21st Oct 2022 17:04
(Alliance News) - The FTSE 100 was outperforming its European peers on Friday as sterling was sliding back towards parity with the US dollar as the Conservative party continues to unravel.
"The pound finds itself back under pressure today as traders are faced with yet another bout of political uncertainty and economic concerns," Joshua Mahony, senior market analyst at IG, said.
The pound was quoted at USD1.1203 at the close on Friday, down versus USD1.1294 at the London equities close on Thursday. It hit an intraday low of USD1.1063 not long after midday.
Adding pressure to sterling, disappointing UK retail sales data showed a bigger-than-expected decline in September, according to figures from the Office of National Statistics.
Retail sales fell 6.9% annually in September, with the decline accelerating from a 5.6% fall in August. It also was worse than FXStreet-cited market consensus, which had expected a fall of just 5%.
"This morning’s retail sales data highlighted the struggles facing consumers and businesses alike, with people spending 3.9% more for 6.9% less goods," Mahony continued. "Meanwhile, traders are faced with yet another bout of political uncertainty, with Penny Mordaunt officially throwing her hat into the ring for a potentially doomed two-year stint that will likely be dominated by inflation and recession."
The pound had initially found some support on Thursday after Liz Truss called an end to her disastrous tenure as prime minister - poking above USD1.13 - but has since been dragged lower.
The FTSE 100 index closed up 25.82 points, or 0.4%, at 6,969.73 - closing out the week up 1.6%.
The FTSE 250 lost 182.38 points, or 1.1%, at 17,206.55, but still managed to gain 1.0% this week, and the AIM All-Share ended down 1.04 points, or 0.1% at 785.40 - but advanced 0.8% over the past five days.
The Cboe UK 100 closed up 0.4% at 696.31, the Cboe UK 250 ended down 1.0% at 14,694.15, and the Cboe Small Companies lost 0.3% at 12,240.46.
In European equities on Friday, the CAC 40 in Paris lost 0.9%, while the DAX 40 in Frankfurt gave back 0.3%.
The Tories have begun to declare their allegiances in the party's second leadership contest of the year as speculation mounts over who will seek to replace Truss at the helm of the party.
Supporters of Boris Johnson are backing the former prime minister to make an extraordinary political comeback, while ex-chancellor Rishi Sunak and Commons Leader Penny Mordaunt also have the public support of several MPs, should they choose to run.
Mordaunt become the first candidate to throw her hat into the ring, with a pledge to re-unite the bitterly divided party.
The Leader of the House – who finished third in the last leadership election – said she had been encouraged by the support she had received from fellow Conservative MPs.
There has also been no declaration yet from Sunak, who did not answer questions from reporters as he left his home on Friday morning.
Whoever does win will face an immediate test, choosing whether to go ahead with the planned Halloween statement setting out how the government intends to get the public finances back on track, Downing Street has said.
Work is continuing in Whitehall, led by Chancellor Jeremy Hunt, in preparation for the medium-term fiscal plan to be announced on October 31 along with an updated set of economic forecasts from the Office for Budget Responsibility.
However, a Number 10 spokeswoman said it would be up to Liz Truss's successor to decide whether to proceed with that approach and with the same timetable.
In London, the blue chip miners were keeping the FTSE 100 in the green. Glencore gained 3.6%, Anglo American 3.1%, Antofagasta 2.7%, and Rio Tinto added 1.6%.
Retailers, however, were showing weakness after the disappointing UK retail sales data, with a profit warning from Adidas not helping either.
JD Sports closed down 6.1%, Frasers 4.0%, Burberry 2.2%, and Next shed 2.9%.
On Thursday, Adidas lowered annual guidance as it struggles with "deteriorating traffic" in China and high inventory levels.
The sports apparel maker said it has needed to turn to "higher clearance activity" to try and shift stock.
It lost 9.0% in Frankfurt.
Deliveroo gained 3.6%.
The London-based online food delivery service said gross transaction values rose 8.3% annually in the third quarter to GBP1.70 billion from GBP1.57 billion, though orders fell by 1.1% to 72.8 million from GBP73.6 million.
Deliveroo said the decline in orders was due to a difficult consumer environment. With economic data on Friday showing that UK consumer confidence remains near record lows, this seems unlikely to change anytime soon.
InterContinental Hotels gave back 2.2% but reported strong revenue growth in the third quarter to September 30, saying that high global employment levels are boosting occupancy levels.
Revenue per available room, or RevPAR, rose 28% year-on-year and now exceeds its pre-pandemic level, being up 2.7% on the third quarter of 2019.
In the third quarter of 2022, the average daily rate increased by 13% compared to a year ago and was up 11% on 2019.
Chief Financial Officer & Head of Strategy Paul Edgecliffe-Johnson will leave the company in six months time to become CFO of Flutter Entertainment in the first half of 2023.
IHG has started the process of finding a new CFO.
The euro stood at USD0.9802 Friday evening, down against USD0.9822 at the close on Thursday.
Against the yen, the dollar was trading at JPY148.03, compared to JPY149.77 late Thursday. The yen was staging a fightback after the open on Wall Street, after nearly hitting JPY152 during the Asia session.
Stocks in New York opened higher on Friday, with the DJIA up 1.1%, the S&P 500 index up 0.9%, and the Nasdaq Composite was 0.6% higher.
Brent oil was quoted at USD92.84 a barrel late Friday, down from USD93.29 late Thursday. Gold was quoted at USD1,643.70 an ounce Friday, up against USD1,641.90 from Thursday.
In the international economics events calendar next week, Monday will be dominated by a slew of composite PMIs, with Japan overnight followed by Germany, eurozone and the UK in the morning then the US in the afternoon. A quiet Tuesday will be headlined by a US house price index.
On Wednesday, there is Chinese GDP, retail sales and industrial production overnight, then on Thursday attention will be on the European Central Bank interest rate decision at 1315 BST. Friday will be headlined by a Bank of Japan rate decision.
In the local corporate calendar on Monday, there are half-year results from Dr Martens, while education publishing firm Pearson will issue a third quarter update.
By Paul McGowan; [email protected]
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