LONDON MARKET MIDDAY: UK support package gives and takes for shares

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Consumer stocks in London on Friday were benefiting from the package of handouts unveiled by the UK government on Thursday, while the shares of domestic energy producers were taking the brunt of selling triggered by windfall profit tax confirmed in the same budget package.

Reports from US consumer-facing companies that were more upbeat than recent ones from peers also was helping the consumer sector globally.

The FTSE 100 index was up 8.90 points, 0.1%, at 7,573.82 midday Friday. It has risen 2.5% so far thus week.

The FTSE opened in flat before climbing. It fell back into the red as the morning progressed, but returned to positive territory heading into the afternoon.

The mid-cap FTSE 250 index was up 72.50 points, or 0.4%, at 20,321.24. The AIM All-Share index was up 6.14 points, 0.6%, at 964.14.

The Cboe UK 100 index was down marginally at 754.18. The Cboe 250 was up 0.1% at 18,029.86, and the Cboe Small Companies was 0.1% lower at 14,621.23.

In mainland Europe, the CAC 40 in Paris was up 0.8% and the DAX 40 in Frankfurt rose 0.7%.

Market focus on Friday will be on the US personal consumption expenditure price data at 1330 BST. The core index reading is the Fed's preferred gauge of inflation.

According to FXStreet-cited consensus, annual PCE inflation is expected to be stable at 6.6% in April. Core PCE inflation is forecast to slow to 4.9% from 5.2%.

Analysts at Lloyds Bank cited a forecast that predicts the headline figure to ebb to 6.3% and the core number to ease to 5.1%.

‘That would confirm the message given by CPI data two weeks ago that inflation probably peaked near term in March. With inflation still well above the Fed’s 2% target, the reduction seems unlikely to be enough to prevent the Fed from hiking interest rates again in June and July. What happens after that point will be partly determined by the pace at which inflation falls in the second half of the year,’ Lloyds analysts added.

Ahead of the data, the dollar moved off intraday lows.

The pound was quoted at $1.2602 midday Friday in London, up from $1.2580 late Thursday. The euro fell to $1.0711 from $1.0725. Against the yen, the dollar was trading at JP¥127.04, fading from JP¥127.37.

Earlier Friday, the euro traded as high as $1.0765, while cable hit $1.2666.

In London, investor Scottish Mortgage and North Sea-focused oil and gas firm Harbour Energy bookended the FTSE 100.

Scottish Mortgage tracked a partial rebound in the US tech sector. It has stakes in the likes of Tesla and Amazon. Scottish Mortgage shares were up 5.4%.

Harbour Energy tumbled 8.0% after the UK imposed a windfall profit tax.

Among the measures announced by UK Chancellor Rishi Sunak includes an energy profits levy, a 25% surcharge on the ‘extraordinary profits’ oil and gas companies are enjoying.

Another stock hit by worries related to the levy is North Sea and Malaysia-focused oil and gas company EnQuest, down 9.7%.

Among the beneficiaries, however, are retail and leisure firms. Online grocer Ocado was 1.0% higher, picture house operator Cineworld added 2.9%, and luxury retailer Burberry rose 2.6%.

The Paris-listed luxury sector also was on the up, helping to lift the CAC 40. LVMH added 3.0%, Hermes 2.5% and Kering 3.7%.

Towards the top of London's FTSE 250, HarbourVest Global Private Equity added 4.0%.

The investment company, which offers a ‘global exposure to private companies’, reported sharp annual net asset value growth.

It was its largest ever NAV increase and the performance was ‘driven by strong exit activity and value gains’.

The company noted global growth pressures, rising interest rates and accelerating inflation, but backed its outlook.

‘Private markets are likely to feel some degree of impact from these developments, so we might expect to see downward pressure on valuations in parts of HVPE's portfolio. In particular, the technology exposure that contributed to recent record NAV increases may face headwinds as investors rotate away from the growth theme, instead favouring investments in more traditional sectors. Nevertheless, we are strong believers in the power of diversification, and with other segments of the Company's portfolio potentially standing to benefit from the changed macro environment, we remain optimistic about the long-term prospects for HVPE,’ the company said.

Net asset value per share at January 31 surged 37% year-on-year to $49.11 from $35.97.

Brent oil was quoted at $117.12 a barrel midday Friday in London, flat from $117.05 late Thursday. Gold stood at $1,858.23 an ounce, up from $1,846.75.

Following the rally on Thursday, US equities are pointed higher again, though gains are set to be more modest.

The Dow Jones Industrial Average is called up 0.1%, the S&P 500 up 0.3% and the Nasdaq Composite up 0.5%.

On Thursday, the Dow rose by 1.6%, the S&P 500 by 2.0% and the Nasdaq Composite by 2.7%.

‘After disappointing updates from various consumer-facing stocks in the US, it was a relief to see positive news from [department store chain] Macy's,’ said Russ Mould, investment director at AJ Bell.

‘This was tonic the market needed, spreading good news which helped to lift investor sentiment and suggest that the US consumer is not in as bad a position as many feared.’

Meanwhile, Twitter shares were 0.8% lower in pre-market trade as its takeover saga continues.

Elon Musk faces a lawsuit accusing him of pushing down Twitter's stock price in order to either give himself an escape hatch from his $44 billion buyout bid, or room to negotiate a discount.

The suit alleges the billionaire Tesla boss tweeted and made statements intended to create doubt about the deal, which has roiled the social media platform for weeks.

Filed Wednesday by a shareholder, the claim seeks class action status and calls on a federal court in San Francisco to back the validity of the deal and award shareholders any damages allowed by law.

At $39.20 in pre-market activity, Twitter shares remain well below Musk's $54.20 offer price.

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