The festive mood disappeared on Thursday ahead of a key US inflation print, the US personal consumption expenditures price index reading due on Friday.
It is London’s last full day of trading before markets shut early for a Christmas break on Friday.
The FTSE 100 index closed down 20.95 points, 0.3%, at 7,694.73. The FTSE 250 ended down 58.12 points, 0.3%, at 19,570.97, and the AIM All-Share closed up 1.01 points, or 0.1%, at 752.45.
The Cboe UK 100 ended down 0.4% at 768.46, the Cboe UK 250 closed down 0.3% at 17,052.82, and the Cboe Small Companies ended up 0.5% at 14,706.49.
In European equities on Thursday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt ended down 0.3%.
Investors are keeping an eye on a key US personal consumption expenditures price index print on Friday, which is the Federal Reserve’s preferred metric of inflation.
According to FXStreet, the core PCE index is expected to cool to 3.3% in November year-on-year, from 3.5% in October. The core reading, the Fed’s preferred inflation gauge, does not include food or energy.
AJ Bell’s Russ Mould warned that ‘a higher-than-expected core US inflation reading tomorrow could tip us back into fretting about rates being higher for longer.’
Last week, the Federal Open Market Committee extended a pause in monetary policy that has been in place since July, leaving the federal funds rate at a 22-year high of 5.25% to 5.5%. At the time, Federal Reserve Chair Jerome Powell said that while interest rates ‘are at or near the peak of the cycle’, the committee ‘has been surprised before and will do more if needed to bring inflation down’.
The notion that the US Federal Reserve might be ready to start cutting interest rates next year has given a boost to stocks in the last week.
However, there was some softer US economic data on Thursday to digest.
The US economy grew by less than expected in the third quarter of 2023, a new estimate showed.
According to a third gross domestic product estimate from the Bureau of Economic Analysis, GDP grew by 4.9% quarter-on-quarter on an annualised basis in the three months to September 30. In the second-quarter, GDP had grown by 2.1% on the same basis.
An earlier advance estimate, out a month ago, said the US economy grew by 5.2% in the third quarter.
Stocks in New York were higher at the London equities close, with the DJIA up 0.6%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 0.8%.
The pound was quoted at $1.2663 at the London equities close Thursday, lower compared to $1.2734 at the close on Wednesday. The euro stood at $1.0988 at the European equities close Thursday, up against $1.0972 at the same time on Wednesday. Against the yen, the dollar was trading at JP¥142.35, down compared to JP¥143.88 late Wednesday.
In the FTSE 100, Vodafone ended the day at the top of the index, rising 2.2%.
Bloomberg reported that Swisscom is weighing an offer for the UK telecom’s Italian business early next year, potentially countering a rival proposal from France’s Iliad.
Citing people familiar with the matter, Bloomberg reported that the possible deal would combine Vodafone’s mobile service with Swisscom’s Fastweb fiber broadband carrier in the country.
Swisscom and Vodafone are in talks to discuss the terms and a formal bid could be announced as soon as next month, the Bloomberg sources said.
Iliad on Monday said it submitted a proposal to Vodafone to create a new joint venture company that combines Vodafone Italia and Iliad Italia.
In the FTSE 250, Harbour Energy climbed 22%.
The oil and gas company said it had reached an agreement with BASF and LetterOne to acquire ‘substantially all’ of the Wintershall Dea’s upstream assets.
It will pay the two Wintershall shareholders $11.20 billion in cash and shares for the portfolio.
Harbour said that the deal will transform it into ‘one of the world’s largest and most geographically diverse independent oil and gas companies.’
On London’s AIM, tinyBuild rocketed 56%.
The Washington, US-based video game developer and publisher said French video game firm Atari will buy $2 million of its shares via a private placing at 5p each. This comes amid plans to raise around $14 million via the issue of shares at the same price.
However, it provided a rather gloomy update on trading, noting some contracts may slip into next year. It expects revenue to be between $40 and $50 million in 2023, which would be down from $63.3 million in 2022.
In response, tinyBuild firm has ‘promptly accelerated’ its cost reduction plans. It will use fund from the equity raise to strengthen its balance sheet.
Brent oil was quoted at $79.05 a barrel at the London equities close Thursday, down from $80.44 late Wednesday. Gold was quoted at $2,040.66 an ounce at the London equities close Thursday, higher against $2,034.50 at the close on Wednesday.
In Friday’s UK corporate calendar, Cellular Goods will publish its full year results. There will also be a trading statement from M&C Saatchi.
The economic calendar for Friday has UK retail sales at 0700 GMT, before markets shut at 1230 GMT.
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