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(Alliance News) - Stocks in London traded lower around midday on Friday with Heathrow's closure knocking travel stocks while higher borrowing figures caused some angst.
The FTSE 100 index was down 39.68 points, 0.5%, at 8,662.01. The FTSE 250 was 101.07 points lower, 0.5%, at 19,996.91, and the AIM All-Share declined 3.24 points, 0.5%, at 692.60.
The Cboe UK 100 was 0.5% lower at 865.76, the Cboe UK 250 was down 0.6% at 17,416.17, and the Cboe Small Companies fell 0.5% at 15,596.33.
In European equities on Friday, the CAC 40 in Paris was trading down 0.4%, while the DAX 40 in Frankfurt ebbed 0.8%.
Kathleen Brooks, research director at XTB observed: "Stock markets in Europe are a sea of red as we end the week, and the great European stock market rally may have stalled. The German DAX index, the best performing index in Europe so far in 2025, is set for a weekly decline, while the Eurostoxx [50] and the FTSE 100 are expected to eke out meagre gains for the week. US stocks closed in the red on Thursday and hopes that a reassuring message from Jerome Powell on Wednesday would spur a recovery rally have been dashed."
Higher than expected UK borrowing figures added to the subdued mood piling pressure on Chancellor Rachel Reeves ahead of next week's spring statement.
According to the Office for National Statistics, public sector borrowing amounted to GBP10.71 billion last month, slightly higher than GBP10.58 billion a year prior, and well above the GBP6.5 billion forecast from the Office for Budget Responsibility, the government's fiscal watchdog.
Numbers in January had showed a surplus of GBP13.32 billion, due to tax receipts usually being higher that month. That January number was downwardly revised from GBP15.44 billion.
Pantheon Macroeconomics analyst Elliott Jordan-Doak believes the weak public finances will pave the way for spending cuts in the spring statement, and tax hikes in October.
Reeves will deliver her spring statement next Wednesday and is expected to resort to spending cuts to plug a hole in her fiscal headroom caused by rising costs of government debt and lower growth.
But economists think further tax rises are inevitable.
"Cost cutting can only go so far, and barring a surprise boost to UK growth this summer, we think further tax hikes look inevitable in the autumn," said James Smith, an economist at ING.
"Britain's public finances are operating under increasingly fine margins," he added.
The pound was quoted at USD1.2942 on Friday afternoon, down from USD1.2964 at the time of the equities close on Thursday.
The euro stood at USD1.0844, fading from USD1.0847 late Thursday. Against the yen, the dollar was trading at JPY148.93, up from JPY148.78.
On the FTSE 100, British Airways owner IAG fell 1.0%, recouping heavier earlier losses, after Heathrow airport was completely shut down after a power outage due to a fire at a London electricity substation.
Some 230,000 passengers a day and 83 million a year use Heathrow, making it one of the world's busiest airports.
Heathrow is considered BA's main hub with the majority of its long-haul flights operating from Terminal 5.
Hotel operator IHG eased 2.7% while Premier Inn owner Whitbread slipped 1.8%.
Leading the blue-chip fallers was sports retailer JD Sports Fashion, which fell 4.3% after Nike issued downbeat guidance and warned its turnaround would take "multiple seasons".
Nike, which has a retail partnership with JD Sports, was trading 6.4% lower in pre-market trading in New York.
The iconic sports retailer reported third-quarter results ahead of forecasts but gave softer guidance than hoped.
Citi said: "It is clear that management’s 'Win Now' strategy will take time".
"Inventories are too high in all regions, and a very weak China business suggests that market will take the longest to recover," the broker said.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 index 0.2% lower, and the Nasdaq Composite down 0.3%.
Back in London, BT rose 0.4% as Bloomberg reported it has approached major telecommunications companies about partnerships to help turn around its struggling international business.
The UK-based operator approached potential partners, including AT&T and Orange, to explore tie-ups that could involve selling a stake in its global segment, Bloomberg said.
Asos was the star performer on the FTSE 250, soaring 22%, after it said adjusted earnings before interest, tax, depreciation and amortisation would be ahead of the GBP34 million consensus.
The London-based online-only fashion retailer said it expects to see a significant improvement in profitability in the first half of financial 2025, despite falling volumes.
This reflects strong gross margin driven by lower markdown activity and increased full-price mix, and continued cost discipline, Asos said.
UBS said: "We see the improvement in profitability as a positive. Asos is executing well on full price sales development. We await further details at the results on the outlook. We think sales growth is likely to be the key focus."
But pub chain JD Wetherspoon failed to cheer investors, falling 9.0% after citing higher costs for a profit shortfall.
Pretax profit for the half-year, before separately disclosed items, fell 8.6% to GBP32.9 million from GBP36.0 million, missing FactSet consensus of GBP40.4 million.
Operating profit before separately disclosed items fell 4.3% to GBP64.8 million from GBP67.7 million with an operating margin of 6.3%, down from 6.8%, reflecting higher labour and utility costs.
Chair Tim Martin said the firm "currently anticipates a reasonable outcome for the financial year, subject to our future sales performance." Wetherspoon's financial year ends on July 27.
But he said a rise in national insurance contributions and pay will add GBP60 million to its annual costs. This amounts to approximately GBP1,500 per pub per week, Martin noted.
John Wood fell 5.3% as Jefferies downgraded to 'hold' from 'buy'.
Brent oil was quoted at USD71.70 a barrel at midday in London on Friday, falling from USD71.89 late Thursday.
Gold was quoted at USD3,035.41 an ounce, little changed from USD3,035.20 on Thursday.
By Jeremy Cutler, Alliance News reporter
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