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(Alliance News) - Stocks in London ended the week in the green after positive retail sales data from the US, easing fears over future US interest rate hikes.
"Perversely of course, strong retail spending would show that perhaps the economy isn't cooling in the way the Fed would like, and even if inflation drops back a bit in the coming months, a full on pause seems unlikely right now. Investors should be prepared for a fresh drop in September perhaps, with the summer rally likely to be only a brief dalliance," IG's Chris Beauchamp said.
The FTSE 100 index closed up 119.20 points, or 1.7%, at 7,159.01 - ending the week down 0.4%.
The FTSE 250 ended up 353.14 points, or 1.9%, at 18,833.80, but lost 0.2% over the week, and the AIM All-Share closed up 3.58 points, or 0.4%, at 873.83 on Friday, but gave back 0.8% over the past five days.
The Cboe UK 100 ended up 1.3% at 712.51, the Cboe UK 250 closed up 1.7% at 16,334.11, and the Cboe Small Companies ended up 1.4% at 12,652.55.
In European equities on Friday, the CAC 40 in Paris ended up 2.0%, while the DAX 40 in Frankfurt ended 2.8% higher.
The euro stood at USD1.0074 at the European equities close Friday, up against USD1.0010 at the same time on Thursday. Earlier in the week the currency briefly fell under the USD1 mark for the first time in 20 years.
"There are several headwinds facing the single currency, including the war in Ukraine and a looming recession that may be exacerbated by the intensifying of the ongoing energy crisis; all against a background of rising inflation and growing risk of fragmentation within the eurozone," commented Ricardo Evangelista, senior analyst at ActivTrades.
"To compound the gloomy scenario for the euro, on the other side of the equation the US dollar continues to strengthen, as the Federal Reserve shows unflappable determination to curb rising consumer prices and may hike rates by a full percentage point later this month," he continued.
The pound was quoted at USD1.1853 at the London equities close Friday, up compared to USD1.1803 at the close on Thursday. Against the yen, the dollar was trading at JPY138.56, down from JPY139.09 late Thursday.
"The Japanese yen, the pound and the euro have all been amongst the worst performers this week largely on the basis that the markets perceive that the central banks of these three countries don't have the appetite to raise rates," said Michael Hewson, chief market analyst at CMC markets.
On the FTSE 100, BT fell to the bottom of the blue-chip index after its workers decided to stage two 24-hour strikes in a dispute over pay.
Members of the Communication Workers Union will walk out on July 29 and August 1 after voting overwhelmingly for industrial action last month.
The union said it wanted a "substantial" pay rise, especially with the spiralling rate of inflation – arguing that BT could afford it.
Shares ended down 7.7%.
Luxury fashion house Burberry closed 3.8% lower on Friday, the second worst performer in the blue chip index.
Shares fell after the company reported that continued Covid disruption in China offset comparable store sales growth in its first quarter.
In its first quarter ended July 2, revenue totalled GBP505 million, reflecting an increase of 5.4% from GBP479 million the year prior.
However, there was a 35% reduction in comparable store sales within China, due to restrictions and store closures to control Covid-19 outbreaks.
Aston Martin raced to the top of the FTSE 250, closing 24% higher on Friday after the luxury car maker set out plans to raise GBP653 million in equity.
The equity raise will be led by Saudi Arabia's sovereign wealth fund, the Public Investment Fund. Also taking part are Lawrence Stroll's Yew Tree Consortium and fellow car maker Mercedes-Benz Group AG, and in total the three are expected to invest GBP335 million.
Aston Martin also confirmed that it rejected an offer from Investindustrial Group Holdings and Geely International Hong Kong - collectively the Atlas Consortium - for an equity investment of up to GBP1.3 billion.
On AIM, Angle dropped 14% as the medical diagnostics company raised GBP20.1 million via a share placing to fund the commercialisation plans for its Parsortix system. The placing represented a 14% discount to Thursday's closing price.
Fevertree closed down 28% in London's junior market after the drink mixers maker said rising costs and supply chain woes are putting pressure on profit, leading the firm to slash to its full-year guidance.
The company flagged labour shortages in the US, resulting in greater UK production and bringing greater exposure to increasing sea freight rates. In addition, the firm explained that glass availability has become "severely restricted" and industry-wide cost pressures have increased.
Fevertree now expects earnings before interest, tax, depreciation and amortisation in a range of GBP37.5 million to GBP45 million for the full-year - down from a prior range of GBP63 million to GBP66 million.
Brent oil was quoted at USD101.57 a barrel at the London equities close Friday, up from USD96.82 late Thursday.
"Brent has moved back above USD100 a barrel on those comforting words [from Bullard and Waller who reassured everyone that 75 basis points remains the base case] but promises to remain choppy amid a tight market and ongoing recession concerns," explained Craig Erlam, senior market analyst at Oanda.
US Federal Reserve Governor Christopher Waller signalled Thursday a possible full percentage point interest rate hike he previously expressed support for another 75 basis point hike but he said he would be watching key reports on retail sales and housing coming in before the policy meeting later this month.
Retail sales in the US were stronger-than-expected in June.
Retail sales rose 1.0% month-on-month in June, the US Census Bureau said, reversing a 0.1% fall in May. Consensus, according to FXStreet, had expected growth of 0.8%.
This was driven by gasoline stations amid rising fuel prices, with sales up 3.6% on a month before. Excluding gasoline stations, US retail sales still rose 0.7% in June.
Nonetheless, the University of Michigan's US consumer sentiment index continued to linger near all-time lows despite an up tick in June.
The index rose to 51.1 points in July from 50.0 points the previous month.
Inflation expectations eased slightly, with the inflation rate seen at 5.2% in the year ahead, down from 5.3% in June, and 2.8% over the longer-term, down from 3.1% the month before.
Stocks in New York were higher at the London equities close, with the Dow Jones up 2.1%, the S&P 500 index up 1.8%, and the Nasdaq Composite up 1.7%.
Gold stood at 1,704.08 at the local equities close on Friday, sharply lower against 1,829.18 on Thursday.
On Monday, Japanese markets will be closed for Marine Day, and there will be US, Canada and UK housing data.
In the local corporate calendar, there's a trading statement from restaurant chain Tortilla Mexican Grill and infection prevention company Tristel as well as half-year results from podcast distributor Audioboom.
By Heather Rydings; heatherrydings@alliancenews.com
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