City skyline in London
FTSE 100 index closed down 22.90 points, 0.3%, at 7,572.58 / Image source: Adobe

There was a divergence between US and European equities on Friday, with stocks on Wall Street largely on the up, but peers in Europe struggling to find their feet at the end of a tricky week.

The divergence between markets in Europe and New York was perhaps typified by the S&P 500 hitting a record high, cementing its status above the 5,000 point threshold.

The greenback ended the week by returning gains, meanwhile, as a government release denoting consumer price index reading revisions offered little to dollar bulls.

The FTSE 100 index closed down 22.90 points, 0.3%, at 7,572.58. The FTSE 250 ended 40.40 points lower, 0.2%, at 19,062.32, and the AIM All-Share lost 3.69 points, 0.5%, at 747.41.

For the week, both the FTSE 100 and FTSE 250 lost 0.6%, while the AIM All-Share gave back 0.9%

The Cboe UK 100 ended down 0.3% at 756.87, the Cboe UK 250 fell 0.5% to 16,463.05, and the Cboe Small Companies lost 0.3% to 14,534.93.

In European equities on Friday, both the CAC 40 in Paris and the DAX 40 in Frankfurt ended down 0.2%.

In New York, the Dow Jones Industrial Average was down 0.13%, while the S&P 500 added 0.3% and the Nasdaq Composite surged 0.9%.

Having very briefly topped the threshold on Thursday, the S&P 500 opened above 5,000 points on Friday.

Focus next week will be on a host of UK data. Unemployment, inflation and economic growth readings will be closely eyed by the Bank of England, with the next interest rate decision from Threadneedle Street around six weeks away.

The UK inflation data is released on Wednesday, though there is another reading before the BoE’s next decision on March 20.

US inflation data for January is released on Tuesday. According to consensus cited by FXStreet, the annual consumer price inflation rate is expected to have cooled to 3.0% in January, from 3.4% in December.

US inflation data from the end of last year saw little in the way of revisions, according to new data published Friday.

The Bureau of Labor Statistics made minimal revisions to last year’s inflation data, with consumer prices excluding food and energy items rising at a 3.3% annualised rate in the final three months of 2023, matching the previous reading.

Revisions to the headline figure were also minimal. December’s monthly increase was marked down to a 0.2% advance instead of 0.3%, while the reading for November moved up 0.1 percentage point, also to 0.2%.

The dollar fell back after the figures, which were seen as supporting an interest rate cut in May.

Federal Reserve Chair Jerome Powell and his colleagues have said they need to see more evidence that price pressures are sustainably receding before they begin cutting interest rates.

In late January, Powell eroded hopes for a cut in interest rates in March, saying it is not the ‘most likely case.’

The pound was quoted at $1.2632 late on Friday in London, up compared to $1.2609 at the equities close on Thursday. The euro stood at $1.0783, up against $1.0763. Against the yen, the dollar was trading at JP¥149.31, down from JP¥149.39.

In London, there was little in the way of major large-cap moves, with Fresnillo closing among the worst FTSE 100 performers. The gold miner ended down 3.4%, tracking bullion prices lower.

‘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,’ AJ Bell analyst Russ Mould commented.

Gold was quoted at $2,021.73 an ounce late Friday afternoon, down against $2,029.31 late Thursday and off the $2,034.63 it fetched this time last week. Gold traded as low as below the $2,015 mark earlier this week.

ACY Securities analyst Luca Santos commented: ‘Gold, the age-old symbol of wealth and stability, has recently faced a significant challenge, breaking below a crucial technical support level at $2.017 per ounce. This development sends a negative signal for both gold and silver. There is even a possibility of a further slide to the mid $1.980 per ounce level, indicating a challenging period for gold investors.’

Recently the object of takeover interest, packaging firm DS Smith and housebuilder Redrow climbed 2.5% and 0.3%, extending gains. Peer Mondi is mulling a takeover of DS Smith, while Redrow has agreed to a housebuilding tie-up with Barratt Developments.

There was some more dealmaking on Friday.

Barclays is to buy the retail banking business of Tesco Bank, as the big UK supermarkets scale back their forays into financial services.

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 £600 million for the business, which has been in operation for more than 25 years. Tesco noted it will receive about £1 billion in cash in total, including a special dividend of £250 million paid by Tesco Bank back in August.

Tesco shares closed marginally higher, while Barclays fell 0.6% in a tricky day for London-listed lenders.

HSBC shares fell 1.3%, weighing on the FTSE 100. NatWest, meanwhile, gave back 2.2%, before it reports annual results next week Friday.

Elsewhere in London, AIM-listed Evgen Pharma slumped 22% as it announced it has issued a notice of dispute with partner Stalicla, explaining that it has not received funds it believes it is entitled to.

‘In October 2022, Evgen licensed the global rights for lead asset SFX-01 in neurodevelopmental disorders and schizophrenia to Stalicla for up to $160.5 million in milestone payments. An initial $500,000 was paid upfront with the next anticipated payment of $500,000 due on completion of the Evgen-sponsored human volunteer Phase 1 study.

‘The phase 1b human volunteer study was completed and the clinical study report finalised in August 2023.’

Evgen said it believes the ‘payment is now due’.

‘In order to effect the payment, Evgen has taken the decision to formally implement the dispute resolution process detailed in the License Agreement, the first step of which is the issuance of a dispute notice. As stated in the half year results in October 2023, Evgen has not anticipated any milestone payments from Stalicla in its financial forecasting and its cash runway remains unchanged,’ it added.

Brent oil was quoted at $82.03 a barrel late in London on Friday, up from $81.02 late Thursday.

On Monday, financial markets in Shanghai and Tokyo are closed for the Chinese New Year and National Day holidays, respectively.

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Issue Date: 09 Feb 2024