Bronze bull against market data screens
FTSE notches up gain for second quarter / Image source: Adobe

Some end of quarter nerves meant the FTSE 100 returned solid gains by the closing bell on Friday, despite a cooler US inflation reading spurring on stocks in New York.

The FTSE 100 index ended 15.56 points lower, 0.2%, at 8,164.12. The FTSE 250 fell 45.77 points, 0.2%, at 20,286.03, while the AIM All-Share fell just 0.09 to 764.38.

For the week, the FTSE 100 lost 0.9%, the FTSE 250 fell 0.8% and the AIM All-Share shed 1.1%.

For the whole of the second quarter, the FTSE 100 climbed 2.7%, the FTSE 250 2.0% and the AIM All-Share 2.8%.

All three indices fell over the month of June, however, with the FTSE 100 giving back 1.3%, the FTSE 250 2.1% and the AIM All-Share 5.1%.

The Cboe UK 100 fell 0.1% to 813.63 on Friday, the Cboe UK 250 fell 0.5% to 17,625.17, but the Cboe Small Companies closed down 0.4% at 16,855.19.

In European equities on Friday, the CAC 40 in Paris ended down 0.7%, while the DAX 40 in Frankfurt added 0.1%.

In New York, the Dow Jones Industrial Average rose 0.2%, the S&P 500 was up 0.3%, while the Nasdaq Composite was 0.2% higher.

US inflationary pressures cooled in line with expectations, according to the Federal Reserve’s preferred measure.

The Bureau of Economic Analysis said the core personal consumption index gauge grew 2.6% on-year in May, easing from 2.8% in April, which was also the pace of growth in March.

The figure was in line with FXStreet-cited consensus.

The core PCE index does not include food or energy. The headline index, which does, rose 2.6% on-year in May, easing from 2.7% growth in April.

‘Today’s data will likely help to provide additional confidence to the FOMC that the US economy is continuing along what remains a bumpy disinflationary path. Nevertheless, it remains the case that ’one swallow doesn’t make a summer’, hence the May PCE figures are unlikely to open the door to a cut on their own, though do push said door ajar a little more,’ Pepperstone analyst Michael Brown commented.

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 pound was quoted at $1.2639 late Friday afternoon, down from $1.2650 at the time of the London equities close Thursday. The euro stood at $1.0713, up slightly from $1.0710. Against the yen, the dollar was trading at JP¥160.88, up from JP¥160.67.

Investors also have political developments to consider, with voters going to the polls in France this Sunday and a week later, and polling day in the UK coming on Thursday. In the US, election day is months away, but a debate overnight between President Joe Biden and his predecessor Donald Trump grabbed headlines.

‘Financial markets and traders are focused on the economic data and when the Fed will cut interest rates. In contrast, the media is focused on last night’s debate between Biden and Trump. Whether or not the Democrats can force President Biden to step down and replace him with a new candidate seems unlikely right now,’ XTB analyst Kathleen Brooks commented.

‘It is worth noting that stock markets tend to do slightly better in the long term under Democratic Presidents, however, we don’t think Biden’s disastrous performance at last night’s debate will have a material impact on markets in the short term. The election is still many months away and a lot could change. Added to this, under Biden the economic performance has been spectacular, but the deficit has surged, so the market may struggle to price in the impact of a reduced chance of a win for the Democrats on the back of last night’s debate performance.’

While the US presidential election later this year threatens to be nip and tuck, the UK general election result is likely to be a lot more emphatic, with Keir Starmer’s Labour Party the frontrunner.

In France, political forces were on Friday making final bids for votes in crunch legislative elections that could see the far right take control of the government in a historic first.

Official campaigning will end at midnight followed by a day off on Saturday, during which time political activity is forbidden ahead of voting on Sunday. Another week of campaigning will then lead up to the decisive second round on July 7.

Opinion polls suggest the centrist alliance will come only third behind the National Rally and a broad but fragile left-wing coalition, the New Popular Front.

In London, JD Sports lost 5.4%, the worst FTSE 100 listed performer. The athleisure firm followed Nike lower. Nike plunged 19% in New York on poorly received earnings and guidance.

Elsewhere, musicMagpie slumped 12%. The seller of refurbished consumer technology, books, and disc media said that in the six months that ended May 31, its pretax loss narrowed to £3.0 million from £3.2 million a year prior.

However, revenue declined 13% to £53.8 million from £61.9 million.

Chief Executive Officer Steve Oliver said: ‘Amidst an increasingly competitive environment for second-use technology, and with consumers continuing to feel the squeeze on their wallets, the market has undoubtedly been challenging.’

Looking ahead, management expects the macroeconomic challenges to continue into the second half.

Nightcap slumped 46%. The bar 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 $84.84 a barrel late Friday afternoon, down from $85.13 late Thursday. Gold was quoted at $2,326.14 an ounce, down slightly from $2,327.60.

Monday’s economic calendar has a slew of manufacturing purchasing managers’ index readings, include China overnight, the eurozone at 0900 BST, the UK at 0930 and the US at 1445.

In the UK corporate calendar, the start of July has half-year earnings from filtration technology company Porvair.

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Issue Date: 28 Jun 2024