Stock markets were positioning to close off another positive week, after safe passage through a week rich with economic data and company earnings.
Figures suggesting that the inflation rate in the US has peaked was supporting risk appetite.
The FTSE 100 was up 15.27 points, or 0.2%, at 7,481.18 midday Friday in London. The blue-chip club was up 0.6% for the week as a whole.
The FTSE 250 index was up 26.47 points, or 0.1%, at 20,271.90. The AIM All-Share index was up 0.95 of a point, or 0.1%, at 929.31.
The Cboe UK 100 index was up 0.2% at 747.74. The Cboe 250 was up 0.1% at 17,606.33. The Cboe Small Companies was up 0.3% at 14,501.44.
In Paris, the CAC 40 stock index was up 0.1%, while in Frankfurt, the DAX 40 was 0.3% higher.
New York was pointed to a higher open on Friday at the end of a significant week for economic data.
On Thursday, data showed the US producer price index rose by 9.8% in July, easing from an 11% rise in June. The latest reading was lower than the market forecast, cited by FXStreet, of 10%.
The factory price data came a day after another data report showed consumer price inflation moderated by more than expected to an annual rate of 8.5% in July from 9.1% in June.
The Dow Jones Industrial Average was called up 0.4% on Friday, the S&P 500 also up 0.4%, and the Nasdaq Composite up 0.5%.
On Thursday, the Dow Jones Industrial Average had closed up 0.1%, but the S&P 500 ended down 0.1% and Nasdaq Composite down 0.6%.
Illumina was down 15% in pre-market trade on Wall Street after the biotech firm, late Thursday, released a ‘disappointing’ set of quarterly results and slashed annual guidance.
The San Diego, California-based firm said revenue edged up to $1.16 billion in the three months to July 3 from $1.13 billion a year before. However, Illumina swung to a net loss of $535 million from a profit of $185 million a year prior, generating a loss per share of $3.40 compared to EPS of $1.26.
The firm now expects full year revenue to grow between 4% and 5% year-on-year, its forecast falling sharply from the 14% to 16% range forecast on the release of its first-quarter results. It expects a GAAP diluted loss per share between $2.93 and $2.78. This compares with previous guidance for GAAP diluted earnings per share between $2.33 and $2.53.
In London, Flutter Entertainment was the standout large-cap performer, up 13%. The gambling firm said it is yet to see ‘discernible signs’ of a hit to the business from falling consumer confidence.
Rival Entain was up 2.3% in a positive read-across.
In the six months to the end of June, Flutter’s revenue increased 11% to £3.39 billion from £3.05 billion a year earlier. However, it swung to a pretax loss of £51 million from a £77 million profit.
The Paddy Power-owner reported amortisation costs increased 3.6% year-on-year to £286 million. Operating costs were 17% higher at £1.60 billion.
During the half, Flutter said it increased its average monthly players base to players to 8.7 million, 14% higher than the prior year. Flutter said the rapid expansion of its US business FanDuel was key to this growth, along with good underlying player momentum in the UK & Ireland, as well as Australia.
GSK was up 3.4%. The drugmaker said it would ‘vigorously defend all claims’ against Zantac lawsuits, after it was named as a defendant in federal litigation in the US, alongside Sanofi and Pfizer.
Fears about the heartburn treatment have hit the pharma stocks. GSK is down 13% for the week.
Ranitidine, sold under the name Zantac, was offered over-the-counter in the US by French drugmaker Sanofi and was originally manufactured by GSK. Zantac was withdrawn after the US Food & Drug Administration in 2019 warned that the product contained levels of NDMA, a probable human carcinogen - a substance which has been linked to cancer.
GSK said it has been named as a defendant in around 3,000 filed personal injury cases in US federal and state court and ‘numerous’ unfiled claims. Class actions have also been filed, it said.
Sanofi said that as of August 1, it was aware of 2,850 personal injury plaintiffs in the US. When factoring in additional Zantac cases that do not include Sanofi, this number rises to 3,450. The stock was up 1.3% in Paris.
Sanofi noted that there are other potential personal injury claimants who, in lieu of filing a court case, have instead joined a registry of ‘unfiled’ claims.
Pfizer late Thursday said it has ‘significant defences’ against Zantac litigation, while GSK consumer spinoff Haleon revealed it is ‘not a party’ to any claims. Pfizer lost 3.3% in New York on Thursday.
Haleon, which is down 13% this week alone, said that it is ‘not primarily liable’ for any over-the-counter or prescription claims involving Zantac. The stock was up 1.4%.
‘It is worth remembering this is not ‘new’ news,’ pointed out Danni Hewson at AJ Bell.
‘Regulators and experts have been looking into any links between Zantac and cancer for years, and indeed the risks were flagged in Haleon’s stock market prospectus. However, it goes to show most investors don’t bother to read the small print, so they’ve been caught off guard after the potential liabilities hit the news.’
Kingfisher was down 2.2% after UBS downgraded the home improvement retailer to ‘sell’ from ‘neutral’.
In the FTSE 250 index, TBC Bank was the best performer, up 5.1%, after the Georgia-headquartered lender raised its dividend following a strong rise in profit.
In the first half of 2022, pretax profit rose to ?510.7 million, about £153.2 million, from ?460.9 million, as operating income increased to ?876.9 million from ?691.4 million.
TBC declared an interim dividend of ?2.5, about 75 pence, rising from ?1.5 a year before.
888 Holdings was the worst performer, down 16%, after the gambling firm reported a falling interim profit.
Pretax profit in the half-year to June 30 dived 66% to £14.4 million from £41.9 million a year ago.
Revenue fell to £332.1 million from £380.9 million. 888 expects revenue in the second half to be in line with the first half.
888 explained revenue was down ‘with the majority of the business seeing relatively stable revenues, offset by declines in the UK of 25% reflecting the implementation of more stringent safer gambling policies, and the closure of the Netherlands.’ Excluding the UK and Netherlands, revenue was up 2% year over year, it noted.
The dollar was higher across the board. The pound was quoted at $1.2138 at midday in London on Friday, down from $1.2205 at the London equities close Thursday.
The euro was priced at $1.0290, down from $1.0328. Against the yen, the dollar was trading at JP¥133.51 in London, higher against JP¥132.79.
The UK economy shrank marginally in the second quarter of the year from the first, according to the Office for National Statistics.
On an annual basis, UK gross domestic product expanded 2.9% in the second quarter, slowing sharply from 8.7% growth in the first quarter. The latest reading just beat the market forecast, cited by FXStreet, for growth of 2.8%.
On a quarterly basis, the UK economy contracted 0.1% in the second quarter following growth of 0.8% in the first quarter. Market consensus had pointed to a 0.2% contraction.
Tom Stevenson, investment director at Fidelity International, commented: ‘The small decline in second quarter GDP reported this morning is unlikely to mark the start of a technical recession because economists think there will be a return to growth over the summer months. However, it is a harbinger of what’s to come at the end of the year. The Bank of England expects output to contract in the final three months of 2022 and throughout 2023, bringing the longest, if not the deepest, recession since the financial crisis.’
Brent oil was quoted at $99.93 a barrel Friday morning, up from $98.87 late Thursday. Gold stood at $1,786.42 an ounce, firm against $1,789.51.
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