Written by 4:29 pm EU Investment

LONDON MARKET CLOSE: Stocks end week higher despite Fed’s tough talk

Stock prices in Europe ended a largely positive week on a high, negotiating a hefty European Central Bank rate hike and hawkish noise from the Federal Reserve.

The FTSE 100 index closed up 89.01 points, 1.2%, at 7,351.07 on Friday. It added 1.0% over the course of the week. The FTSE 250 ended up 309.74 points, 1.6%, at 19,188.03, ending the week 1.8% higher. The AIM All-Share closed up 11.24 points, 1.3%, at 880.60, gaining 1.7% this week.

The Cboe UK 100 ended up 1.4% at 735.94, the Cboe UK 250 closed up 1.7% at 16,536.44, and the Cboe Small Companies ended up 0.7% at 13,705.95.

In European equities on Friday, the CAC 40 in Paris ended up 1.6%, while the DAX 40 in Frankfurt ended up 1.4%.

The Fed will have to stick to its policy of raising interest rates into next year to ensure that high inflation comes down to the 2% target, an official said Friday.

Fed Governor Christopher Waller cautioned that lowering inflation will take time, and he supports another ‘significant increase’ in the benchmark lending rate at the September 20-21 policy meeting.

After the ECB’s historic rate hike on Thursday, and hawkish noise from the Fed, the Bank of England was to take centre-stage next week.

The BoE on Friday said it has decided to postpone a meeting on interest rates due next Thursday by one week, following the death of Queen Elizabeth II. The decision will now come on Thursday, September 22.

Britain’s longest serving monarch died at her Scottish home of Balmoral late on Thursday.

The dollar was weaker on Friday.

The pound was quoted at $1.1580 at the London equities close Friday, higher compared to $1.1495 at the close on Thursday. Against the yen, the dollar was trading at JP¥142.53, lower compared to JP¥143.91 late Thursday.

The euro stood at $1.0003 at the European equities close Friday, rising from $0.9961 at the same time on Thursday.

The EU executive pledged Friday to come up with unprecedented measures in the coming days to solve an energy price shock triggered by Russia’s war on Ukraine, including a controversial gas price cap that could further anger the Kremlin.

Moscow’s invasion has seen the price of natural gas hit record levels, throwing the EU economy into deep uncertainty, with all eyes on whether Russian President Vladimir Putin will cut off the flow entirely.

European energy ministers tasked the European Commission in Brussels to work through the weekend to draw up legal texts that will include emergency funding for consumers sinking under the weight of soaring bills.

The EU will table ‘unprecedented measures next week for an unprecedented situation’, energy commissioner Kadri Simson said, after meeting the ministers.

In London, miners were among the best performing large-cap stocks. They were on the up after data showed inflation in China was showing signs of slowing. China is a key buyer of minerals.

China’s annual consumer inflation rate eased to 2.5% in August from 2.7% in July. Expectations, according to FXStreet, were for the rate to tick up to 2.8%.

Anglo American rose 4.9%, Antofagasta ended 3.4% higher and Glencore added 3.1%

In the FTSE 250, TI Fluid Systems added 4.8%, after Jefferies raised the automotive fluid storage, carrying and delivery systems firm to ‘buy’ from ‘hold’.

Marketer of promotional merchandise 4imprint rose 5.7%, after Barclays raised its target price to 5,800p from 4,800p, keeping its ‘overweight’ rating.

At the other end of the midcaps, Computacenter fell 6.7% after reporting disappointing interim results.

Pretax profit in the six months to June 30 fell 6.4% to £107.8 million from £115.2 million a year ago. The company pinned the drop on higher amortisation costs for past acquisitions and a difficult comparator from the year before.

Revenue grew 17% to £2.83 billion from £2.43 billion. However, the computer services company noted that revenue in the UK business decreased by 7.1% to £653.8 million from £703.4 million.

Despite the profit setback, the Hertfordshire, England-based firm upped its dividend to 22.1 pence per share, an increase of 31% from 16.9p. It said it remains ‘on track’ to delivery on previous guidance for annual profit growth.

On AIM, music instrument seller Gear4Music shed 15%, after it lowered annual guidance. The firm said sales in July and August have been hampered by the cost of living crisis and hot weather across Europe.

Looking ahead, Gear4Music said that it now expects revenue in financial year 2023 to be around £155 million and earnings before interest, tax, depreciation and amortisation of around £9 million.

This is lower than the current consensus expectations, which anticipates revenue of £163.9 million and an Ebitda of £11.9 million.

Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 1.1%, the S&P 500 index up 1.3%, and the Nasdaq Composite up 1.9%.

Brent oil was quoted at $91.75 a barrel at the London equities close Friday, up from $88.99 late Thursday. Gold was quoted at $1,715.81 an ounce, up from $1,707.70.

In Monday’s UK corporate calendar, London-based investment firm HgCapital Trust reports interim results.

The economic calendar for next week kicks off with UK gross domestic product figures at 0700 BST and a Germany IFO economist forecast at 1100 BST on Monday. The week picks up pace with US consumer inflation figures at 1330 BST Tuesday, and UK inflation numbers at 0700 BST on Wednesday.

Financial markets in China will be closed on Monday for the Mid-Autumn Festival.

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