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(Alliance News) - Stock prices in Europe ended the week strongly on Friday, with London's FTSE 100 this time joining the rally, after underperforming continental peers on Thursday.
Markets brushed aside Monday's meltdown, with blue chip stocks in Frankfurt and Paris posting four successive days of gains. London's large cap index recovered from the tough Monday, as well as Thursday's drab session, to post a weekly gain.
The FTSE 100 index closed up 59.28 points, or 0.9%, at 7,027.58, ending the week 0.3% higher.
Strong corporate updates as well as M&A action added impetus to the FTSE 250. The mid-cap index climbed 206.11 points, or 0.9%, at 22,883.39. The index rose 1.9% this week. The AIM All-Share index closed 4.45 points higher, or 0.4%, at 1,232.54, ending the week up 0.9%.
The Cboe UK 100 index closed up 1.0% at 700.12. The Cboe 250 rose 0.9% to 20,579.66, and the Cboe Small Companies inched up marginally to 15,014.58.
The CAC 40 in Paris jumped 1.4%, while the DAX 30 in Frankfurt climbed 1.0%.
"We've seen some big moves this week, with global equity markets getting routed on Monday as rising virus concerns rippled out across global markets, sending the DAX to a two-month low, and the FTSE 100 closing at its lowest level in three months. The declines were as a result of worries that surging Delta cases and rising self-isolation rates would cripple the ongoing recovery. These concerns haven't gone away, however markets appear to be taking a glass half full attitude for now as company reports by and large come in ahead of expectations," CMC Markets analyst Michael Hewson commented.
Weaker than expected UK purchasing managers' index flash data for July showed there will be bumps on the road to recovery, however.
The IHS Markit-Chartered Institute of Procurement & Supply composite output index slipped to a four-month low of 57.7 points in July from June's reading of 62.2. Nonetheless, as the reading remained above the no-change mark of 50, it still signalled strong growth in UK private sector activity.
"July saw the UK economy's recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook," said Chris Williamson, chief business economist at IHS Markit.
Sterling was trading USD1.3754 late Friday, unchanged from Thursday.
The euro fetched USD1.1763 late Friday, down from USD1.1775 late Thursday. Against the yen, the dollar rose to JPY110.53 from JPY110.08.
The US private sector expanded again in July, though at its slowest pace since March according to numbers on Friday, even as the manufacturing industry posted a record month.
The services sector, meanwhile, had its worst month for nearly half a year, as firms noted selling price hikes led to "customer hesitancy".
The composite output index, a weighted average of the manufacturing and services prints, slipped to a four-month low of 59.7 points from 63.7 points.
The US manufacturing PMI rose to a series high of 63.1 points in July, beating June's tally of 62.1 points.
In London, Vodafone rose 2.5%. The telecommunications firm said it is on track to hit full-year guidance. Total revenue for the quarter ended June 30 was up 5.7% to EUR11.10 billion, with service revenue of EUR9.39 billion, a 3.1% increase on a reported basis and 3.3% organically.
AJ Bell Investment Director Russ Mould commented: "Full year numbers from Vodafone in May really created a stink. It fell short on profit and gave investors the unpalatable message that it would have to increase spending on its network, putting a dividend which had already suffered a heavy cut in 2019 potentially back in the firing line. Growth targets also left the market feeling distinctly uninspired.
"While the bad smell has hung around the stock since then, Vodafone's first quarter trading statement has acted as a bit of an air freshener as it reports revenue growth across its consumer and business segments."
Ultra Electronics ended the best performing mid-cap, shares jumped 32% to 3,270.00 pence, valuing it at GBP2.33 billion.
The London-based aerospace and defence engineering company said it is minded to recommend a GBP35.00-per-share takeover approach from former London listing Cobham, which had come knocking several times before.
The takeover offer, together with an interim dividend, values Ultra at around GBP2.58 billion, representing a premium of 63% to its closing price on June 24, the day prior to the start of the offer period. It also marks a 42% premium to Thursday's closing share price of GBP24.70.
The latest approach follows a number of earlier proposals, Ultra noted, the first of which was made on June 29 at a price of GBP28.00. The latest offer, including the dividend, is 26% above this initial tilt.
Aerospace and defence firm Cobham exited the London Stock Exchange in January 2020, following a controversial acquisition by US private equity company Advent, which raised national security risks. Nadine Cobham – daughter-in-law of the firm's founder Alan Cobham - hit out at the deal.
Insurer Beazley rose 5.8% on a swing to interim profit. It also affirmed its commitment to a dividend payment, which the FTSE 250 firm will mull at year-end.
The London-based company posted a pretax profit for the six months ended June 30 of USD167.3 million, after a USD13.8 million loss a year prior. It did not pay a dividend for the period, but remains "committed" to a dividend payment and will consider this at year-end.
Premier Foods also helped lift the FTSE 250, rising 4.8%, as it forecasts annual profit at the top end of expectations.
The Mr Kipling cakes maker said sales for the thirteen weeks ended July 3 were down 13% year-on-year, but up 6.3% from pre-pandemic levels.
Premier Foods now expects adjusted pretax profit for financial year 2022 to be at the top end of the group's expectations. Adjusted pretax profit was GBP117.9 million in financial 2021.
Stocks in New York were higher at the time of the London equity market close. The Dow Jones Industrial Average was up 0.5%, the S&P 500 was up 0.9% and the Nasdaq Composite was 0.6% higher.
Twitter shares rose 4.3% in New York after reporting a swing to profit late Thursday. The California, US-based social networking service provider posted second quarter GAAP operating income of USD30 million, swinging from a USD274 million loss a year earlier. Total revenue of USD1.19 billion was generated in the three months to June 30, up 74% year-on-year
Meanwhile, chipmaker Intel plunged 5.2% after posting a second quarter revenue slip. In the three months ended June 26, revenue fell 0.5% to USD19.63 billion from USD19.73 billion a year earlier. Pretax profit fell 3.2% to USD5.75 billion from USD5.94 billion.
The technology sector, including the remaining FAANGs, will be in focus next week. Google owner Alphabet and iPhone maker Apple post results on Tuesday, before Facebook on Wednesday and Amazon on Thursday. Monday has second quarter numbers from electric automotive firm Tesla.
Monday's local corporate calendar, meanwhile, has first quarter-results from carrier Ryanair.
The economic calendar on Monday has flash PMI data from Japan overnight. The latest US Federal Reserve interest rate decision is on Wednesday.
Gold was trading at USD1,800.34 an ounce late Friday, down from USD1,806.52 late Thursday. Brent oil was trading at USD73.64 a barrel, up from USD72.84 late Thursday.
By Eric Cunha; ericcunha@alliancenews.com
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