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(Alliance News) - Stock prices in London opened lower on Friday morning as investors digested a slew of interest rate decisions from a number of major central banks.
"Recessionary fears raced back to the top of the agenda, as global central banks continued the policy of relentless interest rate hikes. Any thoughts of a Santa rally have all but evaporated, with previous hopes of peak inflation and interest rates being soundly rejected," said Richard Hunter at interactive investor.
The FTSE 100 index opened down 27.07 points, or 0.4%, at 7,399.10. The FTSE 250 was down 85.10 points, or 0.5%, at 18,808.69, and the AIM All-Share was down 2.28 points, or 0.3%, at 826.17.
The Cboe UK 100 was down 0.4% at 739.83, the Cboe UK 250 was down 0.5% at 16,247.00, and the Cboe Small Companies was down 0.4% at 12,962.14.
The Bank of England raised UK interest rates by 50 basis points on Thursday, as expected. The central bank raised rates to 3.50% from 3.00% previously.
Looking forward, the monetary policy committee said that there are "considerable" uncertainties around the UK's outlook and confirmed that it will respond "forcefully, as necessary".
Shortly after, the European Central Bank lifted its benchmark interest rate by 50 basis points as well, also as expected, and warned there will be further "significant" rises to come.
The BoE and ECB moves - together with the same by the Swiss National Bank and a 25-basis-point hike by Norway's central bank - came a day after the US Federal Reserve lifted interest rates by 50 basis points. It also forecast that US interest rates will peak at a higher level than previously expected.
In the US on Thursday, Wall Street ended sharply lower, with the Dow Jones Industrial Average ending down 2.3%, the S&P 500 down 2.5% and the Nasdaq Composite down 3.2%.
In European equities on Friday morning, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was flat.
The euro stood at USD1.0636 early on Friday in London, flat against USD1.0637 at the close on Thursday. Against the yen, the dollar was trading at JPY137.08, lower compared to JPY137.70.
The pound was quoted at USD1.2174, lower compared to USD1.2210.
Retail sales in the UK unexpectedly fell in November against the previous month, data from the Office for National Statistics showed.
Retail sales volumes are estimated to have fallen by 0.4% in November, after a revised 0.9% rise in October. Market consensus, as cited by FXStreet, had expected a 0.3% increase in November.
Compared with the same period a year earlier, retail sales volumes fell by 5.9% in November. The market had expected a 5.6% fall.
For Pantheon Macroeconomics' Gabriella Dickens, the drop in retail sales in November suggests that consumers are buckling under the pressure of surging inflation, "despite additional government support for their energy bills".
In London, Rio Tinto rose 0.6% as the miner completed its acquisition of the remainder of Turquoise Hill Resources for USD3.1 billion.
Rio Tinto now holds a 66% direct interest in the Oyu Tolgoi project with the remaining 34% owned by the government of Mongolia, and Turquoise Hill has become a wholly-owned subsidiary of Rio Tinto. It will be delisted.
Bunzl fell 1.5% after Barclays cut the distribution and outsourcing firm to 'underweight' from 'equal-weight'.
FTSE 250-listed John Wood Group dropped 6.3% as it also received a rating cut from Barclays. The bank cut the engineering and consulting company to 'equal-weight' from 'over-weight'.
Games Workshop jumped 12% as it announced it reached an agreement in principle with Amazon Content Services, a subsidiary of Amazon.com, to develop its intellectual property in film and television productions.
The games manufacturer said the rights will initially be granted to develop the Warhammer 40,000 universe. It added that the project is "wholly dependent" on, and subject to, contracts being agreed and entered into, which it said the firms are working towards.
Elsewhere in London, Hollywood Bowl climbed 5.0%, after it reported a double-digit rise in revenue and profit multiplied.
In the financial year that ended September 30, the bowling centre operator posted revenue of GBP193.7 million, up 49% from GBP129.9 million the previous year - a record for the company.
Pretax profit soared to GBP46.7 million from just GBP462,000 the year prior. This figure was also ahead of financial 2019, its last year of uninterrupted trading before the Covid-19 pandemic.
Hollywood Bowl added it has continued this momentum into the start of its current financial year, noting strong demand an "encouraging" pre-bookings for the Christmas period.
Rank Group fell 6.7% as it noted that like-for-like net gaming revenue in the five months ended November 30 was up just 1% compared to the same period last year. It said this was due to a decline at its Grosvenor venues, with its trading in its second quarter weaker than expected.
"We had expected Grosvenor venues to have continued to improve throughout Q2 and then into the second half of the year, but this improvement has not yet materialised, driven by lower customer spend per visit," Rank explained.
As a result, Rank now expects like-for-like underlying operating profit for the year ending June 30 to be in the range of GBP10 million to GBP20 million.
In Asia on Friday, the Shanghai Composite closed flat, while the Hang Seng index in Hong Kong was up 0.4%. The S&P/ASX 200 in Sydney closed down 0.8%. The Japanese Nikkei 225 index closed down 1.9%.
The Japanese private sector saw output stabilise amid stronger service sector expansion towards the year's end, survey results from S&P Global showed.
The au Jibun Bank-S&P Global flash composite output index rose to 50.0 points in December from 48.9 in November. The services business activity index rose to 51.7 from 50.3. Any reading over the neutral level of 50 indicates growth.
Manufacturing firms in Japan have continued to struggle from subdued demand and severe inflationary pressures.
The flash manufacturing output index rose to 46.4 from 45.8 but continued to indicate shrinking activity. The headline flash manufacturing purchasing managers' index, which measures the overall health of the manufacturing sector, posted 48.8 in December, down from 49.0 in November.
Brent oil was quoted at USD80.31 a barrel early in London on Friday, down from USD81.07 late Thursday. Gold was quoted at USD1,775.10 an ounce, lower against USD1,776.01.
Still to come on Friday's economic calendar, there are flash PMI readings from the UK and the US at 0930 GMT and 1445 GMT, respectively.
By Heather Rydings, Alliance News senior economics reporter
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