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(Alliance News) - Stocks in London rounded off a strong week on Friday with further gains, with the midcaps getting a boost from Babcock International, while European benchmarks extended Thursday's gains.
"Stock markets making modest gains once more on Friday, in what is likely to be rather uneventful trade as we make our way into the weekend," Oanda's Craig Erlam said.
He continued: "This has been a common feature of the markets recently, small and steady gains that have seen European stocks push into record territory. They've been quietly putting together a great run over the last few weeks which has seen them not only deliver strong gains, but hit new records on a daily basis."
The FTSE 100 index closed up 25.48 points, or 0.4%, at 7,218.71. The flagship index was trading at its highest levels since February 2020 and advanced 1.4% this week.
The mid-cap FTSE 250 index closed up 41.68 points, or 0.2%, at 23,788.45. The AIM All-Share index lost 3.42 points, or 0.3%, at 1,266.26.
The Cboe UK 100 index closed up 0.4% at 719.23. The Cboe 250 ended up 0.2% at 21,634.75, and the Cboe Small Companies slightly higher at 15,557.00.
Michael Hewson, chief market analyst at CMC Markets, said: "It's been another day of record highs for European markets, with the DAX breaking above 16,000 for the first time, the Stoxx600 setting another record, and the FTSE250 pushing above 23,800. The CAC40 is also closing in on its own record high, a level that it reached in September 2000.
"If investors are concerned about rising delta variant cases globally there's little evidence that it is prompting any undue worry, although markets in Asia have been a little more cautious. The FTSE100 has also managed to make progress making a new 18 month high, and posting its fourth successive weekly rise, its best run of gains since last November."
In mainland Europe, the CAC 40 in Paris advanced 0.2%, within striking distance of the all-time high of 6,944.77. The DAX 30 in Frankfurt breached 16,000 points for the first time, before settling in at 15,977, closing 0.3% higher.
"The next couple of weeks could be all about delta and how well China, in particular, and others deal with the spread. China has shown its zero Covid approach has worked before and is not changing course, despite other countries taking a more relaxed approach thanks to the vaccines," Erlam added.
In London, Babcock International ended the best performer in the midcaps, gaining 6.4%, after the defence outsourcer said it will sell subsidiary Frazer-Nash Consultancy to US science and technology company KBR for GBP293 million.
Babcock said the sale forms part of its disposal programme, which aims to generate at least GBP400 million over the next twelve months.
Babcock said Frazer-Nash Consultancy is an "outstanding business" which provides independent advice to its customers and has operated largely independently from Babcock. Cash from the sale will be used to reduce net debt.
At the other end of the FTSE 250, Avon Protection, slumped 28% after the personal protection systems maker cut revenue guidance due to order delays.
Delays and widening lead times has forced the company, formerly known as Avon Rubber, to lower its revenue guidance to between USD245 million and USD260 million for financial 2021, which ends on September 30. Avon Protection reported revenue of GBP169.0 million, or around USD233.3 million, in financial 2020.
Due to slower shipment, inventory build-up and delayed customer payments, cash conversion is expected to be around 50% for financial 2021, compared to 85% in financial 2020, the company said.
Though Avon Protection anticipates receipt of delayed orders over the coming months, supply chain issues and the "tight" US labour market are expected to continue into the next financial year.
As such, the company also lowered its revenue guidance to between USD320 million to USD340 million for financial 2022. For now, Avon Protection has maintained its guidance for financial 2023.
On AIM, Venture Life crashed 32% lower as the consumer healthcare products maker reports shrinking interim revenue caused by falling sales of hand sanitiser.
Revenue for the six months ended June 30 is expected to be GBP13.8 million, down 18% from GBP16.8 million a year before. The decline was blamed on substantially lower sales of hand sanitising gel and shrinking sales to its Chinese partner for Dentyl mouthwash.
Despite the disappointing revenue result, Venture highlighted that it was "starting to see encouraging signs of a post Covid recovery in retail in the UK".
In IPO news, Singapore-based agricultural firm Olam International said it has chosen London to list its food ingredients business.
Olam is in the process of demerging its two units - Olam Food Ingredients and Olam Global Agri. OFI supplies ingredients and products made from cocoa, coffee, nuts, spices, and dairy. The IPO is planned for the first half of 2022 and will be joined by a secondary listing on the Singapore Stock Exchange.
OFI is planning to raise about GBP2 billion, Reuters reported on Friday, citing sources familiar with the matter.
Olam International is currently listed in Singapore, with a market capitalisation of SGD5.59 billion, equivalent to USD4.11 billion. It is controlled by the country's sovereign wealth fund, which has a 54% stake.
The pound was quoted at USD1.3859 at the local equities close on Friday, up from USD1.3829 at the London equities close Thursday.
The euro was priced at USD1.1795, up from USD1.1729. Against the Japanese yen, the dollar was trading at JPY109.76, lower from JPY110.35.
CMC's Hewson said: "We were all set for another pretty decent week for the US dollar, which only hit a four month high a couple of days ago, as markets become more comfortable with the prospect of the US Federal Reserve tapering its bond buying program before the end of the year. We've since seen it take a little bit of a pullback today after the weakest Michigan consumer confidence number since 2011, saw some US dollar selling kick in. This has been reflected in US yields, which have slipped back today but are still on course to finish higher for the second week in a row."
Brent oil was quoted at USD70.94 a barrel Friday evening, down from USD71.22 late Thursday. Gold was trading at USD1,775.40 an ounce, higher against USD1,750.13.
Stocks in New York were tilted green at the time of the equity market close in London, with Disney's earnings meeting high expectations .
The Dow Jones Industrial Average and the S&P 500 were both up 0.1%, but the Nasdaq Composite was marginally higher.
TD Ameritrade's JJ Kinahan said: "When it comes to reopening, there aren't many better barometers than Disney. From theme parks to movie theatres to resorts, the company has a finger in lots of pies. That may be why last night's strong quarterly performance from Disney appears to be giving Wall Street a lift this morning. After lagging the market all year, Disney shares had a nice pop after the close yesterday, climbing 5%. Disney+ added more subscribers than analysts had expected and theme park attendance rebounded.
"One big question was whether the Delta variant and the big outbreak in Florida might hurt business at the Magic Kingdom. The answer for now appears to be more beauty than beast, as DIS executives said they're 'bullish' about the parks' recoveries and continue to see 'really strong demand'."
Disney after the market close on Thursday said revenue in the three months to July 3 rose 45% year-on-year to USD17.02 billion, from USD11.78 billion. UBS had expected quarterly revenue of USD16.60 billion.
The entertainment firm swung to a pretax profit of USD995 million from a USD4.84 billion loss a year earlier. Disney had booked USD5.05 billion in restructuring and impairment costs in the third quarter of the last financial year.
Diluted earnings per share, excluding certain items, soared ten-fold to USD0.80 from USD0.08 a year ago. This beat both UBS and consensus, at USD0.47 and USD0.55 respectively.
Disney was 2.8% higher in midday trade in New York.
In the international economics events calendar next week, Monday is headlined by Japan GDP figures and Chinese industrial production, while Tuesday sees a eurozone GDP print alongside US retail sales and industrial production. On Wednesday morning, there is a UK consumer and producer price index reading followed by eurozone consumer price index, and the minutes from the latest US Federal Open Market Committee meeting.
On Thursday, there is US initial jobless claims, while Friday sees a CPI print from Japan and UK retail sales and German producer price index.
In the local corporate calendar on Monday, there is interim results from Brave Bison and MTI Wireless Edge.
By Paul McGowan; paulmcgowan@alliancenews.com
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