European stocks were higher on Friday morning, with mid-cap housebuilder Bellway on the rise, as data from the US on Thursday offered some relief for investors.
A below-expected US nonfarm payrolls report for July on Friday last week set off a global sell-off in markets, but the weekly initial jobless claims report on Thursday provided reassurance.
In the week ending August 3, the advance figure for seasonally adjusted initial claims decreased to 233,000, the Department of Labor said. The reading from the prior week was revised slightly upwardly to 250,000 from 249,000. The latest reading however came in below FXStreet-cited market consensus of 240,000.
The jobless claims report ‘helped calm fears over recession risks and made the calls for emergency rate cuts from the Federal Reserve earlier in the week appear premature,’ said AJ Bell investment director Russ Mould.
The FTSE 100 index opened up 36.75 points, 0.5%, at 8,181.72. The rise puts the blue-chip index about flat for the week.
The FTSE 250 was up 89.78 points, 0.4%, at 20,598.36, and the AIM All-Share was up 1.14 points, 0.2%, at 766.35.
The Cboe UK 100 was up 0.4% at 815.87 points, the Cboe UK 250 was up 0.6% at 26,476.45, but the Cboe Small Companies was down 0.2% at 24,693.34.
In European equities on Friday, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was up 0.2%.
The dollar was lower early Friday.
Sterling was quoted at $1.2763, up from $1.2720 at the London equities close on Thursday. The euro traded at $1.0922, higher than $1.0907 late Thursday. Against the yen, the dollar was quoted at JP¥147.16, flat from JP¥147.17.
Wall Street ended higher on Thursday following the jobless claims report. The Dow Jones Industrial Average closed up 683.04 points, 1.8%, at 39,446.49. The S&P 500 closed up 2.3% at 5,319.31, and the Nasdaq Composite closed up 2.9% at 16,660.02.
Asia followed the US mostly higher on Friday. The Nikkei 225 index in Tokyo closed up 0.6%. The Hang Seng index in Hong Kong closed up 1.2%, but the Shanghai Composite closed down 0.3%. The S&P/ASX 200 in Sydney closed up 1.3%.
Consumer price inflation in China was stronger than expected in July, hitting a five-month high, providing some positive news on the world’s number-two economy, as with officials in Beijing try to boost consumer buying.
The 0.5% annual increase in the consumer price index accelerated from 0.2% in June and marked the sixth straight month of rising prices, according to the National Bureau of Statistics. China endured a period of deflation between October to January, when sliding prices of goods and services heightened worries of an economic slowdown.
July’s reading – which beat market forecasts in a survey by Bloomberg – represents the fastest rise in consumer prices since February, when the index increased 0.7% year-on-year.
In London early Friday, Hargreaves Lansdown shares were up 2.0% to 1,099.00 pence after agreeing to a takeover offer from a private equity consortium led by CVC. The offer at 1,140p per share, including a 30p final dividend for financial 2024, values the wealth management platform at £5.44 billion in total.
Hargreaves separately reported its annual results on Friday. Pretax profit was £396.3 million in the 12 months that ended June 30, down 2% from £402.7 million in financial 2023. Revenue was £764.9m, up 4% from £735.1m. Assets under administration totalled £155.3 billion, up 16% from £134.0 billion a year before. Its total dividend for the year is 43.2p, up 4% from 41.5p.
Jefferies said the annual results from Hargreaves were slightly ahead of consensus, and the investment bank expects Hargreaves shareholders to vote in favour of the takeover.
‘Although the offer is a 54% premium to the pre-offer share price, we think there is greater value in HL in the medium term,’ Jefferies commented. ‘Nevertheless, we expect the offer to succeed.’
The consortium said it had received backing from shareholders representing just over 25% of Hargreaves Lansdown shares. This includes the support of founders Peter Hargreaves and Stephen Lansdown.
However, leading the FTSE 100 index early Friday was gambling operator Entain, shares up 3.6%.
Entain on Thursday said its pretax loss narrowed dramatically to £27.6 million in the first half of 2024 from £448.1 million a year prior, as one-off costs fell away and revenue rose by 6.0%. The company also raised its annual guidance.
In the FTSE 250, Bellway was up 2.3%.
The house builder provided a trading statement ahead of its annual results on October 15. In the financial year that ended July 31, total housing completions declined to 7,654 at an average selling price of £308,000 from 10,945 at £310,306 in financial 2023. However Bellway said both figures were slightly ahead of previous guidance.
Stockbroker Davy said the underlying operating margin reported by Bellway of 10%, down from 16.0% in financial 2023, was nonetheless well ahead of forecasts
‘This is a good out-turn relative to guidance, which was for an ’at least 600 [basis points] fall’ relative to FY23. Overall, this implies a FY operating profit of about £235 million, 12% ahead of consensus and about 8% ahead of our forecast,’ said analyst Colin Sheridan.
‘With the higher order book and better momentum in sales into the end of FY24, Bellway is well placed to deliver growth in FY25,’ he added.
Publisher Future was down 0.8% to 1,059.00p, after Canaccord cut the stock to ’sell’ from ’hold’, with a price target of 733p.
Food ordering platform Just Eat Takeaway was up 5.8%, after Morgan Stanley raised the stock to ’overweight’ from ’equal-weight’.
Gold was quoted at $2,423.56 an ounce early Friday, higher than $2,415.11 late in London on Thursday.
Brent oil was trading at $79.03 a barrel early Friday, up from $78.92.
Still to come on Friday’s economic calendar are industrial production figures from Ireland at 1100 BST.
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