(Alliance News) - The FTSE 100 capped off a strong week Friday, ending in the green, but all eyes were firmly on the EU leaders summit.
European leaders are meeting this weekend at a much-anticipated EU summit where they will try to reach an agreement on the proposed EUR750 billion plan to finance the recovery from the coronavirus pandemic.
IG's Chris Beauchamp said investors are not expecting much from the summit.
"Much has been pinned on the EU agreeing to implement some kind of recovery fund, but the perennial arguments that are such a feature of these summits are still to be resolved. Recent gains in European indices and in the euro, which is enjoying some real strength against the dollar for the first time in over two years, could easily evaporate if Monday arrives without progress of some kind," he added.
The FTSE 100 index closed up 39.61 points, or 0.6%, at 6,290.30. The blue chip index gained 3.2% this week.
The mid-cap FTSE 250 index closed up 26.64 points, or 0.2%, at 17,347.93. The AIM All-Share index ended 0.3% higher at 877.70.
The Cboe UK 100 index added 0.5% at 626.69. The Cboe 250 closed 0.1% lower at 14,699.71, and the Cboe Small Companies index ended down 0.3% at 9,152.57.
In mainland Europe, the CAC 40 in Paris lost 0.43% while the DAX 30 in Frankfurt advanced 0.4%.
Beauchamp continued: "It is a quiet end to the week across markets, with few major US earnings to drive activity and a sense of caution particularly in European markets, ahead of a vital EU Council meeting."
"It has not been a marvellous week for risk, but hopes of vaccine progress have provided the main catalyst for the limited gains in stock markets," he added.
The euro was changing hands at USD1.1433, firm from USD1.1429 at the European equities close Thursday.
In London, travel stocks were bearing the brunt of rising coronavirus infections leading to fears of more global lockdowns, as the US on Thursday set yet another record for new coronavirus cases with 68,428 infections recorded in 24 hours, according to a tally by Johns Hopkins University.
In that period the death toll also climbed by 974 people, the Baltimore-based university's tracker showed at 8:30 pm (0030 GMT Friday).
That brought the total death toll in the country since the pandemic began to 138,201, and the total number of cases to 3,560,364.
The US remains the hardest-hit country in the world in absolute terms.
Experts believe it never emerged from its first wave of infections, and cases have been surging again in recent weeks, particularly across the south and west in states that pushed to lift lockdown restrictions early.
easyJet lost 3.2%, Carnival 2.9% and International Consolidated Airlines 2.3%.
UK flag carrier British Airways is retiring its entire Boeing Co 747 "Jumbo Jet" fleet, it said Friday, following the huge hit to international air travel caused by the Covid-19 pandemic.
"It is with great sadness that we can confirm we are proposing to retire our entire 747 fleet with immediate effect," the International Consolidated Airlines Group SA-owned carrier said in a statement to AFP.
"It is unlikely our magnificent 'queen of the skies' will ever operate commercial services for British Airways again due to the downturn in travel caused by the Covid-19 global pandemic."
Asia-focused lenders HSBC and Standard Chartered lost 1.6% and 1.1% as tensions between China and the US continue to flare.
The US said Thursday all options were open to pressure China, which voiced outrage over reports that US President Donald Trump is considering a sweeping visa ban on communist party members.
The New York Times and later The Wall Street Journal reported that Trump is reviewing a proposal to refuse US entry of all members of the ruling party – which encompasses a who's who of the political and business elite in the world's most populous nation.
Miner Rio Tinto gained 2.5%.
The Anglo-Australian miner left its annual guidance unchanged after posting mixed second-quarter production figures. Bauxite and iron ore output grew in the three months to June 30, though there was a double-digit fall in titanium dioxide slag production, figures from the miner showed.
The FTSE 100-listed Rio did edge its capital expenditure forecasts higher as the bite from Covid-19 eased and the dollar weakened. Pilbara iron ore production rose 4% year-on-year in the second quarter to 83.2 million tonnes, with shipments edging 1% higher to 86.7 million tonnes.
Peers BHP, Antofagasta, Anglo American and Glencore added 2.9%, 2.3%, 1.5% and 1.1%, respectively.
Homeserve added 3.6%. Te home emergency cover provider said its membership businesses, policy renewal and mid-term cancellation rates have all continued in line with historic trends, spanning April to mid-July.
The home repairs and improvements company added that it has felt no effects from Covid-19 and "customer satisfaction is at record highs" reflecting strong service levels during the pandemic. Homeserve has resumed mergers and acquisitions activity with a strong pipeline of targets and four profitable acquisitions completed in May and June, the most significant of these bringing 38,000 new policy customers in Spain.
Walsall, England-based Homeserve continues to expect to deliver a solid performance in the year ending March 31, 2021.
Midcap precision instruments maker Renishaw advanced 10% after raised its annual revenue forecast, but downgraded its profit estimate.
Renishaw predicted revenue for the year to June 30, to be around GBP510 million. In May, it had guided for revenue in a range between GBP490 million to GBP505 million.
However, Renishaw warned it will miss its annual pretax profit estimate due to GBP46 million in charges, but remains focused on cash preservation due to the Covid-19 pandemic. The company, which makes dental scanning products and precision measurement equipment, in May, had guided pretax profit for the financial year, to be in the range of GBP31 million and GBP41 million.
It anticipates GBP24 million in restructuring costs and GBP22 million of fair value losses of financial instruments in financial 2020. In financial 2019, the company recorded pretax profit of GBP109.9 million on a revenue of GBP574.0 million. Adjusted pretax profit had totalled GBP103.9 million.
The pound was quoted at USD1.2538 at the close on Friday, down from USD1.2607 at the London equities close on Thursday.
Wall Street was in the lacklustre at the London equities close. The DJIA was down 0.2%, while the S&P 500 index and the Nasdaq Composite were both 0.1% higher.
Against the yen, the dollar was trading at JPY107.11 Friday evening in London, unchanged from the same time Thursday.
Brent oil was trading at USD43.08 at the London close, down from USD43.72 a barrel late Thursday. As a result, London-listed oil majors Royal Dutch Shell and BP ended lower on Friday.
Shell 'A' shares gave back 1.4%, the 'B' shares lost 1.1% and BP lost 1.0%.
Oanda's Edward Moya commented: "Oil prices dropped as investors assess whether a steady string of downbeat crude demand headlines will persist over the coming weeks. Asia was expected to lead the crude demand recovery trade, but fuel consumption is not rebounding strongly. The virus situation is still bad in the US, but it doesn't seem like a return of harsh coronavirus lockdowns will happen."
Gold was quoted at USD1,810.20 an ounce, up from USD1,805.00 an ounce.
Moya added: "Gold prices are steadily rising as investors start to raise their stimulus expectations on coronavirus second wave fears. Gold is also starting to benefit from election risk, as Wall Street can't ignore the polls anymore and start to price in the risk of a Biden Presidency. The fundamentals for gold have not changed at all this week, so the current consolidation phase seems very constructive for prices to make that run to record high territory."
In the economic calendar, all eyes will be on the crunch EU summit in Brussels on Friday and Saturday, at which leaders will wrangle over a proposed EUR750 billion recovery fund to kickstart the bloc's battered economy.
On Monday, focus will be on the interest rate decision from the People's Bank of China and the minutes from the Bank of Japan's most recent monetary policy meeting overnight. Germany producer price figures are due at 0700 BST.
The highlights for the rest of the week include Jibun Bank manufacturing PMI numbers early Wednesday followed by a slew of composite PMI prints in Europe and the US on Friday.
In the UK corporate calendar on Monday, has half-year results from staffing firm SThree and a trading statement from invoice automator Tungsten Corp. In the evening, blue chip miner BHP Group will issue its second quarter operations review.
By Paul McGowan; paulmcgowan@alliancenews.com
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