9th Dec 2022 17:04
(Alliance News) - Stock prices in London closed higher on Friday, though the FTSE 100 ended the week as a whole in the red ahead of a significant week for central banks.
"With the Federal Reserve, ECB and Bank of England all set to raise rates by 50 [basis points], attention is now shifting to what comes next against a backdrop of slowing growth, and doubts about the sticky nature of inflation, as yields edged back higher after US PPI came in higher than expected for November," said Michael Hewson, chief market analyst at CMC Markets.
The FTSE 100 index closed up 4.46 points, or 0.1%, at 7,476.63, but ended the week 1.1% lower.
The FTSE 250 ended up 91.99 points, or 0.5% at 18,916.00 - closing the week down 2.3%. The AIM All-Share closed up just 0.18 of a point at 834.59, and finished the week 2.3% lower.
The Cboe UK 100 ended down 0.1% at 747.72, the Cboe UK 250 closed up 0.5% at 16,342.76, and the Cboe Small Companies ended flat at 13,088.89.
Upward pressure on US producer prices was higher than expected in November, figures from the Bureau of Labor Statistics showed.
The producer price index for final demand rose higher than expected, by 0.3% in November from October, the same monthly rise as seen in October and September.
The FXStreet-cited consensus was an increase of 0.1%. In August, PPI had been flat on the month before.
On an annual basis, PPI inflation was 7.4% in November, unchanged from 7.4% in October, and in line with FXStreet-cited consensus.
"While US factory-gate inflation points towards the need for still more rate rises, stocks can now scent the potential for a rally into the end of the month. Such a bounce would repair more of the damage suffered in 2022, even if the post-Christmas blues do set in," said Chris Beauchamp at IG.
"The PPI data was unable to have much of a negative impact, although it does set us up for another hot CPI figure and hawkish Fed next week which might be much harder for markets to navigate successfully," Beauchamp continued.
Stocks in New York were higher at the London equities close, with the DJIA up just 15.01 points, the S&P 500 index up 0.2%, and the Nasdaq Composite up 0.3%.
In European equities on Friday, the CAC 40 in Paris ended up 0.5%, while the DAX 40 in Frankfurt ended up 0.7%.
The euro stood at USD1.0542 at the European equities close on Friday, a touch lower against USD1.0547 at the same time on Thursday. Against the yen, the dollar was trading at JPY136.37, higher compared to JPY135.56 late Thursday.
The pound was quoted at USD1.2301 at the London equities close on Friday, up sharply from USD1.2218 at the close on Thursday.
The UK government has launched a raft of major reforms to the financial sector to replace EU regulation and cut red tape.
Chancellor Jeremy Hunt said the so-called "Edinburgh Reforms" will seize on "Brexit freedoms" to overhaul banking rules.
They include a package of more than 30 regulatory reforms which he claims will "turbocharge" growth in towns and cities across the UK.
The moves will loosen banking rules introduced after the 2008 financial crisis, which saw some UK banks face potential collapse.
interactive investor's Victoria Scholar said that Hunt is trying to prove to the financial sector that he is "very much pro-business" and in favour of the City of London as a key growth engine to the economy.
"However," she added, "there is a risk that the Treasury is acting myopically, quickly forgetting the pre-2008 excessive risk taking that ultimately led to the global financial crisis and the introduction of new regulation to prevent another similar catastrophe."
In London, DS Smith finished the best blue-chip performer on Friday, closing 4.4% higher.
The packaging firm reported a strong half-year, posting a jump in profit amid revenue climbs in Southern Europe and North America.
DS Smith said revenue rose 28% to GBP4.30 billion in the six months ended October 31, from GBP3.36 billion a year before, lifting pretax profit by 82% to GBP322 million from GBP177 million.
DS Smith said the performance was driven by focusing on its customers' needs during a period of significant economic volatility.
"This has enabled us to achieve continued market share gains, an increase in profitability and improvements in our key financial performance ratios," said Chief Executive Officer Miles Roberts.
Looking ahead, DS Smith now expects its full-year performance to be ahead of previous expectations, and the second half to be consistent with the first.
Anglo American dropped 2.6% after it moderated its production growth plans over the near term as it battled with economic volatility, extreme weather and other localised disruptions at its operations.
For next year, the mining firm said output is estimated at between 3.6 million ounces and 4.0 million ounces.
For 2024, production is seen at between 3.6 million ounces and 4.0 million ounces in 2024, before dropping to between 3.5 million ounces and 3.9 million ounces in 2025.
Associated British Foods closed down 0.9% despite reiterated its annual outlook amid rising costs.
The Primark owner said it expects significant sales growth, but said that adjusted operating profit and adjusted earnings per share are to be lower than the previous financial year.
AB Foods Chair Michael McLintock said he expects "further significant" input cost inflation, but said the volatility of input costs has "diminished".
McLinktock added that Primark's trading has been encouraging, with 27 new Primark stores set to open in the year - 10 of these in the run-up to Christmas, with 6 already opened.
Elsewhere in London, Porvair jumped 12% after the specialist filtration, laboratory and environmental company said adjusted earnings per share are expected to be ahead of market forecasts.
The firm says this is due to "sound underlying profitability being supplemented by favourable foreign exchange translation".
Porvair's revenue is expected to be 18% higher.
Pendragon plunged 28% as its largest shareholder Hedin Mobility Group said it does not intend to make a takeover offer, three months after publicly floating the idea.
Sweden-based mobility provider Hedin gave challenging market conditions and an uncertain economic outlook as reasons for the change of heart.
In response, Pendragon said it is confident about its long-term prospects and said the process "highlighted the value of Pendragon and the board will continue to explore opportunities to maximise value for its shareholders".
Gold was quoted at USD1,803.01 an ounce at the London equities close Friday, sharply higher against USD1,787.73 at the close on Thursday.
Brent oil was quoted at USD77.10 a barrel at the London equities close on Friday, up from USD76.38 late Thursday.
Next week is a busy week for central banks, with the US Federal Reserve announcing its next interest rate decision on Wednesday, followed by the Bank of England and the European Central Bank on Thursday.
There is also a US CPI print on Tuesday, ahead of the UK GDP print on Wednesday.
In the UK corporate calendar week, there is a trading statement from online retailer Ocado on Tuesday and full-year results from airline Tui on Wednesday.
On Monday, plastic products firm Coral Products will release its half-year results.
By Heather Rydings, Alliance News senior economics reporter
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