The London market held onto the pre-holiday week’s gains in a shortened session on Friday, leaving the FTSE 100 index almost level with where it started 2022.
The index of large-cap stocks closed up 3.73 points, 0.1% at 7,473.01 on Friday, rising 1.9% this week. The London benchmark is down just 0.4% in the year-to-date, despite interest rate hikes, the ’mini-budget’ crisis, and other market shocks.
Meanwhile, the FTSE 250 ended up 68.01 points, 0.4%, at 18,830.08 on Friday, closing the week up 1.3%, while the AIM All-Share closed up 3.95 points, 0.5%, at 830.13, ending the week 0.9% higher.
The Cboe UK 100 ended up 0.1% at 747.36, the Cboe UK 250 closed up 0.6% at 16,298.96, and the Cboe Small Companies ended up 0.5% at 13,054.55.
The London Stock Exchange closed early at 1230 GMT on Friday for the festive period. It will be closed on Monday and Tuesday, before reopening on Wednesday.
In European equities on Friday at 1230 GMT, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.2%.
Financial markets in the US, France, and Germany will be closed on Monday, with trading to resume on Tuesday.
Stocks in New York were called to a higher open at the London equities close, with the DJIA called up 0.2% and the S&P 500 index and the Nasdaq Composite both called up 0.1%.
Investors were awaiting the monthly personal consumption expenditures reading from the US, which is due at 1330 GMT. The PCE is the Federal Reserve’s preferred measure on inflation.
According to FXStreet-cited consensus, PCE is expected to tick down to 4.7% annually in November from 5% in October, and remain unchanged on a monthly basis at 0.2%.
This would confirm the US consumer price index released earlier this month, which showed inflation cooling to 7.1% in November, from 7.7% in October.
However, a hotter-than-expected PCE reading could spook investors across the Atlantic and beyond, sparking fears of further hawkishness from the Fed.
The dollar was mixed against major currencies ahead of the PCE inflation data.
Sterling was quoted at $1.2064 at the London equities close on Friday, firm on $1.2028 at the close on Thursday. The euro traded at $1.0615, higher than $1.0599. Against the yen, however, the dollar was quoted at JP¥132.72, up versus JP¥132.32.
‘The dollar has risen a long way since 2008 as the US economy has out-performed Europe,’ summarised Kit Juckes at Societe Generale, ‘and while currency markets are all about relative growth, relative monetary policy and other relative measures, a US recession in 2023 could see the dollar fall further than anyone expects (and if Santa Claus can bring us peace on earth, it’ll fall a lot further).’
In commodities, gold was quoted at $1,798.25 an ounce on Friday at midday, up from $1,796.92 late on Thursday.
Miners ended the shortened equities trading session higher, with Anglo American up 1.2%, Rio Tinto up 1.2%, and Endeavour up 0.7%.
Brent oil fetched at $82.67 a barrel, flat from $82.69. But the price remains elevated. At the London market close last Friday, it was quoted at $78.82.
Moscow may cut oil production by up to 7% in early 2023 following an oil price cap agreed by Western countries, according to a Russian deputy prime minister.
‘At the start of next year, we could make a reduction of 500,000-700,000 barrels per day. For us, that’s around 5-7%,’ Alexander Novak, who is in charge of Moscow’s energy policy, said according to Russian news agencies.
He said Russia will not supply oil to countries that are enforcing a price cap - a part of punitive measures on Moscow following its offensive in Ukraine.
‘Some market participants are giving more weight to supply risks into the new year beyond the estimated 1 million barrels per day cut due to EU sanctions and G7 price cap effects,’ said Stephen Innes, managing partner at SPI Asset Management.
‘But nothing like Russia ringing in the holiday cheers, with the US getting blanketed by a polar vortex. Hence the conspicuous timing has not gone unnoticed by oil traders either, so the reaction has been muted to Russian threats,’ he added.
A ‘once-in-a-generation’ winter storm with temperatures as low as minus 40 degrees Fahrenheit caused Christmas travel chaos in the US on Thursday, with thousands of flights cancelled and major highways closed. Heavy snow and howling winds upended holiday plans at one of the busiest times of the year, as a huge cold front swept down from the Arctic and took freezing hold of the middle of the country.
In the FTSE 250 index in London, real estate investor Shaftesbury added 2.3%.
This comes despite news that the UK competition watchdog has opened an inquiry into its merger with Capital & Counties.
The UK Competition & Markets Authority said it is considering whether a merger between the two companies would result in ‘a substantial lessening of competition within any market or markets in the UK’.
The CMA said the merger inquiry has a deadline of February 22 for its phase 1 decision.
Capital & Counties closed up 2.4%.
On AIM, Gfinity plunged 42%, as the e-sports and gaming services firm reported disappointing annual results.
For the financial year that ended on June 30, it said pretax loss widened to £4.2 million slightly from £4.1 million the year before. Revenue fell 7.0% to £5.3 million from £5.7 million.
Looking ahead, Gfinity said the e-sports and gaming sectors continue to grow, forming part of a systematic change in the media industry towards digital, streamed and gaming-related content.
Next week’s economic calendar is quiet. Monday has a speech from Bank of Japan Governor Kuroda, with a slew of Japanese data on Tuesday and more to follow on Wednesday.
There are no scheduled events in the UK corporate calendar next week.
By Elizabeth Winter, Alliance News senior markets reporter
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