London’s FTSE 100 ended with a slight gain on Friday, but posted its third consecutive weekly loss, as investors reduced their bets on U.S. interest rate cuts based on strong recent data.
Tepid retail sales in the UK have brought attention back to the Bank of England. The drop in sales reinforced expectations for an interest rate cut for May, after higher-than-expected inflation data cast doubt on the outlook.
The FTSE 100 index gained just 2.84 points to reach 7,461.93 points. The FTSE 250 index lost 73.79 points, or 0.4%, to 18,874.25 points, moving into negative territory after a positive start to the day. The AIM All-Share lost 4.55 points, or 0.6%, to 736.46.
Over the week, the FTSE 100 lost 2.1%, its third consecutive weekly loss. The FTSE 250 lost 1.7%. The AIM All-Share also lost 1.7%.
The Cboe UK 100 rose 745.81 points, the Cboe UK 250 fell 0.7% to 16,295.89 points, while the Cboe Small Companies rose 0.1% to 14,904.25 points.
In New York, the Dow Jones Industrial Average and the S&P 500 both rose 0.5%. The Nasdaq Composite was up 0.7%.
In Europe, the CAC 40 in Paris lost 0.4% and the DAX 40 in Frankfurt fell 0.1%.
The pound was quoted at USD 1.2669 late Friday in London, down from USD 1.2687 at the close of trading on Thursday.
The weakening pound has helped protect the FTSE 100 from declines seen in other blue-chip European benchmarks.
Sterling fell in response to poor UK data.
According to the Office for National Statistics, retail sales volumes have seen their biggest monthly decline since January 2021, due to Covid-19 restrictions. This came as a shock to the market, which was expecting only a slight decline.
Retail sales fell 3.2% in December compared to November, well below market consensus. A monthly decline of 0.5% was forecast, according to FXStreet. In November, retail sales increased 1.4% compared to October.
Signs of a faltering domestic economy have helped revive hopes that the Bank of England could be quicker to start cutting rates.
“For markets, the decline in retail sales undoes some of the reassessment of the May rate cut that occurred after Wednesday’s surprise rise in CPI inflation. Joshua Mahony, analyst at Scope Markets , commented.
The euro stood at USD 1.0884 at the close of European stock markets on Friday, up from USD 1.0853 on Thursday. Against the yen, the dollar traded at 148.18 yen, up from 148.11 yen.
The European Central Bank and the Bank of Japan both announce their interest rate decisions next week.
ING analysts commented: “In short, we believe that President [Christine] Lagarde and her colleagues are not as obsessed with the optimistic assessment of the market as many think, and that they prefer to stick to it “To rely on pure data dependence and avoid giving guidance rather than focusing their efforts on lowering rates. In other words, don’t expect a significant change in the ECB’s language this month.”
The BoJ’s decision comes following the decline in Japanese inflation data.
Prices in the world’s third-largest economy, excluding volatile fresh food, rose 2.3% year-on-year in December, compared with 2.5% the previous month. This figure is in line with market expectations and part of a general trend of slowing inflation over the past year, down from 4.2% recorded in January 2023.
The overall rate increased from 2.8% to 2.6%.
Stephen Innes, analyst at SPI Asset Management, commented: “At its January meeting, Tokyo economists expect the Bank of Japan to maintain its policies of yield curve control and negative rates in the short term. term. The doomsday scenario is therefore a modification of the CCJ. Inflation is expected to slow in January. Therefore, the BOJ’s cautious approach should prevail, especially after the recent earthquake.”
In London, shares of 4imprint jumped 12%. The London-based promotional products marketing and distribution company forecasts 2023 revenue of $1.33 billion, up 16% from the year’s revenue of $1.14 billion. former.
Pre-tax profit for 2023 is expected to be at least $140 million, up from $104 million and slightly above the high end of the current range of analyst forecasts.
“Excellent progress has been made by the group during 2023, resulting in a strong financial performance for the year,” 4imprint said.
Elsewhere, some stocks have been boosted by mergers and acquisitions.
Wincanton jumped 48%.
The Wiltshire, England-based logistics services provider has agreed to the terms of a cash takeover offer recommended by CEVA Logistics UK, a subsidiary of CMA CGM, a Marseille-based shipping and logistics company , In France. The offer is worth 450p per share, valuing Wincanton at £566.9m on a fully diluted basis, with an enterprise value including debt of around £764.9m.
Custodian Property Income fell 13%, while abrdn Property Income jumped 11% after the duo announced a tie-up to create a property investment company with combined assets of $1,000. 0 billion pounds sterling.
abrdn Property Income shareholders will receive 0.78 new shares of Custodian Property Income for each share held. Based on Custodian’s closing share price on Thursday of 79.6p, the deal values abrdn Property Income shares at 62.1p and the whole company at £237m.
Big Technologies fell 16%. The remote people monitoring technology company presented a somewhat gloomy outlook for 2024.
It warned that revenue from a contract from one of its largest Colombia-based clients will likely end in the first half of the year. However, new contracts won recently will partly offset the potential loss.
During the second half of 2023, the company increased its business development efforts in the United States, with associated costs likely to reduce operating profit margins in the United States until the company achieves further sales.
The investment is likely to accelerate sales growth in the medium term. Therefore, the company expects sales to be “at least” in line with 2023. It expects turnover for 2023 to be around £55m, up from 50 .2 million and in line with market consensus.
Brent oil was quoted at $79.06 a barrel late Friday in London, up from $78.61 late Thursday. Gold was quoted at $2,035.35 an ounce, down from $2,015.55.
“Gold is trading a little higher at the end of the week after bouncing off $2,000 a day earlier. The yellow metal was dragged down by slightly lower expectations for rate cuts this year and a lack of data that could turn things in its favor. The numbers we’ve seen since the start of the year have been good, but more is needed to maintain the enthusiasm with which the markets finished 2023.” , commented Craig Erlam, analyst at Oanda.
“Oil prices are stable today after another turbulent but finally consolidated week,” continued Mr. Erlam. “While the price of crude remains sensitive to events in the Middle East, as we have seen over the past two weeks, the oil market remains well balanced, which is why we are not seeing prices rise. “Supply remains an upside risk, but there are also downside risks, particularly with regard to the global economy and OPEC+ unity.”
Monday’s economic calendar forecasts an interest rate decision from the People’s Bank of China overnight.
The local business calendar includes a statement from advertising agency S4 Capital.
This article is originally published on zonebourse.com
