Following a few days in the red, when investors reacted to a US credit rating cut by Fitch Ratings and further monetary policy tightening from the Bank of England, London stocks ended the week in the green on Friday.
The FTSE 100 index closed up 35.21 points, or 0.5% at 7,564.37 on Friday, but ended the week down 1.7%.
The FTSE 250 ended up 100.97 points, or 0.5%, at 18,934.62, and finished the week down 1.0%. The AIM All-Share closed up 3.59 points, or 0.5%, at 763.13 and closed the past five days down 0.3%.
The Cboe UK 100 ended up 0.6% at 754.52, the Cboe UK 250 closed up 0.7% at 16,622.44, and the Cboe Small Companies ended up 0.6% at 13,221.79.
In London, WPP closed down 3.6%, finishing the day as the worst blue-chip performer on Friday.
The advertising company cut its yearly guidance after its second-quarter was hurt by weaker spend in its US technology clients.
The company reported first-half revenue of £7.22 billion, up 6.9% from £6.76 billion a year prior. Pretax profit, however, slumped 51% to £204.3 million from £418.6 million. WPP reported finance costs of £230.7 million, a 59% rise from £144.9 million.
‘Our performance in the first half has been resilient with [second quarter] growth accelerating in all regions except the US, which was impacted in the second quarter by lower spending from technology clients and some delays in technology-related projects...In the near term, we expect the pattern of activity in the first half to continue into the second half of the year,’ Chief Executive Mark Read said.
As a result, WPP now expects like-for-like revenue growth, less pass-through costs, of 1.5% to 3.0% for 2023, its guidance cut from a range of 3% to 5%. Its headline operating margin target of ‘around 15%’ was maintained, however.
Dan Coatsworth, stock market analyst at AJ Bell, said advertising agencies are a ‘good proxy for the state of the economy’ and the fact WPP has issued a profit warning is ‘telling’.
‘If corporates are worried about the near-term outlook, they cut back on advertising and marketing. If they’re bullish, they spend more on promotions,’ he explained.
Meanwhile, Rolls-Royce was the second-best performing in the FTSE 100, ending 4.5% higher.
On Thursday, the London-based maker of power and propulsion systems said it swung to a pretax profit of £1.42 billion from a loss of £1.75 billion a year prior. Revenue rose by 34% to £7.52 billion from £5.60 billion the year before.
In the FTSE 250, Capita plunged 16%.
The business process services provider said it swung to a statutory pretax loss of £67.9 million in the first half of 2023, from a £100,000 profit the previous year.
Capita explained the reported loss was due to business exits, non-core portfolio goodwill impairment, and costs associated with a cyber attack in March which disrupted some clients’ services.
In June, the company said it will sell five non-core software businesses to London-based acquisition vehicle AdvancedAdvT for £33 million, in what the latter said will constitute a reverse takeover.
The transaction is part of Capita’s disposals programme to ‘materially’ reduce its debt, Chief Executive Officer Jon Lewis had explained.
Morgan Advanced Materials slid 4.2% after it reported a fall in interim profit related to a cyber incident.
Pretax profit fell 37% to £28.4 million in the first half of 2023, from £65.7 million the year prior. Revenue, meanwhile, rose 4.5% to £553.9 million from £530.2 million.
Chief Executive Officer Pete Raby said: ‘We have delivered revenue growth in the first half in line with our expectations and continue to see the benefits of our leading differentiated positions in attractive growth markets.’
Elsewhere in London, Caracal Gold fell 4.6% despite reporting production in the second quarter of 2023 was significantly better than in the preceding months.
The East Africa-focused gold producer said that at the Kilimapesa project, its gold mine west of Nairobi, Kenya, it mined 53,630 tonnes of gold during the second quarter of 2023, up from 12,045 tonnes during the first quarter.
‘After a difficult first quarter it has been great to see Kilimapesa run in a steady state over the second quarter. The production numbers confirm that the operation is running well,’ commented Chief Executive Officer Robbie McCrae.
Caracal had said in May that expansion and operational activities were limited during about half of the first quarter due to a delay in funding.
On AIM, Tern more than doubled to 7.66 pence, after closing at 3.51p on Thursday. The company announced its portfolio company Wyld Networks signed an agreement with Space Exploration Technologies, a spacecraft engineering company led by Tesla owner Elon Musk.
Tern, an investment company specialising in supporting early-stage internet of things technology businesses, holds a stake of about 27% in Wyld Networks.
In European equities on Friday, the CAC 40 in Paris ended up 0.8%, while the DAX 40 in Frankfurt ended 0.3% higher.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.5%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.7%.
A positive mood prevailed on Wall Street after fresh data that revealed the US economy added fewer jobs than expected last month, renewing hopes for an end to further interest rate hikes from the US Federal Reserve.
According to data from the Bureau of Labor Statistics, nonfarm payrolls rose by 187,000 in July, below the FXStreet cited consensus, which had chalked in a 200,000 increase, but up from 185,000 in June.
June’s reading was downwardly revised from 209,000.
The pound was quoted at $1.2765 at the London equities close on Friday, up from $1.2719 at the close on Thursday. The euro stood at $1.1037, higher against $1.0951. Against the yen, the dollar was trading at JP¥141.82, lower compared to JP¥142.22 late Thursday.
Brent oil was quoted at $85.77 a barrel at the London equities close on Friday, up from $84.90 late Thursday. Gold was quoted at $1,940.94 an ounce, higher against $1,937.55 at the close on Thursday.
In UK corporate calendar on Monday, there are half-year results from recruitment firm PageGroup and deepwater exploration and production company Kosmos Energy.
The economic calendar next week has the UK Halifax house price index on Monday, inflation data from China on Wednesday, and the latest US weekly unemployment claims report on Thursday.
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