Stocks in London finished in the green on Friday, after PCE data from the US came in hotter than expected.
Investors are also eyeing interest rate decisions from the US Federal Reserve and Bank of England next week.
The FTSE 100 index closed up 99.36 points, 1.2%, at 8,285.71. The FTSE 250 ended up 471.95 points, 2.3%, at 21,356.30, and the AIM All-Share closed up 6.64 points, 0.9%, at 779.67.
Over the last five days, the FTSE 100 and FTSE 250 are up 1.6% and 1.4% each. However, the AIM All-Share is down 0.6%.
The Cboe UK 100 ended up 1.4% at 827.75, the Cboe UK 250 closed up 2.4% at 18,726.28, and the Cboe Small Companies ended up 1.7% at 17,311.93.
In European equities on Friday, the CAC 40 in Paris ended up 1.2%, while the DAX 40 in Frankfurt ended up 0.7%.
Stocks in New York were higher at the London equities close, with the DJIA up 1.4%, the S&P 500 index up 0.8%, and the Nasdaq Composite up 0.5%.
Consumer prices in the US rose slightly more than expected in June and at the same pace as in May, according to the Federal Reserve’s preferred inflation measure, released on Friday.
The Bureau of Economic Analysis said the core personal consumption index gauge rose 2.6% on-year in June, unchanged from May’s annual increase. The pace of inflation as measured by the index had slowed from 2.8% in April, had it had been expected to cool to 2.5% in June.
The core PCE index does not include food or energy. The headline index, which does, rose 2.5% on-year in June, easing from 2.6% growth in May.
On-month, the core PCE index rose 0.2% in June from May, as it did in May from April, in line with forecasts.
The headline PCE index rose 0.1% in June from May after being unchanged in May from April. This was as expected.
The data comes just days ahead of the US Fed’s next interest rate decision. The decision will come from the Federal Open Market Committee on Wednesday.
It is widely expected to leave interest rates unchanged but attention is on hints about the September policy meeting.
‘The subdued rise in prices will give the Federal Reserve greater confidence that inflation is on track to moderate toward its 2% target. While we are not expecting the news to be quite as good in coming months, we think it would take a nasty upward surprise to inflation between now and September to derail the Fed from cutting rates at that meeting,’ said Michael Pearce at Oxford Economics.
Also next week, on Thursday, the Bank of England will announce its own interest rate decision.
The pound was quoted at $1.2859 at the London equities close Friday, lower compared to $1.2882 at the close on Thursday. The euro stood at $1.0859 at the European equities close Friday, virtually unchanged against $1.0857 at the same time on Thursday. Against the yen, the dollar was trading at JP¥153.75, higher compared to JP¥153.44 late Thursday.
In the FTSE, NatWest jumped 7.0%, after raising annual guidance and buying a mortgage portfolio from Metro Bank.
The lender reported total income of £7.13 billion for the first-half of 2024, down 7.7% on-year from £7.73 billion. Net interest income alone dropped 5.6% to £5.41 billion.
Pretax profit declined 16% to £3.03 billion from £3.59 billion. In the second-quarter alone, total income fell 5.0% annually to £3.66 billion, but beat company-compiled consensus of £3.41 billion. Pretax profit, which declined 14% to £1.70 billion, beat consensus of £1.26 billion.
NatWest said the deal with Metro Bank will see it snap up a £2.5 billion portfolio of prime UK residential mortgages.
Metro Bank said the deal will ‘earnings, net interest margin and capital ratio accretive’. Shares in the high street lender closed 5.7% higher.
In the FTSE 250, Drax rose 14%, after it reported strong double-digit growth in the first half.
The Selby, England-based power generation and carbon capture technology company said in the first half that ended June 30, pretax profit rose 37% to £463.2 million from £338.1 million the previous year.
Revenue increased 19% to £3.16 billion from a restated £3.89 billion, leading Drax to raise its interim dividend by 13% to 10.4 pence per share from 9.2p.
Chief Executive Officer Will Gardiner commented: ‘Drax has delivered a strong operational performance, playing an important role supporting the UK energy system...We look forward to working with the new UK Government to help grow the economy and take steps urgently to deliver a net zero electricity system by 2030.’
On London’s AIM, Webis plummeted 29%.
The Isle of Man-based gaming firm said an expected improvement in the business-to-customer segment did not materialise, ‘exacerbated by unprecedented race meeting cancellations throughout the US due to weather disruption’.
It added that it now expects losses in the second half to May 31 to be ‘broadly commensurate’ with the first.
Brent oil was quoted at $79.56 a barrel at the London equities close Friday, down from $81.75 late Thursday. Gold was quoted at $2,384.60 an ounce at the London equities close Friday, higher against $2,366.60 at the close on Thursday.
In Monday’s UK corporate calendar, there are half year results from Pearson. There are also first quarter results from Cranswick.
The economic calendar for Monday looks relatively quiet, other than retail sales data from Ireland and Switzerland.
The week picks up on Tuesday, with a gross domestic product reading from the eurozone, as well as an economic sentiment and consumer confidence reading.
In Germany there is also a GDP reading, paired with a consumer price inflation reading.
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