bowl climbed 3.3%, after it reported a double-digit rise in revenue and profit multiplied.
In the financial year that ended September 30, the bowling centre operator posted revenue of £193.7 million, up 49% from £129.9 million the previous year - a record for the company.
Pretax profit soared to £46.7 million from just £462,000 the year prior. This figure was also ahead of financial 2019, its last year of uninterrupted trading before the Covid-19 pandemic.
Hollywood Bowl added it has continued this momentum into the start of its current financial year, noting strong demand an ‘encouraging’ pre-bookings for the Christmas period.
On AIM, Time Finance was up 11% after it said that it now expects its full-year result to be at least in line with market expectations thanks to ongoing positive momentum in trading.
Chief Executive Ed Rimmer said the firm’s performance during the six months that ended November 30 have been ‘particularly pleasing’.
The specialist finance provider reported revenue of £13.2 million in the period, up 12% against £11.8 million a year prior. Pretax profit jumped 67% to £2.0 million from £1.2 million.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 1.0%, the S&P 500 index down 1.1%, and the Nasdaq Composite down 0.8%.
Brent oil was quoted at $79.40 a barrel at midday in London on Friday, down from $81.07 late Thursday.
Still to come on Friday’s economic calendar, there’s a PMI print from the US at 1445 GMT.
By Heather Rydings, Alliance News senior economics reporter
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