LONDON MARKET CLOSE: Stocks edge higher as focus turns to US budget

Fri, 28th May 2021 17:09

(Alliance News) - Stocks in London ended marginally higher on Friday amid a lack of catalysts, while investors look ahead to upcoming US government budget proposals.

The FTSE 100 index closed up just 2.94 points at 7,022.61 - ending the week flat. The FTSE 250 index ended up 24.91 points, or 0.1%, at 22,683.95 - growing 1.3% over the past five days. The AIM All-Share index finished up 5.63 points, or 0.5%, at 1,256.11 - ending the week up 0.9%.

The Cboe UK 100 index closed up 0.2% at 700.90. The Cboe 250 added 0.3% at 20,471.60 and the Cboe Small Companies ended up 0.1% at 14,991.20.

In Paris the CAC 40 ended up 0.8%, while the DAX 30 in Frankfurt ended up 0.7%.

"Stock markets are on the up on the final day of the week, with a muted performance from the FTSE 100 outpaced by better returns on Wall Street and in continental Europe," commented IG Group's Chris Beauchamp.

"For the moment, it looks like hopes of stronger earnings in the months to come have overridden concerns about inflation and policy tightening from central banks, and with the floodgates opening on government spending (at least in the US) there are plenty of reasons for equities to remain positive," Beauchamp added.

In the FTSE 250, Vistry Group ended the best performer, up 4.3%, after Barclays upgraded the housebuilder to Overweight from Equal Weight. The bank said Vistry's Partnerships business offers a unique avenue for growth.

Peers Taylor Wimpey, Persimmon, Barratt Developments and Berkeley ended among the best FTSE 100 performers, up 2.6%, 2.4%, 2.3% and 1.9% respectively, in a positive read-across.

At the other end of the midcaps, FirstGroup ended the worst performer, down 5.2%. The transport operator late Thursday won a vote on the sale of its US operations following a feud with its largest shareholder.

Investors narrowly voted in favour of allowing the firm to sell its US school bus and transit divisions for GBP3.3 billion.

Just 61% of investors voted in favour of the deal with 39% rejecting it. Only 50% of shareholders needed to agree to the deal for it to be approved.

FirstGroup's largest shareholder, Coast Capital, had said it would vote against the deal, saying the sale to Sweden's EQT Infrastructure undervalued the divisions.

Following the vote, the activist investor said it is considering its options on future action over the deal.

Elsewhere, Senior closed up 34% at 158 pence after the aerospace parts maker rejected a GBP738 million takeover proposal from private equity firm Lone Star Global, saying it undervalued the company.

Lone Star made an offer of 176 pence last week, which was its third unsolicited proposal. It was unanimously rejected by Senior.

On the economic front, US personal consumption expenditure accelerated at a greater pace than expected in April, according to official figures.

Numbers from the US Bureau of Economic Analysis, part of the Department of Commerce, showed the PCE price index jumped 3.6% year-on-year in April, topping consensus estimates for 2.2% growth. In March, the index rose 2.4% annually.

Excluding food and energy, annual PCE inflation picked up pace to 3.1% in April, accelerating from 1.9% inflation in March. A figure of 2.9% was expected for April, according to consensus cited by FXStreet.

On a monthly basis, the PCE index rose 0.6% in April, in line with the March hike but topping expectations of a smaller rise of 0.2%. Core PCE was 0.7% higher monthly, following a 0.4% increase in March.

The figures are closely watched by the US Federal Reserve and are released amid a backdrop inflationary nerves and fears that central banks will taper measures implemented to boost economies battered by Covid-19. The core PCE reading is the Fed's preferred gauge of inflation.

The dollar was broadly bid after the US inflation figures. The pound was quoted at USD1.4175 at the London equities close, lower against USD1.4181 at the close Thursday.

The euro stood at USD1.2185 at the European equities close, down from USD1.2200 late Thursday. Against the yen, the dollar was trading at JPY110.00, up from JPY109.71 late Thursday.

Stocks in New York were higher at the London equities close as investors look ahead to budget proposals from the Biden administration.

Biden is expected to set out a USD6 trillion budget later on Friday that, if passed, would fund a sweeping overhaul of the US infrastructure system. However, the wish list will have to be ratified by Congress over the coming months.

The DJIA was up 0.2%, the S&P 500 index up 0.3% and the Nasdaq Composite 0.5%.

Salesforce led the Dow, up 6.7%, after the cloud computing company late Thursday reported higher earnings on a 23% rise in revenues to USD6 billion. Chief Executive Marc Benioff pointed to "incredible momentum throughout our core business".

Johnson & Johnson was up 1.2% after the UK Medicines & Healthcare products Regulatory Agency approved the drugmaker's single-shot jab, after previously backing the Pfizer, AstraZeneca and Moderna vaccines.

UK Prime Minister Boris Johnson called it "very welcome news and another boost to our hugely successful vaccination programme".

Brent oil was quoted at USD69.77 a barrel at the equities close, up sharply from USD68.93 at the close Thursday.

Gold was quoted at USD1,895.00 an ounce at the London equities close, firm against USD1,891.30 late Thursday.

Financial markets in London will be closed on Monday for the Spring Bank holiday, while markets in New York will also be closed for Memorial Day.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com