LONDON MARKET CLOSE: Investors feel icy ahead of US inflation data

(Alliance News) - Stock prices in London closed slightly higher on Friday, as fears over a recession in the UK dampened the festive spirit.

The London Stock Exchange closed at 1230 GMT on Friday, ahead of Christmas day on Monday. Markets will stay shut on Monday and Tuesday.

The FTSE 100 index closed up 2.78 points at 7,697.51. The FTSE 250 ended up 59.98 points, 0.3%, at 19,630.95, and the AIM All-Share closed up 1.95 points, or 0.3% at 754.40. Over the past week, they are up 1.6%, 2.2% and 2.3%, respectively.

The Cboe UK 100 ended up 0.1% at 769.16, the Cboe UK 250 closed up 0.4% at 17111.93, and the Cboe Small Companies ended up 0.2% at 14,730.73.

In European equities on Friday, the CAC 40 in Paris was flat in London around midday, while the DAX 40 in Frankfurt was down 0.1%.

This afternoon at 1330 GMT, the key US personal consumption expenditures price index - the last potentially market-moving US data before year-end - will be released. It is the US Federal Reserve's preferred measure of inflation.

"If today's PCE print comes in as soft as expected, or ideally softer-than-expected, we shall see the rally in bonds - and perhaps in stocks - extend the Santa rally," Swissquote analyst Ipek Ozkardeskaya said.

Investors hope this US inflation print will likely give US Federal Reserve officials confidence in cutting interest rates next year.

At a policy meeting last week, Fed Chair Jerome Powell signalled interest rate hiking cycle had peaked and hinted that monetary policy easing was possible in 2024.

Stocks in New York were called lower, ahead of the reading. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.

The Office for National Statistics reported second estimates for gross domestic product in the UK.

In the third quarter, the ONS estimates that GDP registered a 0.1% fall quarter-on-quarter, having previously estimated that economic activity had been flat. In the second quarter, the economy saw no growth from the first quarter, revised down from a 0.2% expansion.

The new figures have implications for UK monetary policy as well.

"One of the tools that can be pulled out of the bag to help drive growth is also the instrument the Bank of England has been wielding to hack away at the sticky tendrils of inflation," AJ Bell's Hewson noted.

"If the turgid trend continues, the MPC will come under even more pressure to wrench the taps in the other direction and this new data has prompted markets to start pricing in even more cuts over the next year."

Last week the BoE maintained UK interest rates at a 15-year high, but the decision split policymakers.

The pound was quoted at USD1.2719 at the London equities close Friday, down compared to USD1.2734 at the close on Thursday. The euro stood at USD1.1019 at the European equities close Friday, higher against USD1.0988 at the same time on Thursday. Against the yen, the dollar was trading at JPY142.14, lower compared to JPY142.35 late Thursday.

In the FTSE 100, retailers JD Sports Fashion and Frasers Group fell 5.2% and 0.7%, respectively.

The stock took a hit on the back of Nike shares dropping 12% in after-market trading in New York.

Nike said it expects a "softer" second-half revenue outlook but emphasised it remained focused on "strong" gross margin execution and disciplined cost management.

Regarding costs, the sportswear company said it "is identifying opportunities to deliver up to USD2 billion in cumulative cost savings over the next three years. Areas of potential savings include simplifying our product assortment, increasing automation and use of technology, streamlining our organization, and leveraging our scale to drive greater efficiency."

On London's AIM, Bidstack shares surged by 97%

The in-game advertising firm said it has reached a settlement and new commercial partnership with Azerion Group. It added that the two firms have agreed to resolve claims which are currently pending at the Amsterdam court, and "move forward collaboratively".

Azerion will pay EUR3 million in settlement, after which the firms will begin a new partnership, with Bidstack working with Azerion's supply-side platform to enable Azerion to access Bidstack's gaming inventory.

Webis Holding surged 28%.

The Isle of Man-based gaming firm said it has signed a new agreement with Monarch Content Management for 2024. Monarch manages the wagering and the live-video streaming services for 15 racetracks in the US, including Gulfstream, Santa Anita, Del Mar, Laurel, and Pimlico.

On the other hand. Ferro-Alloy Resources plummeted 35%.

The vanadium producer said that revenue and profitability in the fourth quarter of 2023 has been lower than previously expected due to metal prices and production shortfalls.

"Looking ahead to 2024, the company will continue to work to maintain profitability in the current low-price environment by renegotiating concentrate costs and other contractual terms. The company is also experimenting with new types of concentrate which, whilst producing the same quality of product, could be potentially more profitable," Ferro-Alloy added.

Brent oil was quoted at USD80.02 a barrel at the London equities close Friday, up from USD79.05 late Thursday. Gold was quoted at USD2,055.55 an ounce at the London equities close Friday, higher against USD2,040.66 at the close on Thursday.

By Sophie Rose, Alliance News reporter

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