3rd Jan 2025 17:00
(Alliance News) - The FTSE 100 closed lower on Friday, despite a bright start on Wall Street, hit by a fall in Guinness maker Diageo and weak housebuilders.
The FTSE 100 index ended down 36.11 points, 0.4%, at 8,223.98. The FTSE 250 fell 48.83 points, 0.2%, at 20,591.40. But the AIM All-Share rose 1.70 points, 0.2%, at 725.40.
For the week, the FTSE 100 was up 1.1%, the FTSE 250 climbed 0.2% and the AIM All-Share advanced 1.1%.
The Cboe UK 100 closed down 0.4% at 824.67, the Cboe UK 250 fell 0.2% at 17,997.55, while the Cboe Small Companies fell 0.3% at 15,927.41.
In Paris, the CAC 40 slumped 1.5% while the Dax in Frankfurt declined 0.6%.
Shares in European wine and spirits makers were in the red after the US Surgeon General called for alcoholic drink labels to include cancer warnings.
Diageo, the owner of Guinness and Johnnie Walker whisky, slid 3.7% making it the worst performing stock on the FTSE 100.
Campari was 5.2% lower in Milan, while Pernod Ricard, the world's second-largest wine and spirits seller, fell 3.1% in Paris.
The advisory from the Office of the US Surgeon General described the scientific evidence linking alcohol consumption to an increased risk for at least seven different types of cancer.
The advisory said actions to begin reducing alcohol-related cancers could include updating the existing health warning label on alcoholic drinks to include a warning about the risk of cancer associated with alcohol consumption.
Making label characteristics more visible, prominent, and effective in increasing awareness about cancer risks associated with alcohol consumption could also be considered.
"Health warning labels are well-established and effective approaches to increasing awareness of health hazards and fostering behaviour change. Considerable evidence supports the use of health warning labels, including promising evidence toward their role in raising awareness about alcohol-related risks," the advisory stated.
In contrast to the gloomy mood in Europe, US markets pushed higher. At the time of the London close, the Dow Jones Industrial Average was up 0.6%, the S&P 500 was 1.0% higher and the Nasdaq Composite was 1.4% to the good.
Figures showed the US manufacturing sector contracted at a slower pace in December.
The Institute for Supply Management's manufacturing purchasing managers' index rose to 49.3 in December, up from 48.4 in November.
"US manufacturing activity contracted again in December, but at a slower rate compared to November. Demand showed signs of improving, while output stabilized and inputs stayed accommodative," said Timothy Fiore, chair of the ISM Manufacturing Business Survey committee.
Thomas Ryan at Capital Economics noted the headline figure hit its highest level since March, "beating the consensus and our own expectations that it would remain unchanged".
The increase was driven by solid gains in both the production and new orders indices, he explained.
"The upshot is that while manufacturing activity remains in the doldrums, the recent less gloomy survey data point to slightly better times ahead," he added.
The dollar gave back some ground after Thursday's heavy gains.
The pound was higher at USD1.2414 on Friday afternoon, up from USD1.2378 at the time of the local equities close on Thursday.
The euro rallied to USD1.0297 against USD1.0251. Versus the yen, the dollar was lower at JPY157.33 from JPY157.63.
On London's FTSE 100, housebuilders were a weak feature after a surprise drop in mortgage approvals in November.
According to Bank of England data, net mortgage approvals for house purchases fell to 65,700 in November from 68,100 in October. However, approvals remained above their previous 12-month average of 60,400.
FXStreet consensus had expected mortgage approvals to edge up to 68,500.
Approvals for remortgaging decreased to 31,200 in November from 31,500 in October, but remained above their previous 12-month average of 30,000.
Barratt Redrow fell 2.7%, and Taylor Wimpey slid 2.4% and Persimmon slipped 2.9%.
But oil majors and index heavyweights Shell and BP stayed in the green, up 1.7% and 1.6% respectively, as oil prices held recent gains.
A barrel of Brent eased slightly to USD76.33 on Friday afternoon, from USD76.43 at the time of the London equities close on Thursday. Gold declined to USD2,641.67 an ounce from USD2,657.49.
Retailers were mixed after a report showed footfall fell in December.
According to BRC-Sensormatic data, total UK footfall was down 2.2% in the five weeks to December 28 compared to 2023.
This was an improvement on November's 4.5% decline, although this reflected the timing of Black Friday. This year's December figure includes Black Friday, rather than November's figure, while the reverse was true in 2023.
Overall, UK footfall in 2024 was down 2.2% compared to 2023.
Helen Dickinson, chief executive of the British Retail Consortium, said: "A drab December which saw fewer shoppers in all locations, capped a disappointing year for UK retail footfall. This means 2024 is the second year in a row where footfall has been in decline. High streets and shopping centres were hit particularly hard throughout the year as people veered towards retail parks to take advantage of free parking and the variety of larger stores."
M&S rose 0.5% but Next was down 1.8%.
AJ Bell's Mould said the weak footfall illustrates "how life remains tough for the sector".
"There is a heightened risk of profit warnings from the retail sector over the coming weeks as management teams take a more realistic view of the year ahead. That's a key reason behind a negative broker comment on Next which has sent its shares down."
"Deutsche Bank is worried that Next will give weaker forward guidance than is currently expected by the market."
"Next is the bellwether for the UK retail sector and anything it does to upset investors could have a negative read-across to other retail shares on the London market," he added.
Elsewhere, British Land firmed 0.9% after positive comments from Morgan Stanley.
The broker thinks the European property sector should "re-rate if we were to see more recognition of bottom-up fundamentals".
"There are risks around macro, but the risk reward looks compelling," Morgan Stanley added.
It sees the "best opportunities" in the UK where "asset valuations have been marked down, demand is solid with limited availability, while balance sheets are strong."
"Near term we see most re-rating potential in British Land, Derwent London, Great Portland Estates and Land Securities, with a preference for British Land and Landsec as their high dividend yields means investors are 'paid to wait'."
Shares in Tullow Oil jumped 11% after the International Chamber of Commerce ruled that branch profits remittance tax is not applicable to the firm in Ghana as it is outside the tax regime provided for in its petroleum agreements.
As a result of the decision, Tullow Ghana is not liable to pay the USD320 million BPRT assessment issued by the Ghana Revenue Authority.
Panmure Liberum's Ashley Kelly said the removal of a further liability "will take some pressure off the stretched balance sheet."
Monday's global economic diary sees a raft of composite PMI releases. Later in the week a batch of US jobs datapoints will grab attention, culminating in Friday's nonfarm payrolls.
Next week's local corporate calendar is dominated by Christmas trading statements from retailers Next, B&M European Value Retail, Marks & Spencer, Tesco and J Sainsbury. Shell also updates on trading on Wednesday.
By Jeremy Cutler, Alliance News reporter
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