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(Alliance News) - Stock markets were staging a Friday rally, seeking to move on from a week of interest rate hikes, worrisome economic indicators, and company profit warnings.
The FTSE 100 index was up 57.53 points, or 0.8%, at 7,102.51 on Friday. The mid-cap FTSE 250 index was up 300.70 points, or 1.6%, at 19,028.18. The AIM All-Share index was up 7.29 points, or 0.8%, at 900.00.
The Cboe UK 100 index was up 0.7% at 708.03. The Cboe 250 was up 1.7% at 16,746.88, and the Cboe Small Companies flat at 13,807.78.
‘The sun is shining bright, the weekend is here, yet all investors can think about is medicine to calm the motion sickness after one of the most chaotic five days for stocks and shares in a long time,’ said Russ Mould, investment director at AJ Bell.
Global stock markets have been rocked this week by aggressive central bank tightening, from the US Federal Reserve lifting interest rates by 75 basis points to a surprise half-point raise by the normally conservative Swiss National Bank.
This has reignited fears over global growth, as central banks tread the tightrope between taming inflation without inducing a recession, or at least not a very bad one.
Data from the eurozone on Friday served to highlight the challenge central banks face. The bloc's annual inflation rate for May was confirmed at an awkward 8.1%. The figure was in line with a prior estimate and accelerated from 7.4% in April. May's inflation rate was a record high for the single currency area.
Standing in stark contrast to its global peers was the Bank of Japan, which on Friday stuck to its long-held monetary easing policy.
But the BoJ said it would ‘pay due attention’ to foreign exchange markets, a rare comment that comes after the yen hit a 24-year low against the dollar.
However, Bannockburn Global Forex said the comment ‘lacked teeth’, sparking a sharp yen sell-off.
The dollar was quoted at JP¥134.77 on Friday in London, jumping from JP¥132.22 on Thursday. This week, the greenback hit its highest level against the yen since 1998, at JP¥135.60.
Elsewhere, ‘the US dollar is consolidating after yesterday's broad retreat’, said Bannockburn.
Sterling was quoted at $1.2305 on Friday, soft against $1.2311 at the London equities close on Thursday. The euro traded at $1.0519, firm against $1.0509 late Thursday.
Gold was quoted at $1,846.71 an ounce, higher than $1,841.77 on Thursday. Brent oil was trading at $120.80 a barrel, up from $118.37 late Thursday.
In mainland Europe, the CAC 40 in Paris was up 1.3% while the DAX 40 in Frankfurt was up 1.1% on Friday.
In the US, Wall Street was set to join Europe's upbeat end to a volatile week. The Dow Jones was called up 0.7%, the S&P 500 up 0.7% and the Nasdaq Composite up 1.1%.
In London, Scottish Mortgage Investment Trust - which holds investments in large technology names such as Tesla and Amazon - rose 5.4% on Friday morning, despite the tech-heavy Nasdaq Composite falling 4.1% on Thursday. Tesla was up 1.4% in the New York pre-market, while Amazon was up 1.2%.
JD Sports rose 4.3% and Next by 4.0% as the two retail stocks rebounded after a losing session for the sector on Thursday, dragged down by downbeat updates from the likes of Asos, boohoo and Halfords. boohoo was up 5.7% and Halfords by 2.4%.
Even Asos rebounded on Friday, the stock up 8.3% after losing nearly a third of its value on Thursday.
Asos on Thursday lowered annual guidance after its third quarter was hit by inflationary pressures and a high clothing return rate. ‘What is now clear, based on the significant increase in returns rates that we have seen, is that this inflationary pressure is increasingly impacting our customers shopping behaviour,’ said Chief Operating Officer Mat Dunn.
Grocer Tesco edged up just 0.1%. On Friday, Tesco backed annual profit guidance after first-quarter top-line growth, though sales in the UK alone fell, despite the supermarket eating up more market share.
Tesco, which has the largest share of the UK market grocery market, said overall sales were just shy of 10% above pre-virus levels. However, it warned on inflation and said it has seen signs that consumer behaviour is changing.
UBS commented: ‘Tesco's good start to the year should reassure given a spate of negative news flow in the retail sector, though clearly the year is likely to prove more challenging.’
In the FTSE 250, Future rallied 7.1% after saying it is ‘on track’ to achieve full-year targets as it completed the acquisition of digital-only women's lifestyle publisher WhoWhatWear.
Future said that audience growth has returned in the second half of the year. ‘The group continues to benefit from the effect of its diversified audiences and revenue streams, its operating leverage, excellent cash conversion and strong balance sheet,’ it explained.
M&C Saatchi fell 6.7% to 165.07 pence after its directors withdrew support for a takeover offer by Next Fifteen Communications , while still not supporting a rival offer by AdvancedAdvT.
What's more, M&C Saatchi warned that it may be prevented from delivering on its own plans as a standalone company.
In May, digital marketing services firm Next Fifteen announced it had reached an agreement with M&C Saatchi on a cash-and-shares takeover. It offered 0.1637 of a Next Fifteen share and 40p in cash for each M&C Saatchi share, valuing M&C shares at 247.2p each.
Since announcing the deal, Next Fifteen shares have fallen around 30%. This now means the Next Fifteen offer implies a value of 189p per M&C Saatchi share, the advertising agency noted on Friday.
Next Fifteen fell 1.9% to 892.42p. AdvancedAdvT shares were untraded.
By Lucy Heming; lucyheming@alliancenews.com
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