Market focus as the end of the week was on a key inflation reading in the US, as the Federal Reserve leads central banks around the world in raising interest rates.
Not boding well for price pressure, the Brent crude oil price edged above $124 a barrel on Friday.
The US consumer price index report is at 1330 BST.
The FTSE 100 index was down 87.83 points, or 1.2%, at 7,388.48 midday Friday in London. The mid-cap FTSE 250 index was down 195.88 points, or 1.0%, at 19,879.21. The AIM All-Share index was down 4.48 points, or 0.5%, at 960.74.
The Cboe UK 100 index was down 1.2% at 736.04. The Cboe 250 was down 1.4% at 17,547.62, and the Cboe Small Companies was down 0.8% at 14,639.25.
In mainland Europe, the CAC 40 in Paris was down 1.5% and the DAX 40 in Frankfurt was down 1.6%.
New York was pointed to a mixed open, following steep loses on Thursday. The Dow Jones Industrial Average was called down 0.3% and the S&P 500 down 0.2%, but the Nasdaq Composite was pointed up 0.1%. The indices had closed down 1.3%, 2.4%, and 2.8% respectively on Thursday.
A hotter-than-expected inflation print is likely to hurry the Federal Reserve along on its path of aggressive monetary policy tightening, ahead of the US central bank's interest rate decision next week. Last month, the Fed enacted its first over 50-basis-point hike since May 2000.
Elevated levels of inflation have posed one of the biggest headaches so far for the Biden administration in Washington, as soaring prices take a toll on American households. The annual inflation rate remained close to a 40-year high in April, leaving consumers struggling to afford necessities including food, shelter and fuel.
‘We expect the headline inflation number to be elevated,’ Press Secretary Karine Jean-Pierre had told reporters Wednesday on Air Force One.
On Thursday, the European Central Bank belatedly joined the global policy tightening shift, announcing the end of its bond-buying programme and signalling it will hike interest rates several times this year.
Nick Chatters, investment manager at Aegon Asset Management, commented: ‘US inflation today will be a key data point for the market this week. Yesterday, the ECB signalled a hawkish path of policy to come, as did the Fed earlier in the year, but today could give Powell and company a fright if inflation surprises to the upside yet again. To be clear, they are looking for 'clear and convincing evidence' that inflation in the US is going to start falling back from its eye watering level.’
Economists at Lloyds Bank said they expect the headline annual inflation rate to continue to slow, to 8.2% in May from 8.3% in April and 8.5% in March.
The core rate of inflation is seen falling to 5.9% from 6.2% in April and 6.5% in March. They said risks for the headline figure are skewed to the upside, due to the recent rise in energy prices.
‘Core inflation seems more likely to have declined but there will be considerable interest in whether services inflation is continuing to accelerate. That would be an indication that inflationary pressures are broadening out,’ Lloyds said. ‘Overall, the report is not expected to ease the pressure on the Federal Reserve to continue to raise interest rates.’
The CME Fedwatch service suggests markets are putting a 92% chance on another half-point rise this month to 1.5%.
In the FTSE 100, GSK was up 0.5% after the drugmaker unveiled positive pivotal phase three data for its respiratory syncytial virus vaccine candidate AReSVi 006 for adults.
The RSV vaccine candidate showed statistically ‘significant and clinically meaningful efficacy’ in adults aged 60 years and above, GSK explained.
GSK said interim analysis was reviewed by an Independent Data Monitoring Committee, and the primary endpoint was exceeded with no unexpected safety concerns observed.
In the FTSE 250 index, Apax Global was the best performer, up 9.0%, after it said the Apax X Fund has sold its controlling stake in MyCase to AffiniPay.
Apax Global Alpha is a limited partner in the X Fund; it allows investors access to a portfolio of private equity funds advised by London-based Apax Partners.
X Fund acquired MyCase, which provides legal practice management software and integrated payments to legal professionals, in 2020.
Apax Global Alpha said that the sale values its current look-through investment in MyCase at around €22.5 million. This represents an increase of approximately 48% compared to the last unaffected valuation and an uplift of around €7.3 million in the adjusted net asset value of Apax Global Alpha at March 31, it added.
Elsewhere in London, ProCook was down 40% at 47.10p. The kitchenware retailer said trading has been hurt by increasingly challenging market conditions, with customers affected by ‘exceptional pressures’ on discretionary spending.
The stock listed on the London Main Market back in November at an initial public offering price of 145.00p so is down by two-thirds in six months.
For the fourth quarter, which ended April 3, ProCook said it was trading against ‘exceptionally strong comparatives’ from the prior year, when it benefited from pent-up demand following the lifting of Covid-19 restrictions and the reopening of retail stores.
The retailer said like-for-like sales have weakened across all channels, in line with the wider kitchenware market, though revenue remains ‘significantly higher’ than the comparative pre-Covid period in 2019.
ProCook now expects to deliver adjusted pretax profit of between £4 million to £6 million for financial 2023. It didn't provide its adjusted pretax profit figure for financial 2022. In the first half of financial 2022, the six months that ended October 21 last year, underlying pretax profit was £3.6 million.
The Bank of England said the UK's high street banks are no longer ‘too big to fail’ after it completed its assessment of the the eight ‘major’ lenders in the country.
In its Resolvability Assessment Framework, the UK central bank said shareholders and investors, and not taxpayers, are in line to ‘bear the costs’ if any bank suffers a collapse.
‘In 2007-08, the UK did not have a regime to enable resolving banks without the use of public money. This left two choices when some got into trouble: let banks fail and cause huge disruption or bail them out with taxpayers' money,’ the BoE said.
Now, however, the central bank said it now has a ‘robust’ framework to deal with the fallout of a banking crisis. The eight banks to take part in the assessment were HSBC, Barclays, NatWest, Lloyds Banking, Standard Chartered, Banco Santander's UK operations, Virgin Money UK and Nationwide Building Society.
HSBC was down 1.2%, Barclays down 0.9%, NatWest down 1.0%, Lloyds down 0.9%, Standard Chartered down 1.0%, and VMUK down 2.7%.
Banco Santander was down 4.1% in Madrid.
The pound was quoted at $1.2450 at midday on Friday, down from $1.2536 at the London equities close Thursday.
The euro was priced at $1.0608, down from $1.0657. Against the yen, the dollar was trading at JP¥133.76 in London, lower against JP¥134.16.
Brent oil was quoted at $124.07 a barrel Friday at midday, up from $123.37 late Thursday. Gold stood at $1,843.75 an ounce, up slightly from $1,842.36.
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