(Alliance News) - Stocks in London were higher at midday on Friday with the FTSE 100 benefiting from strength in the US dollar, whilst the midcaps were boosted the Entertainment One takeover.
In addition, investors await the high-profile keynote speech from Federal Reserve Chair Jerome Powell at 1500 BST as the central bank's symposium at Jackson Hole, Wyoming continues.
The FTSE 100 was up 56.51 points, or 0.8%, at 7,184.69. The FTSE 250 index of London mid-caps was up 192.57 points, or 1.0%, at 19,397.65. The AIM All-Share was up 0.6% at 874.21.
The Cboe UK 100 index was up 1.0% at 12,181.12. The Cboe UK 250 was up 1.3% at 17,292.82. The Cboe UK Small Companies was up 0.2% at 10,922.13.
"There was signs of new life in the FTSE 100 ahead of the bank holiday weekend with the blue chip index jumping. A strong US dollar versus the pound benefited several companies which do a lot of business in the former currency," said AJ Bell's Russ Mould.
The pound was quoted at USD1.2205 at midday, down from USD1.2250 at the London equities close on Thursday, largely surrendering gains earlier on Friday caused by Brexit optimism.
In Paris the CAC 40 was up 0.5%, while the DAX 30 in Frankfurt was up 0.4%.
CMC Markets analyst David Madden: "Stock markets are on the rise this morning as traders look ahead to Jerome Powell's update at the Jackson Hole symposium at 1500 BST. Dealers are taking the view the head of the US central bank will deliver a dovish update, and pave the way for a rate cut next month.
"Powell has come under fire from President Trump who has been demanding the Fed lower rates aggressively in a bid to soften the US dollar, and boost US exports, but Jerome Powell might stress the bank's independence and choose to convey a neutral message. After all, the unemployment rate is low, inflation is firm, and retail sales are robust, so there is a strong argument for the Fed to hold fire in September."
Stocks in New York were set for a higher open ahead of Powell's speech, with the DJIA called up 0.4%, the S&P 500 index up 0.5% and the Nasdaq Composite up 0.5%.
US President Donald Trump has been openly critical of Powell and demanded the Fed cut rates further to prop up the economy.
Analysts at FXPro said: "It is widely expected that the Fed head will cement expectations for rates cut in September and note the flexibility of the policy. But the Fed heads since Greenspan, ie since the 1980s, have differed in the opposite way - the ability to create a maximum fog around the upcoming decisions, so as not to limit themselves in subsequent actions. It is much more likely that Powell will blame the trade wars for the deterioration of economic prospects and link his next steps with the negotiations.
"The Fed is also being dragged into a kind of tug-of-war in expectations of rates. Markets are waiting for very aggressive steps to reduce Fed rates, assuming three more cuts by the end of the year, which supports stock prices and holds back the strengthening of the dollar. Fed officials tried to lower the level of these expectations during the week. Both Esther George and Patrick Harker, who voted in favour of the cut, noted in their speeches this week that the economy does not need additional stimulus at the moment. In our opinion, this line is most likely to be expected from Powell: we are ready to support the economy by reducing rates if necessary, but so far there is no such need."
Sterling also appreciated sharply on Thursday as investors reacted positively to comments from German Chancellor Angela Merkel and French President Emmanuel Macron who agreed to give UK Prime Minister Boris Johnson time to find an alternative to the Irish backstop.
"On the whole, nothing has really changed, but the markets' eager response to what amounts to little more than empty rhetoric does suggest that sentiment could be turning for sterling and should we get any tangible progress on this front in the coming weeks then there's scope for a significant recovery in the pound," said XTB analyst David Cheatham.
On the UK corporate front, Entertainment One was the best performer in the FTSE 250, up 32% at 586.50 pence after US toymaker Hasbro late Thursday agreed to acquire the maker of the Peppa Pig children's TV show producer in an all-cash transaction valued at GBP3.3 billion.
Under the terms of the agreement, Entertainment One shareholders will receive GBP5.60 in cash for each share, which represents a 31% premium to the company's 30-day volume weighted average price as of Thursday.
Hasbro said the acquisition will advance its position as a global play and entertainment company, adding "beloved" preschool brands to its portfolio. Moreover, the board of directors of Entertainment One, after consultation with its financial advisors as to the financial terms of the transaction and its legal advisors, unanimously determined that the transaction is in the best interests of the company and has recommended that Entertainment One shareholders vote in favour of the deal.
Elsewhere in the FTSE 250, Computacenter was up 4.3% after the reiterated its recently-upgraded guidance for 2019 despite a marginal reduction in profit in the first half.
The group reported a 2.3% decline in pretax profit in the six months to the end of June to GBP50.8 million from GBP52.0 million a year earlier, despite revenue jumping by 21% to GBP2.43 billion from GBP2.00 billion. On a constant currency basis, revenue increased by 22%.
Computacenter declared an interim dividend of 10.1 pence, up 16% from 8.7p paid the year prior.
The euro stood at USD1.1057 at midday, against USD1.1075 at the European equities close Thursday.
Meanwhile on AIM, Eddie Stobart Logistics said Chief Executive Alex Laffey is stepping down immediately and the company's shares have been temporarily suspended.
The company has promoted Sebastien Desreumaux, currently CEO of iForce and head of Contract Logistics at Eddie Stobart, to group CEO. Desreumaux will join the logistics firm's board "in due course".
The company has been undertaking a review alongside its auditors over its interim results and "is applying a more prudent approach to revenue recognition, re-assessing the recoverability of certain receivables, as well as considering the appropriateness of certain provisions".
The company has applied to have its shares suspended from AIM trading, and the suspension is now in place. The company said the suspension is "pending clarification of the impact" of its new revenue recognition approach.
Still to come in the economic events calendar is US new home sales data at 1500 BST.
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Computacenter (CCC)
