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(Alliance News) - Stock prices in London opened lower on Friday, wiping out almost all of its weekly-gain, despite the mood across the Atlantic being bullish after a the US Federal Reserve's bumper rate cut.
The FTSE 100 index fell 36.33 points, 0.4%, at 8,292.39. The FTSE 250 shed 86.37 points, 0.4%, at 21,076.34, and the AIM All-Share slipped 1.29 points, 0.2%, at 746.79.
The Cboe UK 100 fell 0.5% to 830.11, the Cboe UK 250 lost 0.3% to 18,602.89, and the Cboe Small Companies was flat at 16,738.42.
In European equities on Friday, the CAC 40 in Paris gave back 0.5%, while the DAX 40 in Frankfurt was down 0.8%.
In New York on Thursday, the Dow Jones Industrial Average added 1.3%, the S&P 500 jumped 1.7% and the Nasdaq Composite soared 2.5%.
The pound was quoted at USD1.3322 early Friday in London, from USD1.3268 at the time of the European equities close on Thursday. The euro stood at USD1.1172, up from USD1.1145. Against the yen, the dollar was trading at JPY143.37, rising from JPY142.94.
Only a handful of the FTSE 100, which is stacked with international earners, traded higher in early moves. A stronger pound is a headwind for the blue-chip index.
Utilities were among those to rise early Friday, with National Grid up 0.4% and United Utilities and Severn Trent up 0.3% and 0.2%, in moves which suggest some risk aversion.
At the other end of the index, Burberry dropped 4.2% after Jefferies cut the stock to 'underperform' from 'hold', and slashed its price target to 490 pence from 800p. Goldman Sachs left the luxury retsiler at 'neutral' but lowered its price target to 750p from 910p.
Elsewhere, brewer Diageo and Asia-focused insurer Prudential were among those with an international reach to trade lower amid the stronger pound. Diageo fell 1.1% and Pru lost 0.9%.
On Thursday, the Bank of England's Monetary Policy Committee voted by a majority of 8 to 1 to maintain the bank rate at 5.00%.
"The striking thing about the BoE was the contrast with the Fed. The Fed may have tried to downplay the prospect of further 50bp cuts, but it was still a dovish surprise on balance," analysts at Lloyds Bank commented.
"This was not the most exciting MPC meeting – even the QT decision of GBP100 billion over the next year was as most expected. Things should be more interesting come November though, after the Budget and GDP revisions. Also, there is the issue of whether the BoE can continue to as independent of the Fed as it was on this occasion. GBPUSD hit 1.33 in the aftermath of the BoE minutes, the strongest since early 2022. If the perception of a hawkish BoE versus a more dovish Fed gathers momentum it could see expected rate differentials driving GBP firmer still."
The Bank of Japan left interest rates unchanged on Friday, after a decision to hike them in July pushed the yen sharply higher and fuelled turmoil across world markets.
Two days after the US Federal Reserve slashed rates for the first time since the start of the pandemic, the BoJ's stasis came as data showed inflation in the world's fourth-largest economy picked up as expected in August.
Japanese central bank officials said borrowing costs would be left at 0.25%, a policy decision widely predicted after the fallout from the previous hike.
The BoJ was for a long time an outlier among major central banks – sticking to an ultra-loose monetary policy in an attempt to see demand-driven inflation of 2% fuelled by wage increases.
Numbers on Friday showed the rate of annual consumer price inflation picked up to 3.0% in August, from 2.8% in July. Excluding fresh food, the pace of yearly price growth accelerated to 2.8% from 2.7%.
The People's Bank of China, meanwhile, left its one-year loan prime rate unchanged at 3.35%. It was move that surprised some, though was in line with what others expected.
According to FXStreet cited consensus, the move was expected. However, Reuters reported that a majority of the 39 market participants it surveyed this week predicted a cut.
The over-five-year LPR was kept unmoved at 3.85%.
In Tokyo, the Nikkei 225 was up 1.5%. In China, the Shanghai Composite ended flat though the Hang Seng in Hong Kong was up 1.2%. The S&P/ASX 200 closed up 0.2%.
Brent oil was quoted at USD74.47 a barrel early Friday, down from USD75.05 at the time of the London equities close on Thursday. Gold climbed to USD2,606.89 an ounce from USD2,585.15. Only minutes ago, it hit another record high of over USD2,609 an ounce.
Back in London, Volution Group rose 6.3%. The air quality solutions firm said it struck a deal to acquire commercial and residential ventilation services provider Fantech for up to GBP144 million.
Australasia business Fantech is being acquired from UK-based Elta Group.
"Fantech, which includes the Fantech, Ideal Air, NCS Acoustics, Air Design, Major Air, Systemaire and Burra Steel brands, is a leading provider of both commercial and residential ventilation in Australia and commercial ventilation solutions in New Zealand," Volution said. "The acquisition will enhance Volution's market position in the Australasian region through Fantech's highly recognised and market leading brands extending the group's reach into new end market applications with particular emphasis on the commercial sector."
Volution will pay GBP112.9 million upfront and GBP30.8 million will be payable 12 months after the completion.
Pressure Technologies cut its profit outlook due to order placement and project delays. The stock fell 3.9%.
The engineering firm said that while its Precision Machined Components division has "continued to deliver a strong performance through the second half of the year", it still expects group results to be "slightly below previous guidance".
Pressure Technologies in June had predicted adjusted earnings before interest, tax, depreciation, and amortisation of no less than GBP1.0 million for the year to September 30.
The weaker outlook given on Friday is down to "later than anticipated defence order placement and project delays in Chesterfield Special Cylinders".
The firm noted that the sale process for the PMC unit is now at "an advanced stage", with due diligence now complete. It expects the deal to be sealed in the "very near future".
Pressure Technologies in June said it had found a preferred buyer for PMC, though at the time, it said it was targeting transaction completion in August. The proceeds from the sale will go towards repaying a term loan facility and funding "strategic investment opportunities at Chesterfield Special Cylinders", it said in June.
By Eric Cunha, Alliance News news editor
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