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LONDON MARKET MIDDAY: Stocks climb on favourable UK and eurozone data

29th Sep 2023 11:57

(Alliance News) - Stocks in Europe were on the up on Friday, ending a difficult week with some confident gains, supported by better economic data in the UK, and a rosier inflation picture in the eurozone.

The upbeat mood could be hampered if a key US inflation gauge this afternoon comes in hotter-than-expected, however.

The FTSE 100 index rose 70.96 points, or 0.9%, at 7,672.61. So far this week, the blue-chip benchmark has lost 0.2%.

The FTSE 250 was up 205.78 points, or 1.1%, at 18,304.46, and the AIM All-Share was up 2.53 points, or 0.4%, at 727.51.

The Cboe UK 100 was up 0.9% at 765.69, the Cboe UK 250 was up 1.5% at 15,997.43, and the Cboe Small Companies was flat at 13,365.93.

In European equities on Friday, the CAC 40 in Paris surged 1.0% and the DAX 40 in Frankfurt added 0.9%.

According to a second estimate from the Office for National Statistics, UK gross domestic product increased 0.2% against the prior quarter in second quarter of 2023. This was unchanged from an earlier estimate.

Meanwhile, GDP in the first quarter of the year was upwardly revised to a quarter-on-quarter increase of 0.3%, from a previous estimate of a 0.1% increase.

Hargreaves Lansdown analyst Sophie Lund-Yates said the UK economy is showing "signs of life".

"A particular area of strength has been manufacturing, especially motor vehicles. While momentum is overall positive, these levels of growth aren't exactly shooting the lights out. Higher interest rates are playing their part in turning the nation's economic thermostat down and this will play a key role in upcoming interest rate decisions," the analyst added.

The pound was quoted at USD1.2265 at early on Friday afternoon in London, up from USD1.2209 at the London equities close on Thursday.

The euro stood at USD1.0610, higher against USD1.0568. Against the yen, the dollar was trading at JPY140.06, lower compared to JPY149.36.

Consumer price inflation in the eurozone is expected to cool to 4.3% in September, from 5.2% in August, according to a flash estimate from Eurostat on Friday.

Core consumer prices - which exclude energy, food, alcohol and tobacco - are expected to rise 4.5% on an annual basis in September, slowing sharply from a 5.3% rise in August.

Analysts at ING added: "Weak demand and base effects are currently impacting inflation favourably, but higher energy and wage costs do keep the risk alive that inflation could remain above target longer than hoped for."

Brent oil was quoted at USD93.64 a barrel early in London on Friday afternoon, down from USD94.09 at the London equities close on Thursday.

In London, barely a handful of blue-chip stocks were in the red at midday. Among them were BP and Shell, both down 0.2%, tracking Brent prices lower.

Severn Trent and JD Sports traded places at the top of the index, up 5.6% and 4.9%, respectively.

JD Sports surged in a positive read-across after New York-listed sports apparel maker Nike reported a first-quarter revenue rise.

Severn Trent, meanwhile, proposed "record" levels of investment in its new business plan for April 1, 2025 to March 31, 2030.

The water utility said the plan includes GBP12.9 billion total expenditure across its network, including GBP5.0 billion of investment focused on enhancing capacity and service beyond current levels.

"By 2030 we will have transformed our network to provide our customers with the very best service. At the heart of this ambition is a commitment to a sustainable future - from healthier rivers, to providing thousands of jobs, fewer leaks and a water supply ready for the impacts of climate change and population growth," said Chief Executive Liv Garfield.

Separately, the company proposed an equity issue to raise GBP1 billion.

Among London-listed midcaps, Future jumped 21%. It said its adjusted operating profit in the year ended September 30 is expected to be in line with board expectations of GBP254.1 million.

The company owns names including Marie Claire, Country Life, Money Week said that audience numbers have stabilised in the second half of its financial year, noting positive month-on-month momentum in the final quarter.

However, Future said trading conditions overall remain "mixed" with challenges in consumer spending and the digital advertising market.

Not quite in pole position in the FTSE 250 but still producing a solid gain, shares in Aston Martin raced 12% higher.

Backer Lawrence Stroll's Yew Tree consortium has agreed to purchase an additional 26 million shares in the company, increasing its total stake in the firm to 26.2%.

"The Yew Tree Consortium is delighted to increase its ownership in the company by 3.27%. This additional investment demonstrates the Yew Tree Consortium's continuing confidence and belief in the future of Aston Martin. The company has delivered a major turnaround since the Yew Tree consortium's initial investment three years ago," Lawrence Stroll said on behalf of Yew Tree.

Stroll, the father of Formula One racing driver Lance, is also Aston Martin's executive chair.

AJ Bell analyst Russ Mould commented: "When an investor already owning more than 20% of a business increases their stake, it sends a major signal to the market that something big could happen. It could mean one of three things: either they intend to make a takeover bid at some point in the future, trading is going very well so they believe the company will soon be worth a lot more, or the shares are stuck in the mud and they see an opportunity to buy more of them while the market isn't interested."

On the decline, in-game advertising firm Bidstack slumped 47%.

It warned its annual revenue will fall "significantly short of previous market expectations". Cost savings mean earnings before interest, tax, depreciation and amortisation "should be broadly in line", however.

Gold was quoted at USD1,872.89 an ounce midday Friday, higher against USD1,861.02 late Thursday.

Still to come on Friday is the latest US core personal consumption expenditures index reading at 1330 BST.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

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