LONDON MARKET CLOSE: Stocks mixed as investors eye central banks

(Alliance News) - Stocks in London ended mixed on Friday with miners weighing on the FTSE 100, as investors look cautiously ahead to monetary policy decisions from the US Federal Reserve and Bank of England next week.

The FTSE 100 index ended down 83.46 points, or 1.2%, at 6,944.02. For the whole of this week, the large-cap index lost 1.1%.

The mid-cap FTSE 250 index closed up 26.10 points, or 0.1%, at 23,658.94. It lost 0.6% this week.

The AIM All-Share index closed up 4.39 points, or 0.4%, at 1,276.53, shedding 1.5% this week.

The Cboe UK 100 index closed down 1.3% at 690.70. The Cboe 250 lost 0.1% at 21,354.20, and the Cboe Small Companies ended up 0.3% at 15,448.20.

In Paris, the CAC 40 stock index ended down 0.8%, while the DAX 30 in Frankfurt ended down 1.0%.

"Markets remain under pressure, and the see-saw narrative of the week seems set to continue right into the final close in the US. Although still fairly measured at present, this current selloff has the potential to be one of the most dramatic pullbacks we have seen all year, as inflation, stagflation, slowdown and virus risks all combine to knock back European and US markets," said IG Group's Chris Beauchamp.

"If the caution we have seen this week does carry over into Monday and beyond, then the next Fed meeting provides another reason to tread carefully. After Jackson Hole the tapering debate has diminished in intensity, but expect it to roar back again next week. At the Bank of England too, a similar theme will play out, given additional urgency by the higher UK inflation figures this week. Policy is unlikely to change soon, but a nod towards a reduction in purchases might pull the rug out from underneath global stock markets," Beauchamp added.

In the FTSE 100, British Airways parent International Consolidated Airlines ended the best performer, up 4.9%, amid broader optimism across the travel sector.

UK Transport Secretary Grant Shapps tweeted several changes to the UK's current holiday rules.

"We’re making testing easier for travel," Shapps said on Twitter. "From Mon 4 October, if you're fully [vaccinated] you won’t need a pre-departure test before arrival into England from a non-red country and from later in Oct, will be able to replace the day 2 PCR test with a cheaper lateral flow."

Shapps also tweeted that eight countries will come off the red list from Wednesday next week, including Turkey, Pakistan and the Maldives.

Also on October 4, the UK will introduce a new, simplified system for international travel, which will introduce a single red list.

Midcap airlines Wizz Air, easyJet and Tui closed up 2.6%, 3.9% and 6.0% respectively, while Irish carrier Ryanair Holdings was up 1.7%.

HSBC closed up 1.8% after RBC raised the Asia-focused bank to Outperform from Sector Perform and Barclays double upgraded the stock to Overweight from Underweight.

InterContinental Hotels Group ended up 2.0% after Berenberg raised the Holiday Inn and Crowne Plaza owner to Buy from Hold.

At the other end of the large-caps, Anglo American ended the worst performer down 8.1% after UBS downgraded the miner to Sell from Neutral.

Miners were lower across the board with Rio Tinto and BHP ending down 3.6% and 4.8% respectively amid lower iron ore prices.

"Miners are having a shocker after the tumble in iron ore prices - down 8% overnight, leaving the basic resources sector -2% for the day, dragged down by Anglo American [and] BHP," said Markets.com analyst Neil Wilson.

The pound was quoted at USD1.3752 at the London equities close, down from USD1.3765 at the close Thursday, after weak UK retail sales numbers.

UK retail sales declined in August from the month before, figures from the Office for National Statistics showed, with more consumers going out as lockdown measures have eased, hurting the grocery sector.

Retail sales declined 0.9% in August from July, confounding expectations of 0.5% growth, according to market consensus cited by FXStreet. It was a second straight month of lower sales. In July, they had declined 2.5% from June.

Annually, retail sales were flat, missing expectations of 2.7% growth. Retail sales had risen 2.4% annually in July. August's retail sales were, however, 4.6% above pre-virus levels.

The euro stood at USD1.1734 at the European equities close, down from USD1.1762 late Thursday. Against the yen, the dollar was trading at JPY109.92, up from JPY109.65.

On the continent, consumer prices in the euro area increased in August, figures from the statistical office Eurostat showed.

On an annual basis, the eurozone consumer price index rose 3.0% in August, accelerating from 2.2% in July.

"We slightly lift our euro inflation profile for 2022, mainly on the back of higher core price inflation and a slightly longer tailwind from energy," said analysts at Danske Bank. "We expect core inflation to peak at 2.0% in November 2021, and average 1.4% during 2022. Our profile is broadly in line with the ECB's latest forecast, but we consider market inflation fixings to be on the high side for the remainder of 2021."

Stocks in New York were lower at the London equities close as investors weighed mostly upbeat US economic data over the past week against ongoing worries over the Delta vairient of Covid-19.

The DJIA was down 0.6%, the S&P 500 index down 0.7% and the Nasdaq Composite down 0.8%.

In addition, market participants were looking out for developments on President Joe Biden's ambitious agenda for infrastructure and social spending, as well as a vote Friday by US regulators on Pfizer's proposal to provide booster shots of Covid-19 vaccines to the general public. Pfizer was off 1.1% in New York.

Brent oil was quoted at USD75.06 a barrel at the equities close, firm from USD75.00 at the close Thursday.

Gold was trading at USD1,754.70 an ounce at the London equities close, marginally lower against USD1,756.55 late Thursday.

The economic events calendar on Monday has Germany producer prices at 0700 BST. Financial markets in Japan will be closed on Monday for the Respect-for-the-Aged Day holiday.

Next week, the economic calendar is headlined by interest rate decisions from the Bank of Japan and Fed on Wednesday and BoE on Thursday.

The UK corporate calendar on Monday has annual results from Finsbury Food Group and interim results from Frenkel Topping Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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