London’s FTSE 100 was on the up in afternoon dealings, with markets in a demonstrably more risk-on at the end of the week, while the pound spiked to a one-year-high.
Friday’s gains have so far not been enough to put equities in positive territory for the week. The mood in markets has been tetchy after central bank decisions in the US and eurozone. Focus later will be on the US nonfarm payrolls report for April.
On the UK political front, meanwhile, there were a steady stream of local election results, which left Prime Minister Rishi Sunak with a bloody nose.
The FTSE 100 index was up 37.50 points, 0.5%, at 7,740.14. It is down 1.7% so far this week, however.
The FTSE 250 was up 119.00 points, 0.6%, at 19,363.91, and the AIM All-Share was up 1.34 points, 0.2%, at 826.32.
The Cboe UK 100 was up 0.4% at 774.04, the Cboe UK 250 up 0.7% at 16,979.96, and the Cboe Small Companies down 0.2% at 13,493.31.
In European equities on Friday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.8%.
Stocks in New York are called higher. The Dow Jones Industrial Average is called up 0.4%, while both the S&P 500 index and the Nasdaq Composite are called up 0.6%.
Investors are monitoring developments in the US banking sector. Shares in PacWest fell 51% in New York on Thursday after the regional lender said it had been approached by potential partners and investors over a potential sale. Blue-chip banks also closed in the red overnight.
The dollar fell, amid the crisis in the regional banking sector and as currency traders mull what that means for monetary policy.
The pound was quoted at $1.2611 at midday on Friday in London, higher compared to $1.2565 at the equities close on Thursday. The euro stood at $1.1026, up against $1.1002. Against the yen, the dollar was trading at JP¥134.27, up compared to JP¥133.94.
The pound hit a one-year high of around of $1.2634 on Friday morning, with the dollar under pressure after the Federal Reserve earlier this week strongly hinted at a rate hike pause.
AJ Bell analyst Russ Mould said a crisis in US midsized lending may lead ‘to increasing bets the Federal Reserve may have to move from a pause on interest rate hikes to actually cutting rates’.
On Wednesday evening, the Federal Reserve lifted US interest rates by 25 basis points, but strongly hinted this was the end of its current tightening cycle.
The ECB lifted its own interest rates by 25 basis points on Thursday, resisting the urge to enact another half-point hike. President Christine Lagarde said the ECB still has ground to cover, however.
The latest US nonfarm payrolls report is due at 1330 BST. The US economy is expected to have added 179,000 jobs in April, easing from 236,000 in March, according to FXStreet cited consensus.
In the UK, votes are still being tallied in some of the 230 local authorities in England that held elections on Thursday.
Early results indicated major losses for Sunak’s Conservative party in his first electoral test as prime minister, as the Tories ceded control of several councils to Labour and the Liberal Democrats.
Labour claimed the results suggest leader Keir Starmer will be able to replace Sunak in Number 10 next year.
Among London listings, British Airways parent International Consolidated Airlines rose 2.7%. IAG reported a strong performance in the first quarter, as capacity recovered to close to pre-pandemic levels.
Revenue rose 71% year-on-year to €5.89 billion from €3.44 billion. Its pretax loss narrowed substantially to €121 million from €916 million.
The performance was stronger than expected at all of its airlines, with BA returning to profit for the first since the beginning of 2019. The outperformance was mostly thanks to leisure demand for both long-haul and short-haul flights, IAG said.
‘We are seeing healthy forward bookings with leisure demand particularly strong, while business travel continues to recover more slowly,’ said Chief Executive Luis Gallego.
IAG raised guidance for annual pre-exceptional operating profit to above the top end of previous guidance of €1.8 to €2.3 billion.
‘The company is benefiting in two ways. Easing oil prices have helped with fuel costs while passenger demand has been robust. Crucially, and despite the pressures on household budgets, jetting away continues to be prioritised when it comes to spending decisions and bookings are healthy,’ AJ Bell’s Mould commented.
‘There is one fly in the ointment. The rebound in business travel, an important area for the group, remains sluggish and three years on from the start of the pandemic there may be fears this is becoming a structural issue with companies no longer as willing to fund these kinds of trips as regularly.’
InterContinental Hotels Group lost 2.3%.
The Windsor, Berkshire-based operator of the InterContinental, Holiday Inn and Crowne Plaza hotel chains said Keith Barr’s final day as CEO will be June 30, remaining available to the firm until the end of the year.
Elie Maalouf will take up the role as group CEO on July 1, after eight years serving as the firm’s Americas CEO. A process is underway to find a successor to the Americas CEO role, IHG said.
Barr has worked for IHG for more than 30 years, IHG noted.
For the first quarter of 2023, IHG said revenue per available room was up 33% from a year earlier. It was up 18% in Americas, up 64% in Europe Middle East Africa & Asia, and surged 75% in China.
‘We’ve seen a good start to the year, with continued strong trading in both the Americas and EMEAA, and an excellent rebound in demand in Greater China since the lifting of travel restrictions,’ said outgoing CEO Barr.
On AIM, Aptamer plummeted 61%, after the developer of novel Optimer binders for the life sciences industry updated on its financial year ending June 30.
In the first 10 months, revenue was around £1.4 million, with its pipeline taking ‘longer than expected to convert’. The delays were particularly apparent in licensing and royalty-based contracts.
It now expects annual revenue to be ‘materially’ below the previous year’s level of £4.0 million.
With cash running low at £700,000 at the end of April, Aptamer is mulling a range of funding options, which could be non-dilutive or dilutive in nature.
Brent oil was quoted at $74.33 a barrel at midday in London on Friday, up from $72.38 late Thursday. Gold was quoted at $2,037.22 an ounce, down against $2,049.92.
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