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(Alliance News) - The FTSE 100 faded into the close on Friday, ending little changed, as US markets fell amid soft economic data.
The FTSE 100 index closed down just 3.60 points at 8,659.37. The FTSE 250 ended up just 1.12 points at 20,613.89, while the AIM All-Share closed up 1.48 points, 0.2%, at 718.02.
For the week, the FTSE 100 was down 0.8%, the FTSE 250 was down 1.4% and the AIM All-Share was down 1.2%.
The Cboe UK 100 ended down slightly at 867.06, the Cboe UK 250 closed up 0.1% at 17,945.03, while the Cboe Small Companies fell 0.3% at 15,841.59.
In European equities on Friday, the CAC 40 in Paris ended up 0.4%, while the DAX 40 in Frankfurt fell 0.1%.
US financial markets were lower at the time of the London close. The DJIA was down 0.8%, the S&P 500 was 0.5% lower, and the Nasdaq Composite declined 0.6%.
US markets were knocked by several downbeat economic releases, including a drop in consumer sentiment and a fall in existing US home sales. At the same time, a gauge of business activity expanded at the slowest pace since September 2023.
Adding to the downbeat mood, UnitedHealth dropped 9.0%, weighing on the Dow, after the Wall Street Journal reported that the Justice Department is investigating allegations the company directed doctors to make patient diagnoses that would trigger higher government payments under the US Medicare Advantage program.
The pound was quoted at USD1.2641 at the London equities close Friday, up slightly from USD1.2638 at the close on Thursday. The euro eased to USD1.0450 against USD1.0470.
Against the yen, the dollar was trading lower at JPY149.45 compared to JPY149.64 late Thursday.
Figures from S&P Global showed US business activity growth slowed sharply in February, with services sector output contracting for the first time in over two years.
The S&P Global US Composite PMI Output Index fell to 50.4 in February from 52.7 in January, marking a 17-month low and signalling near-stagnation in business activity.
The services sector drove the decline, as the Business Activity Index dropped to 49.7 from 52.9, its lowest reading in 25 months. New business inflows weakened significantly, and firms cited political uncertainty, federal spending cuts, and inflation concerns as factors affecting demand.
In contrast, manufacturing showed strength, with the manufacturing PMI rising to 51.6 from 51.2, an eight-month high.
Samuel Tombs at Pantheon Macroeconomics said uncertainty over the severity of federal spending cuts and tariffs has led to a sudden stop in decision-making, likely weighing "materially" on economic growth in the first quarter.
The tariff uncertainty was cited as one reason for US consumers’ expectations for long-term inflation rising to the highest rate in three decades in a survey from the University of Michigan. Consumers are concerned tariffs will translate into higher prices.
Consumers expect prices will climb at an annual rate of 3.5% over the next five to 10 years, according to the final February reading from the university. The rate is the highest since 1995, based on data compiled by Bloomberg.
The University of Michigan's consumer sentiment index dropped to 64.7 from 71.7 in January - lower than analysts anticipated. All five components of the index deteriorated, including a decline in buying conditions for big-ticket items.
Meanwhile, sales of previously owned US homes pulled back in January in the face of stubbornly elevated mortgage rates and home prices, industry data showed.
Existing home sales slipped 4.9% between December and January to an annual rate of 4.08 million, seasonally adjusted, said the National Association of Realtors. The figure was slightly better than analysts' predictions, however.
Wells Fargo said a "chill" had swept through the housing market in January, noting the main driver behind the monthly decline was likely renewed upward pressure on mortgage rates.
Back in London, banks provided support, with NatWest up 4.2%, Standard Chartered up 3.8%, Barclays up 1.9% and Lloyds Banking Group up 1.6%.
Standard Chartered climbed after the bank made positive noises about 2025 alongside well-received fourth-quarter results.
The London-listed Asia-focused bank left guidance unchanged, but said its strategy was "firing on all cylinders", and it was pushing for "every bit of upside it can".
The FTSE 100 listing said it is currently tracking towards the "upper end of the range" of operating income guidance for compound annual growth of 5% to 7% in 2025 and 2026. It sees the return on tangible equity approaching 13% in 2026 and to progress thereafter.
But Chief Executive Bill Winters told investors on an earnings call that while "we're not changing our guidance," the bank is "going to push for every bit of upside that we can".
Retail stocks came off early highs but stayed in the green, after strong retail sales data.
J Sainsbury rose 1.8%, Primark owner AB Foods firmed 1.4%, while Marks & Spencer gained 1.3%.
Retail sales volumes surged by 1.7% in January from December, well ahead of the FXStreet-cited consensus of 0.3%, according to the Office for National Statistics. In December, retail sales had fallen 0.6%, the reading downwardly revised from 0.3%.
The ONS said: "Food store sales volumes grew strongly in January 2025, following falls in recent months."
Other UK data saw a slight uptick in consumer confidence and a mixed PMI report, with service sector growth offset by a manufacturing contraction.
Government borrowing figures also attracted attention.
Data from the ONS showed there was a public sector net borrowing surplus of GBP15.44 billion in January, thanks largely to self-assessed tax returns.
The record figure is more than the surplus seen a year ago of GBP14.69 billion, and the largest since monthly records began in 1993.
However, it fell short of the earlier GBP20 billion surplus forecast by the Office for Budget Responsibility.
Elliott Jordan-Doak at Pantheon Macroeconomics said the data piles the pressure on the chancellor, and he thinks "it will only get worse from here".
"The pressure on the public finances is seemingly relentless," he said.
Elsewhere, Poolbeg Pharma plunged 18% after potential suitor Hookipa Pharma opted against making a bid for the company.
The London-based clinical-stage biopharmaceutical said it was "surprised and disappointed" by the decision.
Brent oil was quoted at USD74.89 a barrel at the London equities close on Friday, down from USD76.83 late Thursday.
Gold was quoted lower at USD2,935.51 an ounce at the London equities close on Friday against USD2,945.48 at the close on Thursday.
Next week's UK corporate calendar has full-year results from a number of FTSE 100 listings, including Croda, Smith & Nephew, Unite, Aviva, Haleon, Rolls-Royce, Taylor Wimpey, IMI, Rightmove and Pearson.
The economic calendar for Monday has eurozone CPI data. Elections take place in Germany on Sunday.
By Jeremy Cutler, Alliance News reporter
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