Traders eye US markets amidst inflation data and post-debate analysis / Image Source: Adobe

London’s FTSE 100 made a decent start to the final trading day of the quarter, and cooler-than-expected US data could offer it impetus for further gains.

The blue-chip benchmark in Paris struggled, however, as pre-election nerves kicked in.

The US data is released at 1330 BST. The core personal consumption expenditures inflation gauge is expected to have faded to 2.6% in May, from 2.8% in April, according to FXStreet cited consensus.

The FTSE 100 index traded 33.80 points higher, 0.4%, at 8,213.48. The FTSE 250 rose 28.74 points, 0.1%, at 20,360.54, while the AIM All-Share added 0.95 of a point, 0.1%, at 765.42.

The Cboe UK 100 rose 0.4% to 817.33, the Cboe UK 250 was flat at 17,719.39, and the Cboe Small Companies was down 0.3% at 16,867.66.

In European equities on Friday, the CAC 40 in Paris was down 0.5%, but the DAX 40 in Frankfurt shot up 0.3%.

In New York on Thursday, both the Dow Jones Industrial Average and S&P 500 rose 0.1%, while the Nasdaq Composite added 0.3%.

In China on Friday, the Shanghai Composite rose 0.7%, and the Hang Seng was 0.1% higher in late trade. Tokyo’s Nikkei 225 ended 0.6% higher, while the S&P/ASX 200 edged up 0.1%.

The pound was quoted at $1.2647 early Friday, down slightly from $1.2650 at the London equities close on Thursday.

The UK economy grew at a slightly sharper pace than expected at the start of the year, according to a revision from the Office for National Statistics.

UK gross domestic product grew by 0.7% quarter-on-quarter in the three months to March, recovering after falls of 0.3% and 0.1% in the previous two quarters, and topping the prior estimate of a 0.6% increase.

Year-on-year, growth was upwardly revised to 0.3% from 0.2%. The UK economy had declined 0.2% on-year in the final quarter of 2023.

‘In output terms, services grew by 0.8% on the quarter with widespread growth across the sector; elsewhere the production sector grew by 0.6% while the construction sector fell by 0.6%,’ the ONS said.

An estimate earlier this month showed the UK economy registered no growth at the start of the second-quarter. GDP was unchanged on-month in April, following a rise of 0.4% in March, the ONS said earlier this month.

The euro stood at $1.0697, falling from $1.0710. Against the yen, the dollar was trading at JP¥160.94, up from JP¥160.67.

French consumer price inflation abated in June, according to a preliminary reading on Friday. Insee said the annual rate of consumer price inflation abated to 2.1% this month, from 2.3% in May. On a harmonised basis, allowing for EU-wide comparison, the annual rate of inflation eased to 2.5% this month from 2.6% in May. The reading was in line with FXStreet cited consensus.

Spain’s inflation rate cooled in June, numbers on Friday showed, but consumer prices still rose at a faster pace than expected. According to INE, the rate of consumer price inflation abated to 3.4% in June, from 3.6% in May. It had been expected to cool to 3.3%, however, according to FXStreet cited consensus. By the harmonised measure, allowing for EU-wide comparison, consumer prices expanded 3.5% on-year in June, easing from 3.8% in May.

‘Ahead of the weekend election, today sees the European Central Bank release its consumer inflation expectations for May. Three-year expectations currently sit at 2.4% and a drop under there - marking the lowest levels since before Russia invaded Ukraine - would add to expectations that the ECB could cut again in September. Currently, the market attaches a 64% probability to such an outcome. Perhaps the ECB will take encouragement from the Riksbank which yesterday added the possibility of an extra cut in the second half,’ analysts at ING commented.

Over in Japan, numbers showed consumer price inflation in the nation’s capital picked up, putting the focus on the Bank of Japan.

Annual consumer price inflation in Tokyo picked up to 2.3% in June, from 2.0% in May. Excluding fresh food, the rate of inflation accelerated to 2.1% from 1.9%, topping the consensus of 2.0%.

The data failed to spur on the yen, while the euro could also struggle, with political developments in France in focus.

‘For the euro, the upcoming French election this weekend is probably more important than the inflation figures as regardless of the data – unless we see something very much unexpected – many investors will probably chose to go into the French election weekend without a positive exposure to the euro given that Marine Le Pen’s National Rally is seen securing one vote out of three, and that’s not the outcome that the market is happy with,’ Swissquote analyst Ipek Ozkardeskaya commented.

‘A last word for the yen: the USDJPY was trading past the 161 level this morning, with no news of intervention on the wire just yet. The yen bears are looking for the limit, while the risk of intervention grows with every pip higher.’

Over in the UK, campaigning continues. It is likely that a week from now, voters will know UK Prime Minister Rishi Sunak’s fate.

PA reported Sunak will Friday turn his attention to education on the Conservative Party campaign trail in the North East. The PM has launched an attack on Labour’s plan to expand VAT so it covers private school fees, warning teachers and pupils could ‘see class sizes soar’ under a Labour government.

Homeowners are on Labour’s agenda on Friday, as Shadow Chancellor Rachel Reeves claims people remortgaging their homes face paying £4,800 more under the Conservative Party’s fiscal plans.

Across the Atlantic, a halting Joe Biden struggled to allay concerns he is too old for a second term in the White House in a fiery debate with Donald Trump marked by personal insults.

Deutsche Bank analysts commented: ‘The general consensus among pundits is that Trump had the better performance, and a CNN flash poll of registered voters watching the debate found viewers thought Trump won by a 67%-33% margin. There are just two debates scheduled in this campaign, with the second on September 10, ahead of the election on November 5. Going into the debate, the national polls were neck-and-neck.’

In London, Tyman shares rose 2.4%. Window and door components supplier said shareholders will receive a special dividend, in addition to a takeover consideration from Quanex, following investor engagement.

In a bid to soothe investor concern over the Quanex stock price since the cash and shares deal was announced, as well as adverse currency movements, Tyman shareholders also stand to receive a special interim dividend of 15 pence per share.

That will be in addition to the agreed consideration of 240p cash plus 0.05715 of a Quanex share, for each Tyman share owned.

‘The Tyman directors believe that the transaction, as amended by this announcement, is in the best interests of Tyman shareholders as a whole and continue to recommend unanimously that Tyman shareholders vote or procure votes in favour of the scheme at the court meeting and to vote or procure votes in favour of the special resolution,’ Tyman added.

Also the object of M&A interest, Keywords Studios rose 5.7%. It said it would be ‘minded to accept’ a takeover proposal from private equity firm EQT Group, which values the provider of technical and creative services for video game production at £1.96 billion.

The proposal prices each Keywords share at 2,450p. It followed a revised cash offer of 2,430p made on Wednesday. Keywords in May, however, had said it received a cash bid of 2,550p per share from EQT.

On the decline, Nightcap slumped 53%. The bars operator proposed an AIM exit, believing its ‘current public market valuation does not reflect the underlying potential of our business’.

Nightcap had listed in January 2021, one of the first initial public offerings in a busy year for floats on London’s junior market. The stock has slumped some 80% since listing, however.

Brent oil was quoted at $85.84 a barrel early Friday, up from $85.13. Gold was quoted at $2,328.36 an ounce, rising slightly from $2,327.60.

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Issue Date: 28 Jun 2024