The FTSE 100 closed lower on Friday, despite a more positive mood this week, with investors believing the end of the Federal Reserve’s hiking cycle is in sight.
Focus was also on major US banks, with figures from JPMorgan and Wells Fargo impressing, though Citigroup suffered lower revenue.
The FTSE 100 index closed down 5.64 points, 0.1%, at 7,434.57. The FTSE 250 ended down 64.90 points, 0.4%, at 18,566.81, and the AIM All-Share closed up 0.49 of a point, 0.1%, at 750.78.
Over the week, the FTSE 100 is up 2.5%, the FTSE 250 up 3.1%, and the AIM All-Share up 1.2%.
The Cboe UK 100 ended down marginally at 742.10, the Cboe UK 250 closed down 0.4% at 16,295.74, and the Cboe Small Companies ended down 0.2% at 13,496.46.
‘We are having a great week in terms of US inflation news,’ said Swissquote Bank analyst Ipek Ozkardeskaya.
While the Federal Reserve must negotiate the final part of the journey of getting the yearly US inflation rate back down to 2%, from 3.0% currently, investors are confident the central bank will only hike once more.
With the US labour market also in good health, there is hope the nation may avoid a ‘hard landing’.
‘The probability of another 25bp hike at the Fed’s July meeting didn’t change much. It’s still given more than 90% probability. But the chances of another rate hike following the June hike are getting blurrier, so equity markets cheer the softening Fed expectations,’ Ozkardeskaya said.
The Federal Open Market Committee will decide on interest rates on July 26.
In New York, JPMorgan shares were 0.2% at the time of the London equities closed.
JPMorgan impressed and the bank’s boss hailed a resilient US economy, though he cautioned on ‘salient risks’ as consumers slowly exhaust ‘their cash buffers’.
The bank reported that net revenue increased 34% year-on-year to $41.31 billion, from $30.72 billion. Net income surged 67% to $14.47 billion from $8.65 billion.
Wells Fargo, meanwhile, reported a sharp rise in quarterly net income and revenue, supported by higher interest rates. Its stock rose 0.9%.
The San Francisco-based bank said revenue in the quarter ended June 30 rose by 20% to $20.53 billion from $17.04 billion a year earlier. Net income jumped 57% to $4.94 billion from $3.14 billion.
Chief Executive Officer Charlie Scharf said: ‘Our company remains strong and we have significant opportunities to continue to improve how we serve our customers. The US economy continues to perform better than many had expected, and although there will likely be continued economic slowing and uncertainty remains, it is quite possible the range of scenarios will narrow over the next few quarters.
However, it was a less-than-stellar quarter for Citigroup, which bemoaned higher operating costs and cost of credit, which alongside weaker revenue, hurt its net income. Citi dropped 2.5%.
For the three months ended June 30, the New York-based investment bank reported net income of $2.92 billion, down 36% from $4.55 billion year-on-year. Total revenue fell 1.0% to $19.44 billion from $19.64 billion.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.3%, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.4%.
In European equities on Friday, the CAC 40 in Paris ended up 0.1%, while the DAX 40 in Frankfurt ended down 0.2%.
The pound was quoted at $1.3117 at the London equities close Friday, higher compared to $1.3102 at the close on Thursday. The euro stood at $1.1240 at the European equities close Friday, higher against $1.1192 at the same time on Thursday. Against the yen, the dollar was trading at JP¥138.55, up compared to JP¥138.12 late Thursday.
In the FTSE 100, Spirax-Sarco Engineering closed up 3.3%, making it the performer Friday. UBS raised its rating to ’buy’ from ’neutral’.
In the FTSE 250 index, Ashmore closed 8.3% lower.
Ashmore, an emerging markets-focused investment manager, said its assets under management in the fourth quarter ended June 30 are expected to have fallen 3.1% to $55.9 billion from $57.7 billion on March 31.
‘There remains some global macro uncertainty and certain investors have therefore reduced risk during the quarter,’ Chief Executive Officer Mark Coombs explained.
Elsewhere, 888 plummeted 24%.
It said the UK gambling watchdog is reviewing its licence, after a vehicle backed by former executives of GVC Holdings proposed additions to the bookmaker’s board.
Brent oil was quoted at $80.12 a barrel at the London equities close Friday, down from $80.65 late Thursday. Gold was quoted at $1,957.56 an ounce at the London equities close Friday, up slightly against $1,956.63 at the close on Thursday.
In Monday’s UK corporate calendar, there are full year results from construction materials distributor Brickability and international investment fund Gore Street Energy Storage Fund.
The economic calendar for Monday has Chinese retail sales and GDP figures overnight. In UK, there will be a Rightmove house price index print on the stroke of midnight. Financial markets in Japan will be closed for Marine Day.
The week picks up pace with inflation data from the UK and eurozone on Wednesday.
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