Financial market participants in London early Friday were digesting a set of regulatory reforms set out by UK Chancellor Jeremy Hunt, while awaiting a US inflation reading that could set the stage for next week’s key central bank decisions.
The FTSE 100 index opened down 9.01 points, 0.1%, at 7,462.96. The FTSE 250 was up 26.49 points, 0.1%, at 18,850.50, and the AIM All-Share was up 1.04 points, 0.1%, at 835.45.
The Cboe UK 100 was down 0.2% at 746.45, the Cboe UK 250 closed up 0.1% at 16,272.29, and the Cboe Small Companies ended down 0.6% at 12,865.02.
In European equities on Friday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.1%.
The US producer price index is due out at 1330 GMT. US factory gate inflation is expected to cool to 7.4% in November from 8.0% in October, according to FXStreet-cited market consensus.
‘If this is the case, if the factory gate inflation in the US slowed last month - which would also hint at a potentially slower CPI data next Tuesday before the [Federal Open Markets Committee] decision - we could see the risk assets shrug off some of this week’s weakness,’ Swissquote Bank analyst Ipek Ozkardeskaya said.
However, a hotter-than-expected reading is likely to spook investors and extinguish hopes that peak US inflation has passed. The Federal Reserve will be keeping a close eye on the reading, ahead of two-day policy meeting starting on Tuesday, with the interest rate decision to be announced on Wednesday. Also on Tuesday next week is the US consumer price index for November.
The Bank of England and European Central Bank follow with rate decisions of their own on Thursday
Sterling was quoted at $1.2240 early Friday, edging up from $1.2218 at the London equities close on Thursday. The euro traded at $1.0568 early Friday, higher than $1.0547 late Thursday. Against the yen, the dollar was quoted at JP¥136.38, up versus JP¥135.56.
UK Chancellor Jeremy Hunt launched a raft of major reforms to the UK financial sector to replace EU regulation and cut red tape.
The chancellor revealed the shake-up will include a commitment to make ‘substantial legislative progress’ on repealing and replacing the Solvency II directive next year, which is expected to unlock more than £100 billion of private investment, according to the Treasury.
He also promised to reform the UK prospectus regime to support stock market listings and capital raises, reform rules on real estate investment trusts and review provisions on investment research in the UK.
In Madrid, Banco Santander slipped 0.3%, on news its UK business has been fined £107.8 million over ‘serious and persistent gaps’ in its anti-money laundering controls.
The Financial Conduct Authority said business banking customers were affected by anti-money laundering failures.
It said the bank ‘failed to properly oversee and manage’ these systems, which impacted its oversight of more than 560,000 business customers.
Among London large caps, Berkeley Group rose 0.6%.
In the half year ended October 31, the Surrey-based housebuilder said pretax profit slid 2.0% to £284.8 million from £290.7 million a year before. Revenue fell 1.6% to £1.20 billion from £1.22 billion. The firm left guidance for its full year unchanged, expecting profit of around £600 million.
Associated British Foods, owner of the Primark discount fashion store chain, shed 0.8%, as reiterated its annual outlook.
AB Foods still expects significant sales growth, but adjusted operating profit and adjusted earnings per share to be lower than the previous financial year.
Chair Michael McLintock to the company’s annual general meeting he expects ‘further significant’ input cost inflation, but said the volatility of input costs has ‘diminished’.
AB Foods expects the aggregate profit of its Food businesses to be higher than last financial year. Primark trading has been encouraging, he noted, and ABF is on track to open 27 new Primark stores in the year - 10 of these in the run-up to Christmas, with 6 already opened.
Glencore lost 0.5%.
The Anglo-Swiss commodity trading and mining company has scrapped plans for a huge coal mine in the Australian state of Queensland.
Mining at the Valeria open pit mine, which would have produced up to 20 million tonnes of thermal and metallurgical coal annually for 37 years, was due to begin in 2024. Glencore cited global uncertainties for the decision to abandon the project as well as the Queensland government’s decision to increase royalties on coal.
Among London small-caps, ProCook plunged 19%.
The kitchenware retailer said sales in recent weeks have been weaker than anticipated, as consumer demand softens due to the cost-of-living crisis in the UK.
It now expects revenue for its full year to be between £60 million to £65 million, and underlying profit before tax to be approximately breakeven.
This is due to ‘the combination of the continued softer year-on-year sales performance and heightened costs due to shipping and foreign exchange impacts, additional marketing and promotional activity, and investing in our operational teams to serve higher volumes’, ProCook explained.
It expects gross margins to recover in the next financial year, aided by lower shipping costs in new product intake and company plans to cut operating costs by £3 million on an annualised basis.
In New York on Thursday, the Dow Jones Industrial Average closed up 0.6%, the S&P 500 up 0.8% and the Nasdaq Composite up 1.1%.
In Tokyo on Friday, the Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite added 0.3%, while the Hang Seng index in Hong Kong was 2.3% higher. The S&P/ASX 200 in Sydney closed up 0.5%.
China’s consumer price inflation slowed further in November as it fell below two percent for the first time since March, official data showed Friday, providing authorities room to unveil fresh measures to kickstart the stuttering economy.
The main gauge of inflation, the consumer price index, rose 1.6% on-year last month, slowing from 2.1% in October, according to the National Bureau of Statistics. This was higher than FXStreet-cited consensus of a 1% annual rise.
On a monthly basis, consumer prices fell 0.2%, more than reversing a 0.1% rise in October.
Producer prices in China declined by 1.3% in November from a year before, the same annual rate of decline as in October, owing to weak demand and the imposition of Covid containment measures.
‘In stark contrast to last year, China is now having a positive impact on global inflation dynamics,’ commented Rabobank. ‘Weak domestic demand, price declines in raw materials and the return to more normal supply and logistics conditions, have resulted in China exporting deflation once again.’
Gold was quoted at $1,791.80 an ounce early Friday, higher than $1,787.73 late on Thursday, while Brent oil was unchanged at $76.38.
By Elizabeth Winter, senior markets reporter
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