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(Alliance News) - Stock prices in London opened mostly lower on Friday, after a week dominated by interest rate decisions, which were all in line with market expectations.
The FTSE 100 index opened up just 1.56 points at 7,821.72. The FTSE 250 was down 176.72 points, 0.9%, at 20,437.97, and the AIM All-Share was down 3.34 points, 0.4%, at 885.42.
The Cboe UK 100 was up 0.1% at 782.02, the Cboe UK 250 was down 0.6% at 17,864.28, and the Cboe Small Companies was down 0.5% at 14,156.43.
Despite surrendering some of their weekly gain, it has been a largely positive week for London markets. The FTSE 100 is some 0.8% higher than it was at the end of last week.
Investors closed the week mostly optimistic following three crucial interest rate decisions from central banks and renewed hopes of slowing inflation.
"The reason for the optimism lies in the fact markets are forward-looking, and they can see a path out of the current economic slump. More specifically, there's renewed hope we've reached peak inflation, which will cement central banks' ability to pause interest rate hikes," Hargreaves Lansdown analyst Sophie Lund-Yates commented.
The Bank of England, on Thursday, lifted interest rates by another 50 points and tempered its guidance for future hikes as it acknowledged that inflation in the UK "is likely to have peaked".
The rate lift takes the benchmark bank rate to 4.00% from 3.50%. It was an outcome expected by the market, according to consensus cited by FXStreet.
The BoE said seven of the policy setting Monetary Policy Committee backed the move. Swati Dhingra and Silvana Tenryro opposed the hike, preferring bank rate to be maintained at 3.50%.
The UK's consumer price inflation rate stands at 10.5%, data for December showed, well ahead of the BoE's 2% target. The inflation rate eased slightly from 10.7% in November.
The BoE said on Thursday that it expects "inflation to fall quickly this year". In its monetary policy report, the bank said it expects the yearly inflation rate to abate to 9.7% in the first quarter of 2023.
It is to fade to 3.0% a year later and to 1.0% at the start of 2025.
In its November MPR, the central bank predicted an inflation rate of 10.1% for the first quarter of 2023, 4.0% for 2024 and 1.2% for 2025.
The European Central Bank also raised interest rates in the eurozone by 50 basis points, in line with market expectations, but pencilled in another increase in March. Meanwhile, the US Federal Reserve lifted interest rates by 25 basis points on Wednesday, as widely expected, and signalled that it was not finished raising rates.
Following the trio of rate decisions, the dollar was on the up on Friday.
The pound was quoted at USD1.2195 at early on Friday in London, down compared to USD1.2276 at the equities close on Thursday. The euro stood at USD1.0891, down against USD1.0927. Against the yen, the dollar was trading at JPY128.64, up compared to JPY128.40.
In the US on Thursday, Wall Street ended mostly higher on Thursday, as investors digested the new interest rates. The Dow Jones Industrial Average ended down 0.1%, but the S&P 500 was up 1.5% and the Nasdaq Composite up 3.3%.
In European equities on Friday, the CAC 40 in Paris was down 0.6%, and the DAX 40 in Frankfurt was down 0.8%.
In the FTSE 100, Centrica was among the worst performers, shedding 2.2% in early trade.
Centrica's British Gas is under pressure to explain how it will compensate "vulnerable" customers who faced debt collectors forcibly installing prepayment meters in their homes.
This follows a Times investigation which revealed how customers – including disabled and mentally ill people – have been forced by British Gas on to the pay-as-you-go meters, or face having their gas switched off.
Energy minister Graham Stuart has asked Centrica, which owns the energy provider, to urgently outline "redress" for "mistreated customers".
Meanwhile, UK energy watchdog Ofgem said it has extended the ban on acquisition-only tariffs, which are designed by firms to entice new customers.
The ban means energy companies are no longer able to use these tactics until March 2024.
Ofgem said the move has been made to "continue tackling ongoing risks to market stability".
"Ofgem is modifying domestic electricity and gas supply licences to reflect this and to allow both measures to be renewed on an annual basis," the watchdog said.
Ofgem Chief Executive Jonathan Brearley, said he has "warned all domestic energy suppliers to get their house in order on forced instalments of prepayment meters", while ordering the "biggest ever market review" into the meters to "uncover poor practice".
He said: "I will not hesitate to take the strongest action in our powers where needed. It is right British Gas has apologised following the very worrying allegations in The Times, but millions of customers expect action not warm words."
He added that Ofgem is opening an investigation into British Gas on this issue.
Ofcom said it is consulting on a price offer for full-fibre broadband that Openreach intends to introduce from April 1.
Openreach is part of BT Group. FTSE 100-listed BT shed 0.7%.
In December, Openreach published plans to offer lower wholesale prices to other internet providers for access to its fibre network, but the move saw network rivals raise competition concerns. It announced plans to offer discounted rates on its fibre broadband products as part of its Equinox 2 scheme.
On Friday, Ofcom said it should not intervene to prevent Openreach from introducing Equinox 2. "We consider the offer is not anti-competitive and is consistent with the rules we consulted on before introducing them under our market review in 2021," Ofcom said. It intends to publish its final decision before the end of March and welcomes responses until March 4.
Among London's small-caps, Nanoco lost 23%, despite finally drawing the line under a long-running David-versus-Goliath legal battle with Samsung.
Manchester, England-based Nanoco, a quantum dots manufacturer, initially launched a US patent infringement lawsuit against the South Korean-based electronics company in December, alongside lawsuits in Germany and China.
Nanoco claimed Samsung infringed on its unique synthesis and resin capabilities for quantum dots. Quantum dot technology is used on Samsung quantum light-emitting diode televisions.
On Friday, Nanoco said it will receive USD150 million cash to paid in two equal tranches and it will retain over USD90 million net proceeds after litigation costs.
"This has been a long and hard battle for Nanoco. The outcome is remarkable, given the relative scale of Nanoco and Samsung," Nanoco Chair Chris Richards said.
The company in January cautioned that it expected the settlement value to be at the lower end of expectations.
In Tokyo on Friday, the Nikkei 225 index was closed up 0.4%. In China, the Shanghai Composite closed down 0.7%, and the Hang Seng index in Hong Kong was down 1.4%. The S&P/ASX 200 in Sydney closed up 0.6%.
China's service sector return to growth in January, according to new data.
The Caixin services purchasing managers' index rose to 52.9 in January from 48.0 in December. Returning above the 50.0 mark that separates growth from contraction, it shows activity in the sector has recovered from its recent downturn.
"Both services supply and demand moved into expansion. Although Covid infections remained high, an easing of related containment measures stimulated supply and demand in the sector. The gauges for business activity and total new business both came in above 50, marking an end to a four-month contraction," said Caixin analyst Wang Zhe.
Brent oil was quoted at USD81.72 a barrel at early in London on Friday, down from USD81.95 late Thursday. Gold was quoted at USD1,913.32 an ounce, lower against USD1,920.03.
In the economic calendar on Friday, there are a slew of services PMI readings from the UK, US, EU, and Germany.
By Sophie Rose, Alliance News reporter
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