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(Alliance News) - European stock markets staged an afternoon recovery on Friday after US Federal Reserve Chair Jerome Powell stayed the course in comments made at Jackson Hole.
Speaking at the annual Jackson Hole central banking gathering, being held online this year due to a recent surge in coronavirus cases in the US, Powell said the recovery path has been "a difficult one".
As figures on Friday showed core US personal consumption expenditures rose 3.6% year-on-year in July, matching both June's pace and consensus forecasts, Powell said he believes the "substantial further progress" test has been met for inflation. However, he cautioned against moving too soon amid recent temporary inflation pressures.
With slack remaining in the labour market, "such a mistake could be particularly harmful". Still, he said the outlook for the labour market has brightened considerably in recent months as he noted "clear progress".
ING said the Fed chief took "a more cautious line" on Friday.
"Jerome Powell's softer tone relative to his colleagues has given the market food for thought. The resurgence of Covid certainly poses risk to the outlook, but the general commentary from other Fed officials is that the economy is proving to be resilient thanks to the success of the vaccination programme," said ING.
The FTSE 100 closed up 23.03 points, or 0.3%, at 7,148.01 on Friday. This capped off a good week for the large-cap index, which notched a week-to-date gain of 0.8%.
The mid-cap FTSE 250 ended up 107.33 points, or 0.5%, at 24,059.72 - finishing at a record closing high and up 1.3% for the week as a whole - and the AIM All-Share closed up 1.71 points, or 0.1%, at 1,281.23, clocking a week-to-date rise of 1.6%.
The Cboe UK 100 ended up 0.3% at 711.50, the Cboe UK 250 closed up 0.5% at 21,871.66, and the Cboe Small Companies ended up 0.4% at 15,520.62.
CMC's chief market analyst, Michael Hewson, said: "[Powell's] message has helped deliver the FTSE 100 to a positive week, with basic resources leading the gainers, with the likes of Anglo American, BHP and BP leading the gainers on the back of firmer commodity prices."
Anglo American closed up 3.0%, BHP gained 2.2% and BP rose 2.0%.
Dragging at the bottom of the FTSE 100 was Just Eat Takeaway.com, falling 7.5% as it was dealt a blow in New York after a vote to cap the commission rates that food delivery services can charge.
The bills limit the amount that companies can charge restaurants to use their platforms to 15% of food orders for delivery services and 5% for advertising and other non-delivery services.
Delivery companies that operate in New York include Just Eat's Grubhub business - the acquisition of which Just Eat completed in June of this year - Doordash and Uber Eats.
Shares in J Sainsbury fell 2.9% after UBS downgraded the grocer to Neutral from Buy.
Even with Friday's decline, it's still been a good week for the grocer after shares in Sainsbury's rallied 15% on Monday on M&A speculation. However, UBS said in a note: "We think a lack of statement from Sainsbury/Apollo suggests private equity interest may have been exploratory."
Also giving back some recent gains was CRH, dipping 0.9% after a 3.9% boost on Thursday from a strong set of interim results, which saw pretax profit double year-on-year to USD1.05 billion.
In European equities on Friday, the CAC 40 in Paris ended up 0.2% and the DAX 30 in Frankfurt ended up 0.4%.
Wall Street got a boost from Powell's comments, with the S&P 500 and Nasdaq Composite both reaching fresh record highs.
Stocks in New York were higher at the London equities close, with the Dow Jones up 0.6%, the S&P 500 index up 0.7%, and the Nasdaq Composite up 1.0%.
CMC's Hewson said: "His comments that a taper will be appropriate by the end of the year, suggest that while Powell is in no hurry, other FOMC members will still need further data. Given today's comments by regional Fed presidents that they want to get on with the process, a good payrolls numbers next week could make for an interesting meeting on the 22nd September."
While Powell's remarks propelled equities, the dollar softened.
The pound was quoted at USD1.3752 at the London equities close Friday, up compared to USD1.3723 at the close on Thursday.
The euro rose to USD1.1788 at the European equities close Friday from USD1.1760 at the same time on Thursday.
Against the yen, the dollar retreated to JPY109.92 from JPY110.04 late Thursday.
Brent oil was quoted at USD72.28 a barrel at the London equities close Friday, up from USD71.40 late Thursday. Gold jumped to USD1,807.81 an ounce from USD1,794.77 at the close on Thursday.
Monday's economic calendar has Japan retail sales at 0050 BST and eurozone consumer confidence at 1000 BST, with German inflation at 1300 BST. UK financial markets are shut on Monday for a bank holiday, and will re-open on Tuesday.
On Tuesday, there is Japanese unemployment at 0030 BST, PMIs from China at 0200 BST, German unemployment at 0855 BST and eurozone inflation at 1000 BST. Tuesday's UK corporate calendar has half-year results from distribution and services company Bunzl, financial services firm Old Mutual and Sub-Saharan Africa banking investor Atlas Mara.
By Lucy Heming; lucyheming@alliancenews.com
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