LONDON MARKET OPEN: Pound holds firm despite weak UK growth figures

(Alliance News) - Stock prices in London opened lower on Friday as investors look cautiously ahead to a US inflation reading in the afternoon, while the pound held above the USD1.32 mark despite disappointing UK economic growth figures.

The FTSE 100 index was down 18.51 points, or 0.3%, at 7,302.75 early Friday. The mid-cap FTSE 250 index was down 72.55 points, or 0.2%, at 23,075.49. The AIM All-Share index also was down 0.2%, at 1,193.78.

The Cboe UK 100 index was down 0.3% at 724.36. The Cboe 250 was down 0.3% at 20,479.84, and the Cboe Small Companies was down 0.1% at 15,035.48.

In mainland Europe, the CAC 40 stock index in Paris was down 0.5%, while the DAX 40 in Frankfurt was down 0.4%.

The Japanese Nikkei 225 index closed 1.0% lower. In China, the Shanghai Composite closed down 0.2%, while the Hang Seng index in Hong Kong ended down 1.2%. The S&P/ASX 200 in Sydney finished down 0.4%.

In the FTSE 100, Associated British Foods was up 0.7%. The company said its Primark fashion chain traded ahead of expectations in the new financial year to date, with improved like-for-like sales compared to the fourth quarter of the previous year, which ended September 18. It also said margins at Primark have been ahead of expectations.

Anglo American was up 0.4% after the miner confirmed 2021 guidance and promised 35% growth over next decade at an "attractive 50% margin".

The miner expects 2021 production to be up 7% from 2020, on strong platinum-group metals performance and higher rough diamond demand.

For 2022, Anglo expects capital expenditure in a range between USD6.2 billion to USD6.7 billion. Anglo also raised its performance improvement target to USD3.5 billion to USD4.5 billion by 2023

At the other end of the large-caps, Scottish Mortgage Investment Trust was the worst performer, down 1.3%, tracking a 1.7% decline for the tech-heavy Nasdaq Composite index in New York on Thursday.

The trust has a 5.1% stake in Elon Musk's Tesla and a 5.9% holding in Jeff Bezos's Amazon. Shares in Tesla and Amazon ended down 6.1% and 1.1% in New York respectively on Thursday.

In the FTSE 250, Ashmore was the worst performer, down 3.0%, after Goldman Sachs downgraded the emerging markets-focused fund manager to Neutral from Buy.

Hilton Food Group was down 0.5% after the food packaging company said it has agreed to buy Dutch Seafood Co, the owner of smoked salmon producer Foppen, at enterprise value of EUR90.0 million.

The company said the move expands its presence in a growing protein category, as well as entering the US, a new geography for it. Hilton Food launched an equity placing to raise gross proceeds of around GBP75 million to part fund the acquisition, with the remainder coming from a bridge debt facility. Hilton said the share placing is to be conducted by Numis as sole bookrunner.

The pound was quoted at USD1.3216 early Friday, up from USD1.3191 at the London equities close Thursday, unfazed by weak UK economic growth figures from the Office for National Statistics.

UK gross domestic product advanced 0.1% in October from September, slowing from month-on-month growth of 0.6% in September. The October print missed the market estimate, cited by FXStreet, of 0.4%. The ONS said the UK economy remains 0.5% below its pre-coronavirus pandemic level.

Derrick Dunne, chief executive of You Asset Management, commented: "Despite this slowing growth, there are some real pockets of positivity among the figures. The services industry finally reached its pre-pandemic level of growth for example, with the health sector experiencing a particularly strong boost as more patients were allowed to enter GP surgeries for face-to-face appointments. The construction and production industries fared much less well however, and both made significant downward contributions to the overall number we see today.

"While October's data doesn't present immediate cause for concern, the government's 'Plan B' and the fact that further restrictions are yet to be ruled out mean the economy could be in for a rather rough few months."

The euro was priced at USD1.1291, lower from USD1.1332. Against the Japanese yen, the dollar was trading at JPY113.59, firm from JPY113.52.

Brent oil was quoted at USD74.34 a barrel Friday morning, down sharply from USD75.22 on Thursday evening. Gold stood at USD1,770.47 an ounce, lower against USD1,777.03.

Friday's economic calendar has the US consumer price index print at 1330 GMT.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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