LONDON MARKET CLOSE: Stocks mixed; EMIS rises on UnitedHealth bid

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Stocks in London ended mixed on Friday, with oil stocks dragging the FTSE 100 lower as interest rate hikes over the week ignite recession fears.

Investors were shaken this week after the US Federal Reserve unleashed its biggest hike in borrowing costs for almost 30 years to tackle runaway consumer prices.

This was followed by the fifth straight hike by the Bank of England and the first in 15 years by the Swiss central bank, underscoring the growing global concerns about inflation.

The FTSE 100 index closed down 28.73 points, or 0.4%, at 7,016.25 - ending the week 4.1% lower.

The FTSE 250 ended up 198.43 points, or 1.1%, at 18,925.91, but closing 3.8% lower for the week. The AIM All-Share closed down 8.26 points, or 0.9%, at 900.97 - shedding 5.3% for the week.

The Cboe UK 100 ended down 0.7% at 697.93, the Cboe UK 250 closed up 1.2% at 16,662.69, and the Cboe Small Companies ended down 0.1% at 13,792.13.

In European equities on Friday, the CAC 40 stock index in Paris closed down 0.1%, while the DAX 40 in Frankfurt finished 0.7% higher.

In the FTSE 100, oil stocks ended the worst performers, with BP down 6.2%, Shell down 5.3% and Harbour Energy down 5.5%, tracking spot oil prices lower.

Brent oil was quoted at $114.22 a barrel at the London equities close, down sharply from $118.37 at the close Thursday.

Conversely, Tesco ended up 0.8% after the UK's largest supermarket chain backed annual profit guidance after top-line growth in the first quarter, though sales in the UK alone fell.

Tesco 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.

In the first quarter ended May 28, group retail sales amounted to £13.57 billion, up 2.0% yearly on a like-for-like basis. Sales were up 9.9% like-for-like on three years earlier, before the onset of the pandemic.

In the UK alone, sales fell 1.5% yearly on a like-for-like basis to £9.88 billion, but were up 8.1% from pre-virus levels. In the UK, Tesco's market share advanced by 37 basis points during the quarter, the company said, noting Kantar figures.

Looking ahead, Tesco noted ‘some early indications’ that consumer behaviour is changing due to inflation. Tesco's yearly guidance was left unchanged.

Elsewhere, EMIS Group closed up 47% at 1,901.95 pence after the healthcare software and services firm agreed to be acquired by a group led by health services firm Optum UK for £1.24 billion.

The 1,925 pence per-share cash offer represents a 49% premium to EMIS' closing price on Thursday.

Optum UK is a subsidiary of Dow member UnitedHealth. Shares in the Minnetonka, Minnesota-based firm were down 0.2% in New York.

The pound was quoted at $1.2211 at the London equities close, down from $1.2311 at the close Thursday.

The euro stood at $1.0465 at the European equities close, down from $1.0509 late Thursday.

On the continent, the eurozone's annual inflation rate for May was confirmed at a rampant 8.1%, according to Eurostat.

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. Core inflation, excluding energy, good, alcohol and tobacco, accelerated to 3.8% in the eurozone in May from 3.5% in April.

On a monthly basis, consumer prices in the eurozone rose 0.8% in May from 0.6% in April.

Against the yen, the dollar was trading at JP¥135.17, up sharply from JP¥132.22 late Thursday after the Bank of Japan kept in place its ultra loose monetary policy.

In a statement following a two-day policy meeting, the BoJ kept in place its rate of minus 0.1% – part of a decade-old action plan aimed at boosting the world's third-largest economy – bucking pressure to address the impact of a weaker yen.

The decision runs counter to a global tightening trend from global central bank peers to tackle sky-high fuel and food prices linked to the war in Ukraine and supply chain snarls.

Stocks in New York were mixed at the London equities close following Thursday's sell-off. The DJIA was down 0.3%, the S&P 500 index down 0.5% but the Nasdaq Composite was up 0.4%.

On Wall Street, Adobe was down 1.4% after the graphics and animation software provider, late Thursday, downgraded annual guidance.

Gold stood at $1,841.66 an ounce at the London equities close, little changed against $1,841.77 late Thursday.

The economic events calendar on Monday has eurozone construction output figures at 1000 BST. Financial markets in the US will be closed on Monday in observance of the maiden Juneteenth holiday.

The UK corporate calendar on Monday has third-quarter results from Primark owner Associated British Foods. In addition, the latest FTSE Russell index review changes take effect on Monday with Centrica and Unite joining the FTSE 100 at the expense of Royal Mail and ITV.

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