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(Correcting that sterling strengthened at the London equities close on Friday).
(Alliance News) - Stock prices in London closed near a record high on Friday after the UK economy defied expectations in November by recording marginal growth.
The FTSE 100 index closed up 50.03 points, or 0.6%, at 7,844.07, finishing close to its 2018 all-time closing high of 7,877.45. London's flagship index touched a high of 7,864.95 earlier in the day.
The FTSE 250 ended up 111.71 points, or 0.6%, at 19,952.84, and the AIM All-Share closed up 5.13 points, 0.6%, at 864.60.
Over the course of the week, the FTSE 100 added 1.9%, the FTSE 250 gained 2.3%, and the AIM All-Share finished 1.9% higher.
The Cboe UK 100 ended up 0.5% at 785.42, the Cboe UK 250 closed up 0.5% at 17,428.90, and the Cboe Small Companies ended 0.5% at 13,774.30.
UK gross domestic product grew by 0.1% month-on-month in November, slowing from October's unrevised growth of 0.5%. The economy had been expected to shrink by 0.2% in November, according to consensus cited by FXStreet.
GDP was helped by the start of the football World Cup, which boosted consumer-facing sectors, the Office for National Statistics explained.
However, GDP fell by 0.3% in the three months to November 2022 compared with the three months to August 2022. GDP is 0.3% below its pre-Covid level, the ONS said. Annual growth slowed to 0.2% in November from 1.1% in October.
"It's hard to be a 'Negative Nelly' in the face of today's relieved headlines, but let's not get carried away. The UK economy might have a bit more fight in it than many analysts had anticipated but celebrating 0.1% growth feels a bit like clutching at straws," said Danni Hewson at AJ Bell.
Hargreaves Lansdown's Sophie Lund-Yates agreed: "The level of optimism seen from the positive GDP news also highlights how sensitive the market is at the moment. Markets are overlooking that the economy is smaller than it was pre-pandemic, and as a leading indicator, the frothy new heights of the FTSE100 don’t necessarily tally up with corporate expectations as they currently stand - by some estimations."
Sterling strengthened following the surprise print.
The pound was quoted at USD1.2209 at the London equities close on Friday, up compared to USD1.2171 at the close on Thursday.
The euro stood at USD1.0820, up slightly against USD1.0814. Against the yen, the dollar was trading at JPY127.85 at the London equities close on Friday, significantly lower compared to JPY129.68 late Thursday.
In London, Taylor Wimpey finished 1.7% higher despite reporting that its sales remain "significantly" below levels seen before the third quarter of 2022, as it set out a cost cutting programme.
"As market conditions changed at pace in the third quarter we acted quickly and decisively implementing even tighter cost scrutiny, significantly reducing land commitments, and closely controlling the release of investment in work in progress," Taylor Wimpey explained. It aims to cut costs by GBP20 million per year.
The firm said it performed well during 2022 due to selling price discipline and operational controls. UK average selling price was up 6.0% to GBP352,000 from GBP332,000 in 2021. However, total group completions slipped to 14,154 in 2022, from 14,302 in 2021 and its net private reservation rate for 2022 slowed 25% to 0.68 homes per outlet per week from 0.91 in 2021.
Nonetheless, despite a slowdown in the UK housing sector, Taylor Wimpey said annual profit was in line with expectations and its margin improved.
Housebuilding peer MJ Gleeson jumped 8.2%. The Sheffield-based firm said it remains "cautiously optimistic" despite a downturn in house sales as it cited higher mortgage costs.
It completed the sale of 894 homes during the first six months to December 31, down 4.1% from a year ago. Though it continued to secure new land, acquiring three sites during the first half as well as opening three new build sites. The company currently has 87 active build sites, up 4.8% from 83 a year ago.
In the FTSE 250, 888 finished 4.6% lower after the online betting and gaming company saw its fourth-quarter revenue decline amid regulatory measures hitting its UK online segment.
Revenue in the fourth quarter to December 31 fell by 2.6% to GBP458 million from GBP470 million. For the whole year, revenue was 3.0% lower at GBP1.85 billion from GBP1.91 billion.
888 said the revenue figures are provided pro forma, as if it had owned William Hill for all of both years.
C&C plunged 9.0% as the Dublin-based drinks company's second-half outlook continued to be impacted by cost of living pressures facing customers, and UK rail strikes during the festive period.
"Despite the near-term challenges, the group will continue to operate well within its stated leverage range and this coupled with our strong free cash flow generation will ensure that our stated capital allocation objectives are maintained," it said.
Elsewhere in London, DFS Furniture closed up 1.5%. The soft furnishings retailer reported that order intake in the half-year to December 25 fell from a year ago, but grew in the second quarter on its own.
Order intake in the half-year was 4.8% lower than a year prior. For the second quarter alone, order intake was up 19% from a year before. DFS Furniture also noted a good start to its important winter sale trading period.
In European equities on Friday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended up 0.2%.
Stocks in New York were broadly lower at the London equities close, with the DJIA marginally higher, the S&P 500 index down 0.3%, and the Nasdaq Composite down 0.3%.
US banks were centre-stage.
Wells Fargo was down 0.5%. Net interest income guidance from the firm for 2023 fell short of loftier market estimates.
Meanwhile, Citigroup's fourth-quarter earnings per share underperformed consensus and Bank of America's annual profit fell 14% as it booked USD2.54 billion in provisions for credit losses, swinging from a release of USD4.59 billion.
Nonetheless, Citi and Bank of America were up 0.7% and 0.8% higher at the time of the London equities close.
"The earnings releases today were certainly not the start investors had hoped increasing the stakes for next week's earnings," Saxo Bank analyst Peter Garnry commented.
Brent oil was quoted at USD84.80 a barrel at the London equities close on Friday, up from USD84.03 late Thursday. Gold was quoted at USD1,911.40 an ounce, higher against USD1,891.07.
In Monday's UK corporate calendar, there's a trading statement from FTSE 100 miner Rio Tinto as well as investment manager Ashmore.
The economic calendar for Monday has the Rightmove house price index. Financial markets in the US will be closed for Martin Luther King day.
By Heather Rydings, Alliance News senior economics reporter
Comments and questions to newsroom@alliancenews.com
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