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(Alliance News) - European markets were higher at Friday's open, though trading was somewhat tentative ahead of a key inflation print from the US.
The FTSE 100 index opened up 24.81 points, 0.3%, at 7,932.53. The FTSE 250 was up 32.54 points, 0.2%, at 19,823.03, and the AIM All-Share was up just 0.1 of a point at 855.61.
The Cboe UK 100 was up 0.3% at 794.21, the Cboe UK 250 was up 0.2% at 17,310.56, and the Cboe Small Companies was down 0.1% at 13,968.63.
Investors were waiting on the US personal consumption expenditures data for January at 1330 GMT, which is the US Federal Reserve's preferred measure of inflation.
"PCE has fallen back sharply in the last few months from 5.2% in September, falling to its lowest level since October 2021 in December at 4.4%," said CMC Markets analyst Michael Hewson.
"The sharp fall from those peaks certainly helped drive the disinflation narrative that got the markets speculating that we might start to see some of the recent rate hikes start to get reversed before the end of this year before the January payrolls report blew that bit of wishful thinking out of the water," Hewson added.
Core PCE is expected to fade to 4.3% in January, from 4.4% in February.
Hewson added: "Given the strength of recent economic data, today's January numbers may call time on the trend of lower prices."
The dollar was slightly firmer against major currencies ahead of the PCE reading.
Sterling was quoted at USD1.2022 early Friday, little changed from USD1.2023 at the London equities close on Thursday. The euro traded at USD1.0591, edging down from USD1.0593. Against the yen, the dollar was quoted at JPY134.83, up versus JPY134.72.
Stocks in New York closed in the green on Thursday, with the Dow Jones Industrial Average ending up 0.3%, the S&P 500 up 0.5% and the Nasdaq Composite 0.7% higher.
In European equities on Friday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was marginally higher.
The German economy saw a worse contraction than initially thought in the final quarter of 2022. According to Destatis, German gross domestic product fell by 0.4% in the fourth quarter from the previous quarter, worsening from a preliminary forecast of a 0.2% contraction.
"The German economy has surprised by showing more resilience than feared, despite facing a long series of crises," ING's Carsten Brzeski commented.
"However, while this resilience, driven by fiscal support and warm winter weather, has prevented the economy from falling into a deep recession, it is definitely no guarantee for a strong rebound anytime soon," the analyst added.
ING warned that Europe's largest economy could see a technical recession, given the recent stream of weak economic data.
Meanwhile, in the UK, consumer confidence has made a surprise rebound from historic lows despite ongoing cost-of-living woes, a figure showed.
GfK's long-running consumer confidence index rose by a significant seven points in February, although the headline score remains at a "severely depressed" negative 38.
Joe Staton, client strategy director at GfK, said: "Despite widely reported headwinds of inflation continuing to outstrip wage rises, and the ongoing household challenge from the cost-of-living crisis, consumers have suddenly shown more optimism about the state of their personal finances and the general economic situation, especially for the coming year."
In the FTSE 100, International Consolidated Airlines fell 2.0%.
The British Airways parent swung to a pretax profit of EUR415 million from a EUR3.51 billion loss a year before. Annual revenue in 2022 was EUR23.07 billion, up from EUR8.46 billion. The strong recovery was driven by sustained leisure demand and the reopening of markets, IAG said.
The firm said forward bookings are "robust", and it expects pre-exceptional annual operating profit to be between EUR1.8 billion and EUR2.3 billion in 2023. However, the firm said it is "mindful of uncertainty" in the macro environment as well as fuel and non-fuel inflation.
"As a long-haul specialist, IAG has been one of the last names in the sector to gain momentum following the pandemic. Of course, aviation has flown straight into another hurdle in the form of a cost-of-living crisis," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Yates added: "So far it seems pent-up demand for travel is keeping things propped up, but there is a limit to how long this can continue."
On Thursday, the firm had announced the acquisition of Air Europa for EUR500 million from the Spanish company Globalia. "This acquisition will enable us to grow Madrid as a hub, offering a gateway to Latin America and beyond," Chief Executive Luis Gallego said.
"In times of economic difficulty it's common to see consolidation in the aviation sector, BA's enormous brand power and scale means it's able to make the most of changing market dynamics," Lund-Yates added.
Elsewhere in the index of large-caps, Rolls-Royce added to Thursday's gains, rising 5.0%. It had closed up 24%, after better-than-expected full-year results, and the launch of a new strategic plan.
In the FTSE 250, Jupiter Fund Management was up 12%.
The London-based investment manager said, at December 31, assets under management fell 17% year-on-year to GBP50.2 billion from GBP60.5 billion. Pretax profit plunged 68% over in 2022 to GBP58.0 million.
Jupiter blamed macro-economic events, which hit market valuations and investor sentiment. However, the second half was more positive, with positive net inflows for the first time since 2017.
The fund cut its dividend to just 8.4 pence, from 17.1p in 2021, but extended its share buyback programme by up to GBP16 million, bringing the total programme to GBP26 million.
Elsewhere, Cineworld shares plummeted 37%, as it warned shareholder value will probably be wiped out.
The world's second-largest cinema chain said it has received non-binding proposals from a number of counterparties for some or all of its businesses. "None of these proposals involves an all-cash bid for the entire business," the beleaguered cinema business confirmed.
At present, Cineworld said that none of the proposals received to date would provide "any recovery" for holders of its equity interests. Cineworld said there is unlikely to be sufficient creditor support for any reorganisation plan that includes any recovery of shareholder value.
It now expects to emerge from Chapter 11 proceedings in the first half of the year. Business operations continue as usual, the firm said.
On AIM, Webis Holdings fell 12%.
The Isle of Man-based gaming firm said turnover in the half-year to November 30 fell to GBP6.2 million from GBP6.8 million a year before, as pretax loss widened to GBP325,000 from GBP70,000.
This was primarily due to "adverse" weather conditions in September through November, which led to a large of horse-racing content.
In Asia on Friday, the Nikkei 225 index closed up 1.3% in Tokyo, as trading resumed after Thursday's public holiday.
Japan's consumer prices rose 4.2% in January from a year earlier, a level not seen since September 1981, fuelled in part by higher energy bills. Meanwhile, the Bank of Japan's next governor Kazuo Ueda told parliament that the BoJ's long-standing monetary easing policies are "appropriate". This suggests there will be no sudden changes to the bank's stance when he takes the helm in April.
In China, the Shanghai Composite fell 0.6%, while the Hang Seng index in Hong Kong lost 1.7%. The S&P/ASX 200 in Sydney closed up 0.3%.
By Elizabeth Winter, Alliance News senior markets reporter
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