22nd Nov 2024 16:55
(Alliance News) - The FTSE 100 outperformed as European equities ended the week strongly, following weaker economic data that strengthened the case for more interest rate cuts.
The FTSE 100 index jumped 112.81 points, 1.4%, at 8,262.08. The FTSE 250 climbed 231.77 points, 1.1%, at 20,581.69, and the AIM All-Share gained 6.38 points, 0.8%, at 732.20.
For the week, the FTSE 100 surged 2.5%, turbocharged by a tamer pound. The FTSE 250 climbed 0.5% and AIM All-Share rose 0.7%.
The Cboe UK 100 jumped 1.4% at 831.38, the Cboe UK 250 added 1.5% at 18,068.14, and the Cboe Small Companies rose 0.2% to 15,602.21.
In Europe, the CAC 40 in Paris added 0.6%, while the DAX 40 in Frankfurt rose 0.9%.
In New York, the Dow Jones Industrial Average was up 0.5% at the time of the closing bell in London. The S&P 500 was 0.2% higher, but the Nasdaq Composite shed 0.1%.
The pound was quoted at USD1.2511 late on Friday afternoon in London, plunging from USD1.2605 at the time of the European equities close on Thursday. The euro stood at USD1.0394, slumping from USD1.0491. Against the yen, the dollar was trading at JPY154.87, fading from JPY155.52.
Drab data in the UK and eurozone strengthened the case for faster rate cuts.
UK private sector business activity fractionally declined in November, ending a 12 month streak of growth, amid weaker business optimism since the government's budget, a survey showed.
The flash UK composite purchasing managers' index fell to 49.9 points in November, from a final tally of 51.8 in October. The reading slipped below the 50 mark, which separates growth from decline for the first time in a year, and the PMI fell to a 13-month low.
The flash services PMI also hit a 13-month low, declining to 50 points from October's final tally of 52.0. The manufacturing PMI faded to 48.6 points from 49.9, hitting a nine-month low.
"Sterling has fallen sharply off the back of the data, briefly dropping below the 1.25 level on the dollar this morning. This is partly a consequence of markets racing to price in an additional rate cut from the Bank of England, which is now seen delivering three 25 basis point cuts over the next twelve months, up from just two prior to the data," Ebury analyst Matthew Ryan commented.
Rate sensitive stocks rose in London. Housebuilder Vistry rose 2.6%, property company British Land added 3.4% and real estate portal Rightmove climbed 1.1%.
The eurozone private sector economy contracted at the fastest pace seen since January according to preliminary purchasing managers' index survey results released by S&P Global on Friday.
The flash PMI composite output index fell to 48.1 points in November from 50.0 in October. A reading below 50 points indicates a decline in business activity.
This latest reading marked the most considerable rate of contraction seen in the eurozone since January, driven by a waning demand environment.
Oxford Economics analyst Paolo Grignani commented: "2024 looks set to end on a very weak note, with the eurozone's flash composite PMI falling sharply to 48.1 in November. Major domestic and international political developments in recent weeks are likely to have played a role, and the bleak state of the current economic conjuncture suggests much weaker momentum than suggested by GDP data."
The US private sector expanded in November, according to survey data on Friday, as optimism picked up and price growth slowed.
The S&P Global flash US composite purchasing managers' index rose to a 31-month high of 55.3 points in November, from 54.1 in October.
Rising further above the neutral 50 reading, it indicates a robust rate of expansion.
However, the asymmetry of the US economy persisted, with growth being led entirely by the services sector.
The flash services PMI jumped to 57.0 from 55.0, beating FXStreet-cited market consensus of 55.3. Meanwhile, manufacturing continued to weaken, with the flash PMI edging up to 48.8 from 48.5, coming in line with consensus.
Among London listings, CMC Markets backed its StrikeX investee, explaining a write-down does not change its belief in the firm.
"The write-off of our initial investment is purely an accounting decision and does not reflect our belief in StrikeX's technology or potential, nor does it indicate any change in our partnership," CMC Markets said.
"On the contrary, we continue to integrate StrikeX's services into our offerings and see our relationship deepening further as we collaborate on Web 3.0 developments. The team at StrikeX has made tremendous strides in this fast-paced industry, and we remain excited to grow alongside them, supporting their mission to reshape the future of finance."
Shares in the trading platform provider fell 8.5%.
In its half-year results on Thursday, CMC said: "Due to the continued underperformance of the investment, combined with its poor financial position and ongoing losses the group fully wrote down its investment in Strike X, a customer centric blockchain solutions business, which was acquired in June 2023. Despite the impairment, the group continues to support Strike X and its strategic objectives.
CMC owns 33% of Strike X, a blockchain solutions business. The holding was acquired in June 2023 for GBP2.8 million.
Also on the decline were banking shares across Europe. In London, Barclays fell 2.1%, while Paris-listed Societe Generale and Credit Agricole lost 2.5% and 2.1%. Over in Madrid, BBVA shed 0.9% and Santander lost 3.5%.
Spain slapped major banks with a larger windfall tax. The levy has been extended for another three years at an increased rate of 7% for the largest banks, including the likes of Santander and BBVA.
Back in London, DFS rose 1.7%. It said trading has continued to improve in the new financial year.
At its annual results released in September, the Doncaster-based furniture retailer noted an improvement in trading performance in the final quarter of that year, which ended on June 30, with year-on-year growth in order intake.
In a trading update ahead of its annual general meeting on Friday, DFS said this trend has continued into the current financial year, with order intake remaining in growth over the first 20 weeks, in line with expectations.
In addition, DFS said progress made on reducing the cost base also has continued in financial 2025 to date.
DFS also announced the appointment of Marie Wall as interim chief financial officer, effective December 2. Current CFO John Fallon will step down from the board on Friday and leave the business on January 17.
Brent oil was quoted at USD74.46 a barrel late Friday afternoon, up from USD73.52 at the time of the London equities close on Thursday. Gold rose to USD2,703.04 an ounce from USD2,655.01.
In a quiet economic diary on Monday, Bank of England Deputy Governor Clare Lombardelli and fellow Monetary Policy Committee member Swati Dhingra speak at the BoE Watchers' Conference at 0900 GMT and 1030 GMT.
The local corporate calendar has a trading statement from DIY retailer Kingfisher.
By Eric Cunha, Alliance News news editor
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