The FTSE 100 ended a stormy week in calmer fashion after data allayed fears of an impending economic slowdown.
After the turmoil following last week’s US nonfarm payrolls print, this week closed on a more muted note than it had started. Lower-than-expected US jobless claims on Thursday, and robust US services PMIs earlier in the week, helped to quell anxiety that the US economy had weakened more rapidly than expected.
The FTSE 100 index closed up 23.13 points, 0.3%, at 8,168.10. The FTSE 250 ended up 116.60 points, 0.6%, at 20,625.18, and the AIM All-Share closed up 1.03 point, 0.1%, at 766.24.
The FTSE 100 closed the week down just 0.1%, the FTSE 250 fell 1.0%, whilst the AIM All-Share shed 0.6%.
The Cboe UK 100 ended up 0.4% at 816.40, the Cboe UK 250 closed up 0.5% at 18,055.53, and the Cboe Small Companies ended up 0.7% at 16,796.56.
In European equities, the CAC 40 in Paris ended up 0.3%, while the DAX 40 in Frankfurt ended up 0.1%.
‘More reassuring data on the US economy, as jobless claims came in below forecasts, has 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.
According to CME’s FedWatch tool, the market is pricing the odds of a 50 basis point cut at September’s meeting at 54%, which is down considerably from as much as 94% on Monday. However, it marks a shift from last week’s prevailing view that a 25bp cut was the most likely option.
The pound was quoted at $1.2770 at the equities close on Friday in London, rising from $1.2720 at the equities close on Thursday. The euro stood at $1.0925, up against $1.0907. Against the yen, the dollar was trading at JP¥146.56, down slightly compared to JP¥147.17.
Mining stocks such as Antofagasta and Glencore, closed up 1.5% and 1.4% respectively, amid positive economic data from China - a key driver of demand for commodities.
Chinese consumer inflation picked up more than expected and spiked to its hottest level in five months, providing some much-needed positive news on the world’s number-two economy.
July’s 0.5% increase on-year in the consumer price index - the main gauge of inflation – was sharply up from the 0.2% seen in June and marked the sixth straight month of rising.
China endured a period of deflation between October to January, when sliding prices of goods and services heightened worries of an economic slowdown.
However, Pantheon Macroeconomics warned that the headline figure rose ‘thanks to severe weather conditions buffeting fresh food supplies, rather than stronger demand’.
Commodity prices picked up somewhat, with Brent oil quoted at $79.54 a barrel on Friday afternoon in London, up from $78.92 late Thursday. Gold was quoted at $2,429.01 an ounce, up against $2,415.11.
Elsewhere in the FTSE 100, Rightmove added 0.9%.
The Milton Keynes-based online property portal said lettings agent OpenRent has entered into a new membership agreement, only days after saying it had failed to strike a deal.
Hargreaves Lansdown rose 2.6%, on news that the Bristol-based wealth management platform accepted a £5.44 billion takeover offer from a consortium of private equity buyers led by CVC.
The consortium, made up of CVC Private Equity Funds, Nordic Capital XI Delta and Platinum Ivy B 2018 RSC Ltd, a wholly-owned subsidiary of the Abu Dhabi Investment Authority, have agreed to pay 1,140 pence per share cash for each Hargreaves Lansdown share.
In the FTSE 250, Bellway shares were up 3.3%.
The housebuilder said it was encouraged by the new UK government’s plan to increase the supply of homes in the country, as it reported a slump in house completions.
The Newcastle-based firm said total house completions dived 30% to 7,654 in the financial year ended July 31, from 10,945 a year prior. The average selling price dipped 0.7% to £308,000 from £310,306. However, Bellway said both figures were slightly ahead of previous guidance.
Housing revenue fell 31% to £2.35 billion from £3.40 billion.
More positively, Bellway said its forward order book stood at 5,144 homes on July 31, up 17% from 4,411 a year before.
‘The stock market is not (and cannot) always be right, but its views must always be respected and right now the share price chart for Bellway suggests that investors believe a gradual recovery in the UK housing market is underway,’ commented Mould.
Meanwhile, on AIM, Hummingbird Resources fell 25%.
The gold miner with operations in Mali, Guinea and Liberia says performance at its Yanfolila mine in Mali was hurt by short-term mining challenges, resulting from poor availability and utilisation of the mining fleet.
As a result, the firm records a loss before interest, tax, depreciation and amortisation of $13.5 million in the second quarter. For financial 2024, it now expects 65,000 to 75,000 ounces from Yanfolila, which would be down from 83,965 ounces in financial 2023.
Stocks in New York were making little headway at the London equities close, with the DJIA marginally lower, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.1%.
In Monday’s UK corporate calendar, there are half-year results from natural stone and concrete hard landscaping product maker Marshalls and fintech group and trading platform operator Plus500.
The economic calendar for Monday sees Japanese financial markets closed for Mountain Day. On Tuesday, there will be UK unemployment, EU unemployment and GDP, on Wednesday, there will be UK and US inflation figures, with Thursday seeing a raft of Chinese data overnight.
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