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LONDON MARKET MIDDAY: European markets quiet heading into afternoon

9th Feb 2024 11:44

(Alliance News) - European stock markets were quiet heading into Friday afternoon, as investors eye the annual US consumer price index benchmarks revisions.

The FTSE 100 index was up 8.94 points, 0.1%, at 7,604.42. The FTSE 250 was up 12.99 points, 0.1%, at 19,115.71, and the AIM All-Share was down 0.71 of a point, 0.1%, at 750.39.

The Cboe UK 100 was up 0.1% at 760.46, the Cboe UK 250 was flat at 16,537.56, and the Cboe Small Companies was flat at 14,582.48.

In European equities on Friday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.1%.

Friday has been relatively quiet across Europe, closing off a busy week.

"After a barrage of company announcements this week, it's no wonder that markets have paused for breath on Friday. Investors have had so much to take in from a wealth of big names that they're exhausted by the all the numbers," said Russ Mould, investment director at AJ Bell.

Still to come on Friday, the US Bureau of Statistics will release the CPI revisions.

ING analysts said: "Today sees one of the key event risks of the week – the annual US CPI benchmarks revisions. The Fed's current position is that it is looking for confidence in the disinflation process. Assuming the recent benign inflation trends are not revised away today, the dollar could edge a little lower."

Stocks in New York were called higher. The Dow Jones Industrial Average was called up marginally, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.2%.

The pound was quoted at USD2.2606 at midday on Friday in London, down slightly compared to USD1.2609 at the equities close on Thursday. The euro stood at USD1.0768, up against USD1.0763. Against the yen, the dollar was trading at JPY149.39, unchanged from a day earlier.

In the FTSE 100, Tesco rose 1.4%, whilst Barclays fell 0.2%.

The companies announced an agreement for Barclays to buy the retail banking business of Tesco Bank, as the big UK supermarkets scale back their forays into financial services.

London-based Barclays and Welwyn Garden City, England-based Tesco also announced a 10-year exclusive partnership that will see Barclays market Tesco-branded credit cards, unsecured personal loans and deposits to customers through Tesco's distribution channels as well as on the open market.

Tesco said it will sell to Barclays all of its banking operations in credit cards, loans and savings to Barclays, while retaining other activities of Tesco Bank including insurance, automatic teller machines, travel money and gift cards. The supermarket noted that these businesses are capital-light, profitable, and have a strong connect to its core retail offer.

Barclays will pay about GBP600 million for the business, which has been in operation for more than 25 years. Tesco noted it will receive about GBP1 billion in cash in total, including a special dividend of GBP250 million paid by Tesco Bank back in August.

Rival UK supermarket chain J Sainsbury last month announced a phased withdrawal from its core banking business. This followed a review of its Financial Services division as part of its 'Food First' strategy.

Shares in Sainsbury were down 0.4% early Friday.

Elsewhere in the FTSE 100, oil firms Shell and BP were up 1.7% and 0.8, respectively.

Israeli Prime Minister Benjamin Netanyahu on Thursday dismissed a ceasefire proposal, reviving geopolitical risks that threaten to disrupt oil supply.

Brent oil was quoted at USD81.60 a barrel at midday in London on Friday, up from USD81.02 late Thursday.

"Crude oil leapt higher as Israel took hope for a ceasefire agreement off the table, triggering a wave of buying as geopolitical risk went on the boil again. Prime Minister Benjamin Netanyahu said that he sees no other solution than total victory following a counteroffer from Hamas for a ceasefire. This comes amid a military escalation against Iranian-backed 'terrorist' factions by the US and UK concerns," said SPI Asset Management's Stephen Innes.

In the FTSE 250, Bellway edged up 0.1%.

The Newcastle Upon Tyne, England-based home construction company expects a 31% drop in housing revenue for the six months ended January 31 to GBP1.25 billion, from GBP1.80 billion a year prior.

Chief Executive Officer Jason Honeyman said: "Bellway has delivered another resilient performance in a period of challenging trading conditions. While the economic backdrop remains uncertain, the gradual reduction in mortgage interest rates through the first half has eased affordability constraints and we are encouraged by the seasonal pick-up in customer leads and an improvement in reservations since the start of the new calendar year."

Housebuilders have been struggling in the face of higher interest rates, with similar updates from FTSE 100 Taylor Wimpey, Persimmon, and Barratt Developments. Taylor Wimpey and Persimmon were up 0.5% and 0.7%, respectively on Friday at midday. Barratt lost 0.7%, however.

Amongst London's small-caps, S&U lost 7.7%.

The Solihull, England-based motor and property-focused lender said that the headwinds experienced in 2023 had continued into the new year, taking a toll on the company's progress and profitability.

While S&U said that headwinds were primarily in the final quarter of 2023, the company said that the impact on collections will temporarily impact the group's profitability.

As a result, pretax profit for the year ended January 31 is expected to end up between 10% and 15% below the consensus expectations of GBP38.0 million, down from GBP41.4 million in 2022.

Gold was quoted at USD2,033.03 an ounce at midday Friday, up against USD2,029.31 late Thursday.

By Sophie Rose, Alliance News reporter

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