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LONDON (Alliance News) - The FTSE 100 closed fractionally higher Friday, ensuring that it ended the week in the black for the first time in four weeks despite losses mid-week due to the UK budget and a press conference by Federal Reserve Chair Janet Yellen.
There was little in the way of major economic or corporate news to drive markets Friday and indices traded in a narrow range after the volatility of prior days.
"Looking back on the past week, global markets have been particularly volatile, mostly driven by the Federal Open Market Committee press conference and the UK budget," said Spreadex analyst Sam Fox.
The FTSE 100 fell sharply on Wednesday as annuity providers and betting companies plummeted in the aftermath of UK Chancellor of the Exchequer George Osborne's changes to pension rules and hike to gaming machine duty in his budget. A press conference by Yellen after the equity market close on Wednesday then pushed the blue-chip index down again on Thursday as investors digested the news that US interest rates may rise sooner than previously expected.
However, a strong start to the week and a positive close on Friday ensured the FTSE 100 snapped a three-week losing streak, closing the week 0.5% higher than it started it.
The index outperformed its smaller peers Friday, closing up 0.2% at 6,557.17, while the FTSE 250 ended the day down 0.4% at 16,160.11, and the AIM All-Share index closed down 0.4% at 856.33.
Europe's major indexes performed marginally better, with the DAX 30 in Frankfurt closed up 0.5% and the CAC 40 in Paris closing up 0.2%.
In the US, at the UK equity market close, the S&P 500 is up 0.4%, having hit a record high of 1,883.97 earlier in the day, the DJIA is up 0.6%, and the NASDAQ Composite is almost perfectly flat.
At the individual stock level, FTSE 100-listed William Hill and FTSE 250-listed Ladbrokes were both amongst the leading fallers in their respective indices as they continue to be punished in the wake of Osborne's announcement that the government will raise duty on gambling machines to 25%, from the current 20%, from March 1, 2015.
William Hill ended the day as the second biggest loser in the blue-chip index, closing down 2.2%, while Ladbrokes, which closed down 2.3%, was amongst the biggest fallers in the mid-cap index. The stocks have shed around 10% and 18%, respectively, since the close of the UK equity market on Tuesday.
Hikma Pharmaceuticals, closing down 2.9%, was another big faller in the FTSE 250. Shares in the company fell after Jefferies downgraded it to Hold, from Buy, saying that, following a "bumper" 2013 and a sharp share price increase so far in 2014, there is now the need to re-evaluate the stock.
The company's share price rose by 58% in 2013 and has already jumped around 35% in 2014, and currently trades at around 1.5 times the sector average. However, the investment bank now believes that Hikma's growth profile looks less attractive than in recent times, and its "valuation appears stretched".
Despite this, Jefferies still regards Hikma as a quality business, and has accordingly increased its price target on the stock to 1,500.00 pence, up from 1,250.00p.
At the other end of the spectrum, following heavy falls in recent weeks amid growing fears about a slowdown in the Chinese economy, mining companies were amongst the leading gainers in the FTSE 100. Fresnillo closed up 2.1%, Anglo American closed up 2%, Rio Tinto closed up 1.6%, and Antofagasta closed up 1.6%.
The gains were even more impressive given that Nomura cut its view on the mining sector Friday. The broker lowered its price target for Rio Tinto to 8,300.00 pence, down from 8,500.00p, it decreased Anglo American's target to 1,475.00p from 1,550.00p, and dropped Antofagasta's to 720.00p from 800.00p.
In the only UK data release of the day, the UK Office for National Statistics reported that UK public sector net borrowing was GBP7.48 billion in February. Despite increasing from a surplus of GBP6.43 billion recorded in January, the figure came in below economists' expectations of GBP8.55 billion.
The pound, which had edged lower in the run up to the data, ticked higher against its major rivals in the aftermath of the release. With no further catalysts released Friday, at the close of the UK equity market, sterling trades at USD1.6485, EUR1.1949, JPY168.705, and CHF1.4558.
Excluding interventions, public sector net borrowing increased to GBP9.3 billion in February from GBP6.5 billion in the same period of last year.
Still to come Friday, Minneapolis Federal Reserve President Narayana Kocherlakota gives a speech at 2030 GMT. As the only member of the Federal Open Market Committee to vote against the the central bank's decision to overhaul its forward guidance on interest rates, investors will be keen to listen to his views on US monetary policy.
Dallas Fed President Richard Fisher speaks at 1845 GMT, while Federal Open Market Committee member Jeremy Stein gives a speech at 2230 GMT.
On Monday, the preliminary reading of China's HSBC manufacturing purchasing managers index for March is released at 0145 GMT. French Markit manufacturing and services PMI data are released at 0758 GMT, followed by the equivalent German data at 0828 GMT, and the eurozone readings at 0858 GMT.
The UK CBI distributive trade survey for March is released at 1000 GMT.
In the afternoon, the preliminary reading of US Markit manufacturing PMI for March is scheduled to be released at 1358 GMT.
In the corporate calendar, FTSE 250-constituents John Laing Infrastructure Fund, Kentz Corporation and Centamin release full-year results for 2013.
By James Kemp; jameskemp@alliancenews.com; @jamespkemp
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