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(Alliance News) - London's FTSE 100 underperformed as European equities recorded in a positive morning session on Friday, shaking off eurozone economic data that showed inflation continued to heat up, while economic growth slowed.
The mood in Europe was lifted by a strong session in New York overnight and a buoyant Chinese tech-led handover from Asia.
The FTSE 100 index was up just 1.01 points at 7,510.20 midday Friday. The mid-cap FTSE 250 index was up 130.99 points, or 0.6%, at 20,750.61. The AIM All-Share index was up 6.77 points, or 0.7%, at 1,021.63.
The Cboe UK 100 index was up 0.2% at 747.84. The Cboe 250 was up 0.8% at 18,297.24. The Cboe Small Companies climbed 0.4% to 15,165.82.
In mainland Europe, the CAC 40 in Paris rose 0.3% and the DAX 40 in Frankfurt was up 0.8% in the early afternoon Friday.
Share price declines for the banking sector and Vodafone clipped the FTSE's wings.
Bank of America cut the telecommunications firm to 'neutral' from 'buy'. Vodafone shares were down 3.7%.
NatWest was down 3.5% despite reporting largely positive first-quarter numbers. Peer Lloyds Banking was 1.6% lower and HSBC lost 0.6%.
NatWest reported a strong rise in profit in the first quarter as the bank boasted of its capital strength and said it is confident of securing income well above GBP11.00 billion in 2022 in its core operations.
In the three months to March 31, the Edinburgh-headquartered bank recorded an operating pretax profit of GBP1.25 billion, surging 41% from GBP885 million in the same period a year prior. Attributable profit rose 36% to GBP841 million from GBP620 million.
NatWest - formerly Royal Bank of Scotland - saw total income rise 17% to GBP3.03 billion from GBP2.59 billion. Net interest income rose to GBP2.05 billion from GBP1.86 billion, while non-interest income increased to GBP982 million from GBP727 million.
Looking ahead, NatWest said its 2022 income excluding notable items will be "comfortably" above GBP11.0 billion in the 'go-forward group' - advancing at least 4.7% from total income of GBP10.51 billion in 2021.
"Like several of its rivals, NatWest smashed forecasts but for investors the focus is much more on the outlook, which despite the boost to profit implied by rising interest rates, is heavily clouded by the risk of an increase in bad debts linked to the cost-of-living crisis," AJ Bell analyst Russ Mould added.
Cost of living increases are causing problems for more than just lenders.
AO World shares slumped 19%. The electrical goods retailer predicted annual revenue will decline, as inflation hits discretionary consumer spending.
AO World expects revenue in the financial year that ended March 31 to be GBP1.56 billion, down 6% on the year before, amid "exceptionally strong prior year comparatives" due to the Covid lockdown-driven online shopping boom that year.
It expects to generate adjusted earnings before interest, tax, depreciation and amortisation of just GBP8 million for the year amid higher costs in its UK logistics operations, driver shortages, and higher marketing costs in Germany. Adjusted Ebitda in the 2021 financial year was GBP64 million.
Looking ahead, AO World said it is cautious on its outlook for revenue and profit in the near-term amid "volatile market conditions, inflationary cost pressures and logistical challenges in the supply chain, together with the escalating cost of living for consumers".
In addition, the former FTSE 250 constituent said Founder & CEO John Roberts has decided to dispose of a small part of his 22% stake in the business "on an annual basis". AO World noted that since its float in 2014, Roberts has maintained his shareholding and increased it with "selected" share purchases.
The dollar was weaker midday Friday in London. The pound was quoted at USD1.2577, up from USD1.2458 late Thursday. The euro stood at USD1.0565, up from USD1.0524. Against the yen, the dollar was trading at JPY130.09, down from JPY131.00.
The eurozone's economy grew at a slower pace than expected in the first quarter of 2022, according to numbers on Friday, while separate data showed inflation picked up slightly in April.
According to Eurostat, eurozone gross domestic product grew 0.2% quarter-on-quarter in the first three months of 2022. The figure fell short of an FXStreet cited estimate of 0.3% growth.
Separate figures from Eurostat showed inflation accelerated to another record high in April, as expected.
The eurozone annual inflation rate for April was 7.5%, an uptick from 7.4% in March. The April figure was in line with FXStreet cited consensus.
A key US inflation gauge is reported at 1330 BST. Annual core personal consumption expenditure inflation, the Federal Reserve's preferred inflationary gauge, is forecast to slow to 5.3% in March from 5.4% in April.
Ahead of the PCE report, US equities were called lower. The Dow Jones Industrial Average was called down 0.4%, the S&P 500 down 0.7% and the Nasdaq Composite 1.0% lower.
Amazon was down 8.6% in pre-market dealings. Amazon suffered a first-quarter loss as the e-commerce company took a hit from its investment in electric vehicle maker Rivian Automotive.
For the three months to March 31, net sales were down to USD116.44 billion from USD108.52 billion in the first quarter last year.
Amazon swung to a first-quarter net loss of USD3.84 billion from a profit of USD8.11 billion.
Back in London, Johnson Matthey shares were on the up, jumping 17% on Friday.
A regulatory filing on Friday showed industrial investor Standard Investments LLC has built a 5.2% stake in the specialist chemicals firm. Standard Investments is based in New York.
Chinese technology shares closed higher in Hong Kong on Friday. Tencent jumped 11%, while Alibaba added 16%.
The Hang Seng Index in Hong Kong, stacked with Chinese tech shares, rose 4.0% on Friday.
China's tech stocks were on the march after a meeting at which top officials called for the "healthy development" of the sector, fuelling hope among investors that a damaging state crackdown may ease.
FTSE 250-listed Fidelity China Special Situations PLC was up 4.8%, while Baillie Gifford China Growth Trust added 6.7%. Both have stakes in Chinese tech shares.
Gold and Brent prices were higher on Friday.
Gold rose to USD1,915.63 an ounce midday Friday, from USD1,887.75 late Thursday. Brent oil was quoted at USD108.78 a barrel, rising from USD106.55 late Thursday.
By Eric Cunha; ericcunha@alliancenews.com
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