LONDON (Alliance News) – Stocks in London ended higher on Friday to just about retain some of the record gains seen this week, as sterling continued to benefit from the fall in the dollar, which also provided a boost to commodity prices and lifted miners.
The FTSE 100 index recovered some of the losses from Thursday to close up 0.5%, or 34.29 points at 7,470.71, closing the week 0.5% higher. On Tuesday, the FTSE 100 closed at a record high of 7,522.03, after earlier hitting an intra-day peak of 7,533.70.
The FTSE 250 ended up 0.6%, or 121.16 points, at 19,812.80, closing up 0.3% for the week. The AIM All-Share closed up 0.5%, or 4.98 points, at 976.84, ending the week 0.2% higher.
The BATS UK 100 ended up 0.4% at 12,647.14, the BATS 250 closed up 0.6% at 18,050.44, and the BATS Small Companies ended 0.2% higher at 12,059.72.
In mainland Europe, the CAC 40 in Paris ended up 0.6% while the DAX 30 in Frankfurt ended 0.4% higher.
The pound continued to strengthen after gaining momentum this week from positive UK data and the weakness in the dollar. Sterling was quoted at USD1.3031 at the London equities close, compared to USD1.3005 at the same time on Thursday. At the close last Friday, the pound was quoted at USD1.2873.
Meanwhile, the euro stood at USD1.1194 at the European equities close, against USD1.1124 the prior day.
“Despite the substantial gains posted by the pound and euro, the European indices were still more than happy to continue their rebound this afternoon. The FTSE climbed, though couldn’t break through the 7,500 mark, as did the CAC, which crossed 5,300; the DAX lagged behind its UK and French counterparts, but did crawl back above 12,600 with a push,” said SpreadEx analyst Connor Campbell.
The small amount of economic news on Friday was largely positive, with growth in British manufacturing output picking up pace during May while Eurozone consumer confidence strengthened for a third consecutive month to its highest level in nearly a decade.
UK manufacturing order books improved in May and output growth accelerated according to the Industrial Trends Survey from the Confederation of British Industry.
The order book balance rose to 9% in May from 4% in April. The score was forecast to remain at 4%. The balance reached its highest level since February 2015. Manufacturers expect output to grow at the same robust pace in the coming quarter. About 37% forecast growth, while 10% expect decline, giving a balance of plus 28%.
IHS Markit economist Howard Archer said it was an encouraging survey that fuels hopes that the UK economy is on course for some pick-up in growth in the second quarter.
The preliminary flash consumer confidence index for the Eurozone climbed to -3.3 in May from April’s -3.6, preliminary data from the European Commission showed, reaching its highest since July 2007 when the score was -1.9. Economists had forecast a score of -3 in May.
The corresponding index for the European Union edged up to -3.3 from -3.4. The reading was the highest since April 2015, when it was -2.4.
“Another month, another increase in Eurozone consumer sentiment. The index has now increased five months in a row, and points to resilient growth in retail sales and consumers’ spending. The headline provides an upbeat counterbalance to the more pessimistic message from real wage growth data, which are being hit by higher inflation amid still sluggish nominal wage growth,” said Claus Vistesen, chief Eurozone economist at Pantheon Macroeconomics.
Following their European counterparts, stocks in New York were rising at the London equities close, recovering some of the recent Trump-inspired losses. The DJIA was up 0.5%, the S&P 500 index was up 0.7% and the Nasdaq Composite was trading 0.6% higher.
“Washington is mercifully quiet, as the president prepares for his first overseas trip. The timing could not be more convenient for the administration, and at least offers the chance of a break from ill-timed tweets,” said IG analyst Chris Beauchamp.
US President Donald Trump embarked upon his first overseas trip on Friday and is set to arrive Saturday in Saudi Arabia before heading to Israel, the Vatican, Belgium and Italy. The trip includes a meeting of NATO leaders in Brussels and the Group of Seven in Sicily.
The trip comes as the president faces scandal at home over his handling of an investigation into his campaign’s dealings with Russia.
Goals for the trip include reaffirming US global leadership, building relationships with world leaders and spreading a message of unity among three of the world’s major religions.
“The week winds to its close with US markets joining in the general rally party, gaining around half a percent so far in the UK afternoon session. Further US dollar weakness is giving succour to commodity prices, and in turn UK miners are the driving force behind the FTSE bounce,” said IG’s Beauchamp.
Brent oil continued to push higher on optimism over an extension to OPEC’s production curbs ahead of the meeting of OPEC ministers in Vienna next Thursday, when they are expected to agree on limiting production for up to a further nine months. A barrel was quoted at USD53.50 at the close from USD52.48 at the same time the prior day.
“There is a real sense that, while the last big meeting staved off disaster, OPEC ministers threw away their chance by over-egging the chance of a fundamental shift in market dynamics. Now their task is much harder, and while oil has rallied hard over the past two weeks, latecomers could come away with burnt fingers if the cartel fails to live up to expectations,” said Beauchamp.
Meanwhile, gold did not build on the rally seen this week, but the precious metal has retained most of the gains from the latest controversy to surround US President Trump. An ounce was quoted at USD1,253.49 against USD1,253.41 on Thursday.
“The soft dollar combined with the unstable political scene in the US has prompted traders to pour money into the gold market. Apart from yesterday’s pullback the precious metal has had a positive run over the past week and a half,” said CMC Markets analyst David Madden.
Back in London, miners were supporting the blue-chip index on the back of a weaker dollar, with Anglo American atop the FTSE 100, up 3.0%, followed by Rio Tinto, BHP Billiton and Glencore up 2.1%, 1.1%, and 1.5%, respectively.
BHP gained ground in spite of having its target price cut by Jefferies.
In the FTSE 250, Petra Diamonds and copper miner KAZ Minerals were among the best performers, up 5.3% and 2.9%, respectively.
At the other end of the FTSE 100, Hikma Pharmaceuticals closed down 5.0%, following a volatile day of trading in its shares.
The firm said annual revenue in 2017 will be in the range of USD2.00 billion to USD2.10 billion. That would be a rise from the USD1.95 billion of revenue reported in 2016, but represents a drop from the original guidance for the current year of USD2.20 billion.
After the news, Numis cut its rating on Hikma to Add from Buy, while S&P Global raised its rating to Buy from Hold.
Smiths Group was also rooted near to the bottom of the index, down 3.6%. The engineering group said Chief Financial Officer Chris O’Shea has resigned and been replaced by current Non-Executive Director Bill Seeger on an interim basis. That overshadowed the company’s statement that showed current trading remains in line, keeping its guidance intact.
Land Securities closed down 1.2%, after JPMorgan cut its rating to Neutral from Overweight. Meanwhile, British Land Co closed 0.4% lower after Goldman Sachs cut its target price and JPMorgan lowered its rating to Neutral from Overweight.
Experian closed 2.2% lower after Goldman Sachs cut its target price while Jefferies dropped its rating to Hold from Buy.
As for mid-caps, Berendsen was one of the best performers in the FTSE 250 after closing up 22% on Thursday following its rejection of a GBP2.05 billion takeover offer from French peer Elis. On Friday, Exane BNP raised its price target on the company as Berendsen closed up 4.4%.
Thomas Cook was among the mid-cap fallers, down 2.9%, after Barclays cut its rating to Equal Weight from Overweight.
The economic calendar on Monday returns with the UK Rightmove house price index at 0001 BST, the Japanese merchandise trade balance at 0050 BST and leading economic index at 0600 BST. In the afternoon, there is the US Chicago Fed national activity index at 1330 BST.
Next week starts with a slim corporate calendar on Monday, with annual results from commercial property investment company McKay Securities, interim results from disease technology firm IXICO and a trading statement from office support services business Restore.
By Joshua Warner; email@example.com; @JoshAlliance
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