The second half of 2022 started on a downbeat note for equities in London following a brutal start to the year.
‘Bad H1's for equities have tended to be followed by much better H2's. But with increasing warnings that a recession is round the corner, it isn't so obvious where things are headed this time round,’ said Deutsche Bank.
‘Indeed, equities saw another significant selloff yesterday as those fears were magnified yet again by another weaker than expected round of data which genuinely puts the US at risk of a technical recession in H1 already.’
The FTSE 100 index was down 40.52 points, or 0.6%, at 7,128.76. The FTSE 250 index was down 105.80 points, or 0.6%, at 18,561.70. The AIM All-Share index was down 2.25 points, or 0.3%, at 873.97.
The Cboe UK 100 index was down 0.5% at 711.88. The Cboe 250 was down 0.7% at 16,204.25, and the Cboe Small Companies was flat at 13,277.87.
In mainland Europe, the CAC 40 stock index in Paris was down 0.1%, while the DAX 40 in Frankfurt was down 0.3%.
Recession fears were reflected in weaker oil prices on Friday. Brent oil was quoted at $108.85 a barrel in morning trade, down sharply from $114.74 a barrel at the London equities close Thursday.
Tracking this, FTSE 100-listed oil company Harbour Energy was the worst performer, down 3.1%.
Elsewhere among the large-caps, Abrdn was down 2.5% after Citigroup downgraded the asset manager to 'sell' from 'neutral'.
BT Group was down 1.3% after staff at the telecommunications company voted to strike, union bosses announced Thursday, joining workers in various UK sectors protesting over pay as decades-high inflation erodes wages.
Dave Ward, general secretary at the Communication Workers Union, said BT now faces its first national strike since the company's privatisation in the 1980s after a ballot in favour of walking out. It comes after strike action in recent days by tens of thousands of rail workers in addition to stoppages held by senior criminal lawyers.
Elsewhere, Oxford Biomedica was up 3.2% after the gene and cell therapy developer signed a new three-year agreement with AstraZeneca, which would facilitate potential future manufacturing opportunities for the FTSE 100-listed drugmaker's Covid-19 vaccine.
AstraZeneca was down 0.8%.
The Oxford, England-based company said that the agreement is an extension of the original 18-month supply & development agreement signed back in September 2020 between the two companies.
Under the new agreement, manufacturing of vaccines at Oxford Biomedica's manufacturing facility will be available to AstraZeneca on an as-needed basis beyond 2022.
On Friday, the Japanese Nikkei 225 index closed down 1.7%. In China, the Shanghai Composite lost 0.3%, while the Hang Seng index in Hong Kong was closed for a holiday. The S&P/ASX 200 in Sydney ended down 0.4%.
China's manufacturing sector returned to expansion levels in June, with the easing of Covid restrictions leading to a sharp expansion of output, and the stabilisation of supply chains, data from Caixin and S&P Global showed.
The Caixin general manufacturing purchasing managers' index rose to 51.7 points in June from 48.1 points in May, signalling the first improvement in the sector in four months, as well as the strongest rate of increase since May 2021.
Companies noted the first expansion of output since February, as a result of the return to more normal operations, as well as the reopening of production lines as Covid restrictions were relaxed.
In Japan, the au Jibun manufacturing PMI slowed to 52.7 in June from 53.3 in May, which was the 17th consecutive month of growth.
‘The weaker headline reading was partly due to a near-stagnation of new orders. While remaining in expansion territory, the latest increase in sales was only fractional and the slowest in the current nine-month sequence of growth. The slowdown in demand was commonly linked to rising prices and weaker client confidence amid sustained material shortages and delivery delays,’ au Jibun explained.
The pound was quoted at $1.2125 early Friday, down from $1.2157 at the London equities close Thursday.
The euro was priced at $1.0440, down from $1.0456. Against the safe haven Japanese yen, the dollar was trading at JP¥134.92, lower against JP¥135.89.
Gold was quoted at $1,796.30 an ounce, down from $1,807.91 late Thursday.
Friday's economic calendar has manufacturing PMIs from the eurozone at 0900 BST and UK at 0930 BST. There is also eurozone inflation at 1000 BST and US PMIs at 1445 BST and 1500 BST.
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