People sit on benches as a pelican walks past in St James’s Park, London, on Friday. Associated Press
London’s FTSE 100 gained on Friday, boosted by optimism about economic re-opening, although the index was set to post a weekly loss on weakness in energy and travel stocks.
The blue-chip FTSE 100 index rose 0.4%, with retailers Unilever and Diageo being the top boost. The index is set to end the week 1.1% lower, led by a 4.4% weekly drop in energy stocks and 6.6% fall in travel stocks.
The domestically-focussed mid-cap index gained 0.3%, lifted by low-cost air carriers Wizz Air and EasyJet , and tourism group TUI, as Britain was set to ease all lockdown restrictions from Monday.
Britain’s economy will expand rapidly this quarter as additional coronavirus-related restrictions are lifted and further pent-up demand is unleashed, a Reuters poll found, but growth is at risk from new variants of COVID-19.
“Inflation is a bit of a double-edged sword, which means demand is clearly strong but higher inflation also warrants a conversation of a tighter monetary policy. So, until we have confirmed commentary from the central bank on their stance, inflation will continue to be an overhang,” said David Madden, an analyst at Equiti Capital.
Picture used for illustrative purpose only.
The FTSE 100 has gained 9.2% so far this year on support from cheap interest rates, but higher-than-expected inflation levels, a robust labour market recovery, and hawkish central bank comments have sparked worries of an overheating economy and weighed on the index.
Among stocks, Burberry dropped 4.3% even after it said it had made an “excellent start” to its new year, with full-price sales accelerating and strong growth in leather goods and outerwear.
Miner Rio Tinto fell 1.4% after it reported a 12% fall in quarterly iron ore shipments after storms affected its West Australian operations, but is expected to report bumper results this month on soaring prices for the steel raw material.
European stocks rose on Friday as travel stocks rebounded after posting sharp losses this week, while a batch of upbeat earnings reports overshadowed concerns about rising cases of Delta variant in the continent.
The pan-European STOXX 600 index rose 0.1%. Still, the index was on course end the week flat to slightly lower.
Travel and leisure stocks gained 1.1%, with shares in UK’s Whitbread, Intercontinental Hotels and British-Airways owner IAG up almost 3%.
UK’s FTSE 100 and midcap stocks added 0.3% each ahead Britain’s lifting of all pandemic-led restrictions on Monday despite rising COVID-19 cases.
Aiding the travel and leisure sector, President Joe Biden said on Thursday the United States is reviewing when it can lift restrictions that ban most-non US citizens from travelling to the United States from much of Europe.
Picture used for illustrative purpose only.
Concerns about higher inflation and rising infections causing a slowdown in economic recovery have weighed on investors’ minds this week, driving many to the safety of bond markets and making it harder for record-high equities to build on gains.
“Markets have largely moved sideways this week, reflecting some cross-currents,” said Silvia Dall’Angelo, senior economist, at the international business of Federated Hermes.
“On one hand, a strong start to US Q2 earnings season and dovish rhetoric from central banks continued to provide support. On the other hand, several factors have weighed on the outlook, including weaker activity data out of China, signs that growth and earnings have peaked...”.
Swedbank rose 2.5% after it reported a better-than-expected profit amid a booming mortgage market and record levels of commission income.
Cartier maker Richemont slipped 1.3% even as quarterly constant-currency sales more than doubled, lifted by a strong performance in the Americas from its jewellery brands.
UK luxury group Burberry and German sportswear company Puma also fell despite strong sales numbers.
Sweden’s Ericsson tumbled 8.5% after it reported second-quarter core earnings below market estimates, hit by a decline in sales in mainland China.
UK-listed miner Rio Tinto fell 1.6% after reporting a 12% fall in quarterly iron ore shipments after storms affected its West Australian operations.
Wall Street stocks edged higher early Friday following stronger than expected US retail sales, pointing towards a positive conclusion to a choppy week in markets.
Heading into Friday’s session, two of the three major stocks indices were on track for weekly losses, reflecting unease about inflation and profit taking after a string of equity market records earlier in the month.
But investors greeted data showing retail sales rose 0.6 percent last month to $621.3 billion, beating forecasts for a decline and reflecting sales increases at department stores, electronics and appliance retailers and clothing outlets.
About 20 minutes into trading, the Dow Jones Industrial Average stood at 35,029.73, up 0.1 percent.
The broad-based S&P 500 advanced 0.1 percent to 4,365.46, while the tech-rich Nasdaq Composite Index climbed 0.2 percent to 14,573.88.
Besides data showing unexpectedly high inflation, this week also featured a restatement of the Federal Reserve’s dovish posture on monetary policy from Fed Chair Jerome Powell as well as a round of strong earnings, mostly from large banks.