28th Oct 2022 17:05
(Alliance News) - Stocks in London closed in the red on Friday, but clung on for week gains, as interest rate decisions from the Bank of England and the US Federal Reserve move into focus.
The Federal Reserve announces its rate decision on Wednesday next week, with the BoE following on Thursday.
The FTSE 100 index closed down 26.02 points, or 0.4% at 7,047.67 on Friday, but finished the week 1.1% higher.
The FTSE 250 ended down 165.25 points, or 0.9%, at 17,916.67 - closing the week up 4.1%. The AIM All-Share closed down 4.09 points, or 0.5%, at 805.37, finishing 2.7% higher over the past five days.
The Cboe UK 100 ended down 0.5% at 703.81, the Cboe UK 250 closed down 1.0% at 15,378.84, and the Cboe Small Companies ended down 0.5% at 12,320.39.
The pound was quoted at USD1.1595 at the London equities close Friday, up slightly from USD1.1573 at the close on Thursday. Though sterling steadied on Friday, the currency has gained 3.2% over the past week.
In the FTSE 100, Centrica jumped 5.2% after it announced the reopening of the Rough natural gas storage facility off the east coast of England.
Centrica, which owns British Gas, said the facility is operational for winter. The facility increases the UK's storage capacity by 50% despite it operating at just 20% of its previous capacity.
GSK closed up 2.3% after it said its majority owned ViiV Healthcare venture has received the European Medicines Agency's validation for its marketing authorisation application for HIV prevention, and said its MAA for respiratory syncytial virus adult vaccine has also been accepted.
NatWest plunged 8.3% as it reported strong income growth in the third quarter, boosted by both increased lending and higher interest rates, but the bank warned it is keeping a close on eye on any change in behaviour from its customers.
In the three months to September 30, operating profit before tax rose to GBP1.09 billion from GBP976 million a year before.
Putting a cap on the bank's profit, NatWest set aside GBP247 million in the quarter to cover an expected increase in bad loans, which is reversed from a GBP221 million gain the year prior.
Glencore fell 1.0% as it trimmed annual guidance for some of its commodities after a disappointing third-quarter performance dominated by supply chain disruptions in Kazakhstan, extreme weather in Australia, and strikes in Canada and Norway.
In the FTSE 250, ASOS tumbled 11%.
The stock was rocked by a Telegraph report which stated some hedge funds have shorted the stock, just days after retailer Frasers bought a stake.
Elsewhere in London, China-focused investment trusts fell.
JPMorgan China Growth & Income fell 2.9% and abrdn China Investment dropped 3.5%.
Investor sentiment turned sour as Chinese cities doubled down on Covid-19 lockdown restrictions.
Stocks in New York were firmly in the green at the London equities close, with the Dow Jones Industrial Average up 2.0%, the S&P 500 index up 1.7% and the Nasdaq Composite up 1.8%.
"When tech fails, there's always old economy stocks like Chevron and Exxon to lift markets. Like their UK counterpart Shell, both these oil giants have posted strong numbers thanks to higher gas prices that have more than countered weaker oil prices. This has resulted in a recovery for US indices after a couple of disappointing days on the earnings front that seemed to point towards a renewed risk-off move in markets," said Chris Beauchamp, chief market analyst at IG.
Wall Street also shook off a higher inflation reading for the US on Friday.
According to the Bureau of Economic Analysis, the Fed's preferred inflationary measure, the core personal consumption expenditures index, which excludes food and energy, shot up 5.1% year-on-year in September, quickening from a 4.9% hike in August.
"The Fed's favoured measure of inflation is heading higher, rather than lower, while employment costs continue to rise at double the rate experienced over the past 15 years. The market is probably right to expect the Fed to slow the pace of rate hikes from December, but this is by no means guaranteed," analysts at ING commented.
On Thursday, the European Central Bank on Thursday lifted its benchmark interest rates by 75 basis points, as expected.
In European equities on Friday, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt ended up 0.2%.
The euro stood at USD0.9943 at the European equities close Friday, lower against USD0.9984 at the same time on Thursday.
Against the yen, the dollar was trading at JPY147.54 late Friday, higher compared to JPY145.90 late Thursday.
Gold was quoted at USD1,640.91 an ounce at the London equities close Friday, down sharply against USD1,662.60 at the close on Thursday. The precious metal has an inverse relationship with the greenback, weakening as the dollar strengthens.
Brent oil was quoted at USD93.34 a barrel at the London equities close Friday, down from USD94.75 late Thursday.
In Monday's UK corporate calendar, there are full year results from self storage company Lok'n Store and kidney disease-focused diagnostics firm Renalytix.
In the economic calendar, the EU will publish its latest GDP and CPI readings.
By Heather Rydings; [email protected]
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