24th Feb 2023 12:00
(Alliance News) - Stock prices in London were higher at midday on Friday as investor sentiment was boosted by a surprise up tick in UK consumer confidence, ahead of a key piece of US inflation data.
The US Federal Reserve's preferred inflation measure - the core personal consumption expenditure index - will be released at 1330 GMT.
"Given the previous inflation data, we know that inflation has certainly eased, but not as much as expected. If there is not a big surprise, there should be no bloody market reaction to a slightly higher than expected PCE index," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The FTSE 100 index was up 13.57 points, or 0.2%, at 7,921.29. The FTSE 250 was up 68.76 points, or 0.4%, at 19,859.25, and the AIM All-Share was up 0.72 of a point, or 0.1%, at 856.23.
The Cboe UK 100 was up 0.1% at 793.14, the Cboe UK 250 was up 0.4% at 17,348.83, and the Cboe Small Companies was up 0.1% at 17,348.83.
UK consumer confidence made a surprise rebound from historic lows in February, despite ongoing cost-of-living woes.
GfK's long-running consumer confidence index rose by a significant seven points in February, although the headline score remains at a "severely depressed" negative 38.
Joe Staton, client strategy director at GfK, said: "The headline consumer confidence score is still severely depressed and the mood as well as the economy remains a long way off pre-lockdown levels, but a little consumer resilience might be what we need to soften any downturn in 2023."
The pound was quoted at USD1.1983 at midday on Friday in London, lower compared to USD1.2023 at the close on Thursday.
In London, International Consolidated Airlines was the worst blue-chip performer at midday, nosediving 5.3%. This was despite reporting a swing to a profit in 2022, led by higher passenger numbers, as skies got busier after Covid-19 mobility restrictions eased.
The British Airways parent reported a pretax profit of EUR415 million for 2022, swinging from a loss of EUR3.51 billion in 2021. In 2019, the airline reported a pretax profit of EUR2.28 billion.
Operating profit was EUR1.26 billion, 4.7% higher than the median company-compiled consensus of EUR1.20 billion, which had a range of EUR1.07 billion to EUR1.40 billion.
It swung from an operating loss of EUR2.77 billion in 2021, but 2022's figures were less than half of 2019's operating profit of EUR2.61 billion.
Looking ahead, IAG expects 2023 operating profit before exceptional items to be between EUR1.8 billion and EUR2.3 billion, above 2022's EUR1.23 billion but at least 30% lower than EUR3.29 billion in 2019.
Russ Mould, investment director at AJ Bell, said the pledge to return to pre-Covid levels of profit in the next few years gives investors "something to look forward to" but also "demands some patience". The analyst said there is no dividend to serve as a reward to those shareholders still "sticking around".
In the FTSE 250, Jupiter Fund Management, jumped 13%. It reported a drop in yearly pretax profit and a fall in assets under management, though a decent second half for the company lifted spirits.
The London-based investment manager said, at December 31, assets under management fell 17% year-on-year to GBP50.2 billion from GBP60.5 billion. Pretax profit plunged 68% over in 2022 to GBP58.0 million.
Jupiter blamed macro-economic events, which hit market valuations and investor sentiment. However, the second half was more positive, with positive net inflows for the first time since 2017.
Elsewhere in London, Kin & Carta plunged 30% after the business consultancy cut its full-year expectations, due to the effects of macro headwinds which have made clients more cautious, and elongated sales cycles.
Gold was quoted at USD1,817.72 an ounce at midday in London on Friday, lower against USD1,821.05 late Thursday. Brent oil was quoted at USD82.18 a barrel, up from USD81.71.
In European equities on Friday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.4%.
The German economy saw a worse contraction than initially thought in the final quarter of 2022.
According to Destatis, German gross domestic product fell by 0.4% in the fourth quarter from the previous quarter, worsening from a preliminary forecast of a 0.2% contraction.
The euro stood at USD1.0575 at midday on Friday in London, lower against USD1.0593 at the London equities close on Thursday. Against the yen, the dollar was trading at JPY135.39, higher compared to JPY134.72.
Japan's consumer prices rose 4.2% in January from a year earlier, a level not seen since September 1981, fuelled in part by higher energy bills.
The 4.2% rise, which excludes volatile fresh food, is well below the still sky-high levels that have sparked concern in the US, Britain and elsewhere, but far exceeds the Bank of Japan's longstanding inflation goal of two percent.
The BoJ's next governor Kazuo Ueda told parliament on Friday that the central bank's long-standing monetary easing policies are "appropriate", suggesting no sudden changes to the bank's stance when he takes the helm in April.
Under current boss Karuhiko Kuroda, the bank has unleashed a raft of extraordinary ultra-loose policies – from a negative interest rate to spending vast sums on government bonds – in a bid to boost the sluggish economy.
It has stuck with these measures over the past year, despite pressure to join the US Federal Reserve and other central banks in aggressively hiking interest rates to tackle soaring inflation.
Ueda, an economics professor, told lawmakers that he saw the "continuation of monetary easing as appropriate", warning of high levels of uncertainty in financial markets and the global economy.
Still to come in Friday's economic calendar, alongside the release of the US Federal Reserve's preferred inflation gauge at 1330 GMT, there will be the University of Michigan consumer sentiment index and new US home sales data at 1500 GMT.
Ahead of the US open, stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.5%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 0.9%.
By Heather Rydings, Alliance News senior economics reporter
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