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LONDON BRIEFING: FTSE 100 called up; UK house prices show resilience

31st May 2024 07:50

(Alliance News) - The FTSE 100 in London is called to open higher on Friday, as investors shake off US inflation nerves.

According to FXStreet, numbers on Friday are expected to show that the core personal consumption expenditures index, the Federal Reserve's preferred US inflation gauge, rose 2.8% year-on-year in April, the same pace of growth as in March.

The core PCE reading does not include food or energy. The headline index, which does, is expected to have risen 2.7% on-year in April, also the same pace of growth as in March.

In early economic news, UK house prices were higher on-month May, according to figures from Nationwide, as the market continues to show resilience.

In corporate news, the UK government said it has sold GBP1.24 billion in NatWest shares back to the bank.

Here is what you need to know at the London market open:




FTSE 100: called up 0.1% at 8,242.40


Hang Seng: up 0.2% at 18,263.09

Nikkei 225: closed up 1.1% at 38,487.90

S&P/ASX 200: closed up 1.0% at 7,701.70


DJIA: closed down 330.06 points, 0.9%, at 38,111.48

S&P 500: closed down 0.6% at 5,235.48

Nasdaq Composite: closed down 1.1% at 16,737.08


EUR: down at USD1.0821 (USD1.0839)

GBP: down at USD1.2722 (USD1.2738)

USD: up at JPY156.78 (JPY156.65)

GOLD: up at USD2,342.90 per ounce (USD2,342.54)

OIL (Brent): down at USD81.73 a barrel (USD82.83)

(changes since previous London equities close)




Friday's key economic events still to come:

11:00 CEST eurozone CPI

11:00 IST Ireland construction output

09:30 BST UK money supply

08:30 EDT US personal consumption expenditures

09:45 EDT US Chicago PMI


UK house prices were higher on-month May, according to figures from Nationwide on Friday. The Nationwide house price index showed a 0.4% increase in seasonally adjusted UK house prices in May, following a 0.4% fall a month earlier. According to FXStreet, market consensus expected the house price index to rise by just 0.1%. In May, the average UK house price stood at GBP264,249, up from GBP261,962 in April. Annually, the house price index rose by 1.3%, picking up speed from a 0.6% increase in April. "The market appears to be showing signs of resilience in the face of ongoing affordability pressures following the rise in longer term interest rates in recent months. Consumer confidence has improved noticeably over the last few months, supported by solid wage gains and lower inflation," said Robert Gardner, Nationwide's chief economist.


Retail footfall across the UK remains well down on last year as bank holidays and improving weather failed to lure customers away from online shopping, figures show. Total footfall was down 3.6% on a year ago but an improvement on April's 7.2% drop, according to British Retail Consortium-Sensormatic IQ data. High street footfall was down 2.7%, while shopping centre visits remained at a subdued 4.5% lower than last May. All UK nations saw a year-on-year fall despite improving on April's figures, topped by Scotland at 5.4% and suffered the least by Northern Ireland at 3%. BRC chief executive Helen Dickinson said: "Retailers will be hopeful that a warm summer, coupled with events such as the European Championships and Olympics, will boost footfall across all major shopping destinations across the UK."




RBC raises Centrica to 'outperform' (sector perform) - price target 170 (145) pence




The UK government has sold GBP1.24 billion in NatWest shares back to the company. The Treasury sold 392.4 million shares at 316.2p each, and as a result the government's stake will be cut to 22.50% from 25.98%. NatWest said it plans to cancel 222.4 million of the shares and hold the remainder in treasury. NatWest was nationalised in 2008 and 2009, with several multibillion-pound bailouts leaving the UK taxpayer with an 84% stake in the company, which at the time was known as the RBS Group. The government since has been progressively reducing its stake by means of market sales and buybacks by NatWest. Chancellor Jeremy Hunt recently revealed plans to start selling the government's remaining stake to retail investors starting as early as this summer, but this plan was put in doubt by the calling of a general election for July 4.


JD Sports reported revenue of GBP10.54 billion in the 53 weeks ended February 3, or GBP10.40 billion on a 52 week basis, up from GBP10.13 billion a year earlier. Pretax profit increased to GBP811.2 million, up 67% from GBP486.7 million. JD Sports upped its annual dividend by 13% to 0.9p from 0.8p. The company said that first quarter performance was in line with expectations and it has maintained full-year pretax profit guidance of GBP995 million to around GBP1.04 billion. Chief Executive Regis Schultz said: "We have started the new financial year with Q1 in line with our expectations in a volatile market and we are on track to deliver our profit guidance for the full year. Looking further ahead, we have a strong business model and a clear strategy to deliver long-term growth and value creation for our shareholders."


Associated British Foods' largest shareholder will trim its stake in the Primark owner through a bookbuild, according to a statement on Thursday. Howard Investments Ltd, part of Wittington Investments Ltd, plans to sell around 10.3 million shares in AB Foods, a 1.4% chunk of the FTSE 100 listing's share capital. The sum represents just under 2.4% of Wittington and Howard's combined AB Foods holding. AB Foods shares fell 0.6% to 2,652.13 pence each in London on Thursday. At current prices, the shares being sold are worth GBP273.2 million. Wittington's main investment is AB Foods, though it also owns stakes in food and hospitality brand Fortnum & Mason and it invests in real estate.




Oil and gas company Harbour Energy said it continues to make "good progress" on concluding the acquisition of the Wintershall Dea asset portfolio. In December, Harbour agreed to purchase the assets from the oil and gas company for USD11.2 billion, and expects the acquisition to increase its production rate to around 500,000 barrels of oil equivalent per day. On Friday, it noted that documents are in the final stages of preparation and are expected in the coming weeks. It expects to complete the acquisition during the fourth quarter of this year.


The Competition & Markets Authority said it is considering whether Nationwide's planned takeover of Virgin Money UK breaches competition rules. The watchdog said the investigation will look into "whether the creation of that merger may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services." Nationwide announced earlier in the year that it plans to buy rival lender Virgin Money UK in a deal worth about GBP2.9 billion. Invitation to comment closes June 14.


By Sophie Rose, Alliance News senior reporter

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