LONDON MARKET CLOSE: Stocks sink as aggressive rate hike fears mount

(Alliance News) - Stocks in London ended firmly in the red on Friday as investors returned their focus to the US Federal Reserve's plans to ramp up interest rates.

The FTSE 100 ended down 90.88 points, 1.2%, at 7,494.13 - ending the week 0.7% lower.

The mid-cap FTSE 250 index closed down 451.74 points, or 2.0%, at 22,263.24 - off 2.1% for the week.

The AIM All-Share index lost 24.37 points, or 2.1%, at 1,132.08 - ending the week down 2.5%.

The Cboe UK 100 index closed down 1.2% at 743.57 points. The Cboe 250 ended down 1.8% at 19,982.05, and the Cboe Small Companies finished down 1.1% at 15,631.18.

The CAC 40 stock index in Paris closed down 1.8%, while the DAX 40 in Frankfurt shed 1.9%.

"Bearish sentiment is dominating the markets as stocks, oils and metals are enduring large declines. The mood in the markets has been progressively getting worse recently as traders are preparing themselves for the prospect of the Federal Reserve hiking interest rates three or four times this year, there is speculation the first rise will be in March," said Equiti Capital analyst David Madden.

"The pessimism peaked today as European equities buckled under the pressure that has been impacting US shares for the last few sessions," Madden added.

In the FTSE 100, Burberry Group ended the best performer, up 0.7%. The fashion house on Thursday brought forward the start date of its new chief executive, Jonathan Akeroyd. He will now start on March 15, two weeks earlier than his original start date of April 1.

Cigarette manufacturers British American Tobacco and Imperial Brands ended among a handful of stocks in the green, up 0.5% and 0.1% respectively, amid a flight to safety.

In the FTSE 250, 4imprint closed up 1.7% after the promotional merchandise marketer said its revenue significantly increased and expects profit to be at the upper end of forecasts, due to a strong recovery over the year.

At the other end of the midcaps, Playtech was the worst performer, down 14%, after suitor JKO Play Ltd confirmed it does not intend to make an offer to acquire the London-listed gambling software company.

The board of the gambling company continues to recommend that shareholders vote to accept the offer from Sydney-listed Aristocrat, worth GBP2.1 billion at 680 pence per share. It is to date the only "firm" offer Playtech has received, noted previously by Aristocrat.

Playtech had previously agreed to be acquired by Aristocrat Leisure Ltd in mid-October, but delayed the vote from January 12 to February 2 to give JKO more time to prepare an offer. It had received an approach by JKO back in November. JKO is controlled by Keith O'Loughlin and Eddie Jordan, the former boss of a Formula One team.

According to the Financial Times, JKO had intended to sell Playtech's Italian business Snaitech to FTSE 100-listed Entain in order to help fund the bid, citing two people involved in the process. Entain ended the worst blue-chip performer, down 4.6%.

The pound was quoted at USD1.3550 at the London equities close, down sharply from USD1.3657 at the close Thursday.

On the economic front, UK retail sales in December saw the largest monthly fall since January last year as non-food store sales sunk, figures from the Office for National Statistics showed.

UK retail sales fell 3.7% in December month-on-month with the decline driven by non-food store sales which fell 7.1%. Retailers reported that Omicron hit footfall last month. Automotive fuel sales volumes fell by 4.7% as work from home guidance led to reduced travel.

"After strong pre-Christmas trading in November, retail sales fell across the board in December, with feedback from retailers suggesting Omicron impacted on footfall," said Heather Bovill, ONS deputy director for Surveys & Economic Indicators. "As Plan B restrictions in England meant more people working from home, there was a notable fall for fuel sales. However, despite the fall in December, retail sales are still stronger than before the pandemic."

The euro stood at USD1.1343 at the European equities close, down from USD1.1359 late Thursday. Against the yen, the dollar was trading at JPY113.75, down from JPY114.00.

Stocks in New York were mostly lower at the London equities close amid concerns about rising inflation and potential interest rate hikes, ahead of the US Federal Reserve's first policy meeting of 2022 next week.

The DJIA was up 0.1%, the S&P 500 index down 0.3% and the Nasdaq Composite down 0.5%.

On the corporate front, Netflix plunged 24% after the streaming services provider late Thursday reported earnings which saw rising competition and slowing subscriber growth take the gloss off a strong end to 2021.

For the three months to December 31, revenue rose to USD7.71 billion from USD6.64 billion in the fourth quarter of 2020. Fourth quarter net income was USD607 million, or USD1.33 per diluted share, rising from USD542 million, or USD1.19 diluted earnings per share, the year before.

The Los Gatos, California-based firm added 8.28 million global paid net subscribers in the fourth quarter, down from 8.51 million in the corresponding period a year earlier. Netflix at the time of its third quarter results release had guided to 8.5 million additions in the final three months of 2021.

Looking ahead, Netflix said for the first quarter of 2022, it expects to add 2.5 million subscribers, down from the 3.98 million it added at the same time in 2021.

Brent oil was quoted at USD87.74 a barrel at the equities close, down sharply from USD88.67 at the close Thursday.

Gold stood at USD1,833.20 an ounce at the London equities close, lower against USD1,845.00 late Thursday.

The economic events calendar on Monday has PMI readings from Germany, the eurozone, the UK and US at 0830 GMT, 0900 GMT, 0930 GMT and 1445 GMT respectively.

The UK corporate calendar on Monday has annual results from Driver Group and a trading statement from Computacenter.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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