LONDON MARKET CLOSE: Stocks edge higher as UK economy expands in April

(Alliance News) - Stocks in London ended higher on Friday after data showed the UK economy grew in April as lockdown restrictions eased, though the pound edged lower as the figure missed market forecasts.

The FTSE 100 index closed up 45.88 points, or 0.7%, at 7,134.06 - ending the week up 0.8%. The FTSE 250 ended up 125.37 points, or 0.6%, at 22,734.13 - ending the week flat. The AIM All-Share closed up 3.03 points, or 0.2%, at 1,249.65, finishing the week down 0.1%.

The Cboe UK 100 ended up 0.7% at 711.10, the Cboe UK 250 closed up 0.6% at 20,469.40, and the Cboe Small Companies ended up 0.2% at 15,160.60.

The CAC 40 in Paris and the DAX 30 in Frankfurt both ended 0.8% higher.

"It's been a decent end to the week for markets in Europe with the FTSE 100 hitting a one-month-high after edging above 7,120 for the first time since May 10, with the FTSE 250 also doing well after experiencing three days of losses. It's certainly helped that today's UK economic data showed the economy grew by 2.3% in April, with services activity driving most of the improvement," said CMC Markets analyst Michael Hewson.

In the FTSE 100, miners Thungela Resources, Glencore and Anglo American closed up 25%, 2.9% and 1.5% respectively as metal prices firmed.

Spot platinum advanced to USD1,156.48 an ounce on Friday from USD1,143.40 on Thursday, while spot palladium was quoted at USD2,796.00 an ounce, up from USD2,768.20.

In the FTSE 250, Sanne Group ended the best performer, up 8.8% at 840 pence, after the alternative asset and corporate services provider agreed to enter talks with Cinven, after the private equity firm raised its takeover offer for Sanne to GBP1.42 billion.

The London-based firm has agreed to extend the put-up-or-shut-up deadline for Cinven to either announce a firm offer or walk away. The new deadline is July 9. There can be no certainty an offer will be made, Sanne said.

Cinven has made five unsolicited approaches to Sanne. Its latest is for 875p per share in cash. The company's shares closed at 772.00p each in London on Thursday, with the latest offer representing a premium of 13%.

At the other end of the midcaps, Domino's Pizza closed down 2.3% after the pizza chain said Chief Financial Officer Neil Smith is leaving the company to take up another unspecified opportunity. Domino's says it will now commence a search process to find a successor, with Smith set to depart on November 26 following completion of his notice period.

Elsewhere, G7 leaders opened their first in-person talks in nearly two years, with an expected pledge to donate one billion Covid vaccine doses to poor countries on the agenda in a show of Western democratic cohesion.

The club of leading economies - Britain, Canada, France, Germany, Italy, Japan and US - say a joint approach is the world's best chance for recovering from the global health crisis, and tackling climate change.

Welcomed by UK Prime Minister Boris Johnson to the beachside summit venue in Carbis Bay, southwest England, the leaders posed for a family photo before opening their first session of talks on "building back better" after the pandemic.

US President Joe Biden had set the tone, ditching predecessor Donald Trump's isolationist stance to ram home a message of resolve by the G7 and NATO against both Beijing and Moscow, as he heads into his first sit-down with Russian President Vladimir Putin next week in Geneva.

Johnson will have talks with German Chancellor Angela Merkel and other key EU players, including France President Emmanuel Macron and European Commission President Ursula von der Leyen, as efforts continue to resolve the dispute over Northern Ireland's post-Brexit arrangements.

The pound was quoted at USD1.4105 at the London equities close, down from USD1.4174 at the close Thursday, after the latest UK economic growth figures missed forecasts.

The UK's economic recovery gathered pace in April, figures from the Office for National Statistics showed on Friday.

Gross domestic product expanded 2.3% month-on-month in April, marking the fastest monthly growth since July 2020, as lockdown restrictions eased. This follows a rise of 2.1% growth for March, though April's reading was slightly below expectations, cited by FXStreet, for an expansion of 2.4%.

While UK GDP remains 3.7% below pre-pandemic levels, it is now 1.2% above the initial recovery peak in October 2020.

In mid-April, beer gardens, hairdressers and non-essential retail re-opened in England. The service sector grew by 3.4% in April, the ONS said, with consumer-facing services growing by 13%.

Meanwhile, industrial production fell by 1.3% in April with the manufacturing sector contracting 0.3%, and construction output shrinking 2.0% following "exceptionally strong" growth in March.

Analysts at FXPro commented: "The UK's statistics package released earlier today is a cause for caution. The epicentre of the recovery has shifted from manufacturing and construction to the service sector. There is little cause for optimism here as, in absolute terms, the [industrial production] index is 3% below levels for February 2020 and 6.5% below the local peak in March 2019. In other words, we see a renewed trend towards stagnation in the sector, probably caused by Brexit."

The euro stood at USD1.2096 at the European equities close, down from USD1.2168 late Thursday. Against the yen, the dollar was trading at JPY109.80, up from JPY109.56 late Thursday.

Stocks in New York were flat at the London equities close, as investors were still digesting Thursday's data that showed US inflation continues to run hot.

Investors have been concerned that the global economic recovery would push prices up and prompt the US Federal Reserve and other central banks to raise interest rates and wind down bond-buying programmes.

Data released Thursday showed the annual rate of US consumer price inflation at its highest level in 13 years, but the S&P 500 still finished the day's trading at a record high. Attention now shifts to the Fed's monetary policy meeting next week.

Fawad Razaqzada, analyst at ThinkMarkets, said: "It appears as though the market is so confident that the Fed will maintain its current policy stance" despite the higher inflation.

Brent oil was quoted at USD72.85 a barrel at the equities close, up from USD72.45 at the close Thursday, after the International Energy Agency said oil demand is set to rise above pre-pandemic levels by the end of next year.

Shares in London-listed oil majors BP, Royal Dutch Shell 'A' and 'B' shares closed up 0.3%, 0.8% and 1.0% respectively, tracking spot oil prices higher.

The North Sea benchmark touched an intraday high of USD72.95 at midday - its highest level since late 2018.

In its first detailed look at next year in its regular monthly review of the oil market, the IEA sees a gradual return of demand as vaccine distribution widens and economic activity returns to normal in many countries and sectors.

Gold was quoted at USD1,894.00 an ounce at the London equities close, marginally higher against USD1,891.85 late Thursday.

The economic events calendar on Monday has eurozone industrial production at 1000 BST. In addition, financial markets on Monday will be closed in Hong Kong and Shanghai for the Dragon Boat Festival holiday.

The UK corporate calendar on Monday has annual results from fashion retailer Ted Baker and a trading statement from recruiter SThree.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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