London’s FTSE 100 underperformed on Friday, with its heavyweight pharmaceutical firms among the worst performers, as a post-Federal Reserve decision rally gave way to some profit taking.
There were also some hawkish words from a US policymaker which kept enthusiasm to a minimum, though stocks in New York made a strong start.
The FTSE 100 index gave back 72.62 points, 1.0%, at 7,576.36. It had surged more than 100 points on Thursday.
The FTSE 250 lost 47.99 points, 0.3%, at 19,208.97, though the AIM All-Share ended up 1.47 points, 0.2%, at 739.31.
For the week, the FTSE 100 rose 0.3%, the FTSE 250 added 2.7%, while the AIM All-Share climbed 2.2%.
The Cboe UK 100 ended down 1.0% at 756.32. The Cboe UK 250 lost 0.4% at 16,658.06, though the Cboe Small Companies added 1.2% at 14,297.15.
In European equities on Friday, the CAC 40 in Paris closed up 0.3%, while the DAX 40 in Frankfurt ended flat.
New York Federal Reserve President John Williams said it is too soon to be talking about US interest rate cuts, CNBC reported on Friday, souring the mood after the Fed’s dovish hold on Wednesday.
The New York Fed president told CNBC that policymakers are not ‘really talking about rate cuts right now’.
Williams said the focus right now is on whether rates are in ‘sufficiently restrictive’ territory to send inflation back down to the 2% target.
‘It is looking like we are at or near that in terms of sufficiently restrictive, but things can change,’ he told CNBC.
The Fed left its benchmark interest rate unchanged, as expected on Wednesday, but signalled rate cuts of as much as 75 basis points in the coming year.
The decision from the Federal Open Market Committee extends 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%.
But the latest quarterly dot plot showed that most officials expect rates to be in the range of 4.4% to 4.9% by the end of 2024.
A small majority of the Federal Open Market Committee anticipate at least three quarter-point cuts from current levels.
In New York, both the Dow Jones Industrial Average and the S&P 500 were up 0.1%, while the Nasdaq Composite climbed 0.5%.
Analysts at Tower Bridge Advisors commented: ‘Markets expect it in March although Fed officials don’t universally agree. The question for investors is how much of the good news is already priced in. Right now, momentum firmly favours the bulls. That could change quickly once Christmas is over.’
The pound was quoted at $1.2693 at the time of the London equities close on Friday, lower compared to $1.2762 on Thursday. The euro stood at $1.0912, lower against $1.0994. Against the yen, the dollar was trading at JP¥141.75, higher compared to JP¥141.60.
Shares in pharmaceutical firms struggled on Friday, putting some pressure on London’s FTSE 100. AstraZeneca ended 2.7% lower, while GSK lost 2.9%.
Bloomberg on Thursday reported the likes of Astra and GSK have come under scrutiny from US Senator Elizabeth Warren.
The drugmakers have been accused of making sham patents to send prices higher and clip the wings of competition, the news agency reported.
Astra’s Symbicort asthma treatment and GSK’s Advair and Flovent pair of inhalers are among the products mentioned in a letter sent by Warren to the drugmakers.
Trainline shot up 11% as the threat from the UK government’s Great British Railways offering subsided.
Trainline on Thursday noted the UK Department for Transport will no longer pursue creating a ticket retailing website and app, which would have presented competition for the FTSE 250 listing’s eponymous platform.
The proposal for a Great British Railways app was first mooted in May 2021 as part of a white paper. GBR is a planned state-owned body that would oversee UK rail transport.
Shares in pub firm Marston’s rose 5.3%, adding to Thursday’s 6.6% stride. JPMorgan had lifted the stock to ’overweight’ from ’neutral’ on Thursday.
On AIM, Getech lost 27%.
The Leeds-based geo-energy and green hydrogen company said its client base, 85% of which is based outside of the UK, were showing a ‘growing level of caution’ due to economic and geopolitical instability.
Getech said this has pushed a number of projects initially expected to begin before the end of 2023 into 2024.
As a result, Getech has warned that sales for the full year are not expected to surpass £4.4 million, down 14% from £5.1 million in 2022.
XLMedia shares slumped 12% after announcing that revenue for 2023 will fall shy.
The London-based global digital media company said that a ‘change in the revenue profile’ of its North American activities had been caused by, among other things, the exit of XLMedia’s major partner Barstool from the market.
The group’s revenue for the full year is now expected in the range of $50.0 to $52.0 million, down from $71.8 million in 2022. The group also predicted adjusted earnings before interest, tax, depreciation and amortisation of $12 million to $14 million, down from $17.8 million in 2022.
Brent oil was quoted at $76.34 a barrel late Friday in London, down from $76.70 late Thursday. Gold was quoted at $2,034.62 an ounce, down against $2,039.11.
Monday’s economic calendar has the latest Ifo business climate index reading from Germany at 0900 GMT. The week picks up speed with a rate decision from the Bank of Japan on Tuesday, UK inflation data on Wednesday, and a US gross domestic product reading on Thursday.
Monday’s local corporate calendar has full-year results from ten-pin bowling firm Hollywood Bowl.
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