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(Alliance News) - Stock prices in London were on the up heading into Friday afternoon, managing a solid gain in the final morning of a tough quarter for equity markets.
Interest rate worries, amid stubborn inflation, and growth worries out of China hurt risk appetite in the second quarter of 2023. Both were themes on Friday too.
In London, share price rises for housebuilders and lenders helped lift the FTSE 100. In the junior market, Revolution Beauty's stock continued its winning streak, though its war of words with boohoo continued.
The FTSE 100 index rose 54.00 points, 0.7%, at 7,525.69 on Friday. The FTSE 250 was up 105.99 points, 0.6%, at 18,376.72. The AIM All-Share was up 1.25 points at 751.98.
The Cboe UK 100 was up 0.7% on Friday at 750.81, the Cboe UK 250 also added 0.7% at 16,047.60, and the Cboe Small Companies grew 0.3% at 13,746.22.
In European equities, the CAC 40 index in Paris and the DAX 40 in Frankfurt were both 1.2% higher.
For the quarter, the DAX has added 3.3%, while the CAC is up 1.1%. The FTSE 100 in contrast, has lost 1.4%.
"What happens in the second-half period? It might be like racing through mud – plenty will get to the end but the journey will be challenging. The prospect of higher interest rates for longer does not create the easiest environment for consumers and businesses. Expect further corporate cost-saving measures which could lead to job cuts and reduced consumer confidence, yet that could also benefit profit margins," AJ Bell analyst Russ Mould commented.
A central banking conference in Portugal, where Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey sounded as hawkish as ever, meant monetary policy was front-and-centre as the second quarter draws to a close.
The European Central Bank was under the spotlight on Friday. Though headline inflation in the eurozone eased, core inflation picked up, putting some pressure on the ECB.
The single currency area's yearly inflation rate cooled to 5.5% in June, from 6.1% in May. It had been forecast to ease to 5.6%, according to FXStreet-cited consensus, so the figure fell short of expectations.
Core inflation, subtracting items such as food, energy, alcohol, and tobacco, sped up slightly to 5.4% in June, from 5.3% in May. The figure fell short of the FXStreet-cited estimate of 5.5%, however.
Ebury analyst Matthew Ryan commented: "Today's euro area inflation data will provide a crumb of comfort to policymakers at the European Central Bank, as they continue on their unenviable odyssey to bring down prices in an economy currently languishing in a technical recession.
"While this morning's data should be seen as encouraging, it is unlikely to halt the ECB in its tracks, and we see at least another 25 [basis point] rate hike as a done deal at the bank's next meeting in July. The Governing Council will probably adopt a data-dependent approach beyond next month's meeting, although we see further hikes beyond then as a near certainty. We think that a terminal rate of anything less than 4% will be insufficient in order to bring down core inflation that continues to print at well over double the ECB's target."
The ECB lifted the main refinancing rate by 25 basis points to 4.00% earlier this month.
Still to come on Friday is the US core personal consumption expenditures reading at 1330 BST.
The euro traded at USD1.0849 on Friday afternoon, down from USD1.0886 at the European equities close on Thursday. Sterling was quoted at USD1.2644 midday Friday, higher than USD1.2611. Against the yen, the dollar was quoted at JPY144.63, down slightly from JPY144.70.
China growth worries returned to the fore on Friday. Activity in China's factory sector contracted for a third straight month in June, official data showed on Friday.
The official manufacturing purchasing managers' index – a key measure of factory output – came in at 49.0, below the 50-point mark that separates expansion and contraction, according to the National Bureau of Statistics. It was above the 48.8 figure recorded in May and in line with forecasts by economists polled by Bloomberg, however.
Stocks in New York are called to open higher. The Dow Jones Industrial Average is called up 0.3%, the S&P 500 up 0.4% and the Nasdaq Composite 0.5% higher.
In London, lender NatWest and housebuilder Berkeley Group were among the best FTSE 100 performers, up 2.4% and 1.7%.
NatWest shares fell 8.6% during the quarter so far, while Berkeley is down 6.3%.
The duo received some respite on the stock market, after shares struggled in the second quarter amid their exposure to the wild UK mortgage market.
Numbers on Friday showed house prices in the UK fell year-on-year again, in the face of Bank of England rate hikes.
The building society said UK house prices fell 3.5% annually in June, keeping pace with the 3.4% decline seen in May. Market consensus had been expecting a more severe 4.0% fall, according to FXStreet, however.
From the previous month, house prices were mostly stable. On a seasonally adjusted basis, they rose 0.1% in June from May, after falling 0.1% in May from April.
Aviva added 2.0% on Friday, also among the best blue-chip performers, after HSBC lifted it to 'buy'.
Elsewhere in London, Petrofac rose 5.7%. The energy infrastructure company secured a USD700 million contract, being picked up Adnoc Gas Processing for the engineering, procurement and construction of a new gas processor plant at the Habshan complex, west of Abu Dhabi.
On the up again, Revolution Beauty surged 15%. The stock has risen in every trading day since shares were re-admitted to AIM after a lengthy suspension on Wednesday. boohoo, which holds roughly a 275 stake in the firm and eyes replacing its board, was up 2.6%.
Revolution Beauty hailed a "very positive reaction" since its the retailer's stock was re-admitted.
"The board continues to believe in the exciting future growth prospects of the business and believes the company's shares are still significantly undervalued. The company has received positive feedback from a wide group of stakeholders, all of whom see this as the start of the next phase in the company's journey following the troubles of the past 12 months," Revolution Beauty said.
The re-admission followed a stormy annual general meeting which saw three Revolution Beauty ousted, before later returning.
boohoo called the Revolution Beauty board "self-serving" and said it is "contravening best practice in relation to corporate governance". Revolution Beauty on Friday labelled that accusation as ironic, given the fast fashion firm's own "long and well documented track record of substandard corporate governance".
Revolution Beauty defended the share options granted Chief Executive Officer Bob Holt and Chief Financial Officer Elizabeth Lake, two of the directors who were initially ousted from the board at the AGM.
"These amounts pale in comparison to the extremely management-friendly incentive packages boohoo have awarded in the past, including most recently awarding the executive team significant cash bonuses even after missing certain financial targets," Revolution Beauty added.
Revolution Beauty called on boohoo to clarify its "strategy and future plans" for the company.
Brent oil was quoted slightly higher, at USD74.46 a barrel midday Friday in London, up from USD73.70 late Thursday. Gold bought USD1,906.14 an ounce, lower than USD1,911.17 late on Thursday.
By Eric Cunha, Alliance News news editor
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