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LONDON MARKET CLOSE: FTSE 100 surges almost 3% in strong week

London’s FTSE 100 and its blue-chip peers in Paris and Frankfurt hit record highs on Friday, riding a wave of interest rate optimism, though it was a slightly more cautious start in New York, where stocks traded mixed.

The FTSE 100 index closed up 52.41 points, 0.6%, at 8,433.76, after hitting a record high 8,455.77 earlier. The FTSE 250 ended up 114.08 points, 0.6%, at 20,645.38, and the AIM All-Share ended up 6.17 points, 0.8%, at 789.87.

For the week, the FTSE 100 added 2.7%, the FTSE 250 rose 2.4%, while the AIM All-Share also climbed 2.4%.

The Cboe UK 100 was up 0.9% at 844.75, the Cboe UK 250 was up 0.9% at 17,973.70, and the Cboe Small Companies was up 0.3% at 16,089.25.

In European equities on Friday, the CAC 40 in Paris closed up 0.4%, while the DAX 40 in Frankfurt added 0.5%. Both the CAC and DAX hit their best levels too.

In New York, the Dow Jones Industrial Average was 0.2% higher, the S&P 500 was flat, though the Nasdaq Composite was down 0.1%.

SPI Asset Management analyst Stephen Innes commented: ‘For a Federal Reserve already short on justifications for implementing rate cuts, the emergence of ’negative’ news may paradoxically provide some relief. In such a context, a slight downturn in economic indicators could be seen as offering the Fed a more legitimate rationale for adjusting its monetary policy stance.’

Sterling was quoted at $1.2513 late on Friday afternoon, largely flat from $1.2511 at the London equities close on Thursday. The euro traded at $1.0769, down from $1.0775. Against the yen, the dollar rose to JP¥155.87 versus JP¥155.61.

Rate cut hope in the UK also lifted equities, following a doveish tinge to the latest Bank of England bank rate hold.

The Bank of England’s Monetary Policy Committee on Thursday voted by a majority of 7 to 2 to maintain bank rate at 5.25%. Two members preferred to reduce the bank rate by 0.25 percentage points, to 5.00%.

Swissquote analyst Ipek Ozkardeskaya commented: ‘None of the nine MPC members voted to hike the policy rate yesterday, seven of them voted to maintain it, and two of them voted to cut – as Dave Ramsden opted for an immediate rate cut. And because the committee members has a track record of having followed his view in the past, Mr Ramsden’s vote to cut has been taken as a very strong signal that the BoE will be cutting its rates soon.

‘How soon? Governor Bailey said that the June meeting ’is neither ruled out nor a fait accompli’. We have two sets of inflation and labour data before the next decision, so the expectations will likely swing but in the wake of the BoE meeting, the market gives a 50% for a June cut, and an August cut is seen as a sure thing.’

In London, housebuilders ended higher on the expectation that UK interest rates could soon be cut. Persimmon rose 1.3%, while Taylor Wimpey added 1.1%.

Rightmove fell 4.3%. It left its top and bottom line outlook for 2024 unchanged, but lowered its guidance for the average revenue per advertiser metric, amid a ‘recent change in customer mix’.

It said its estate agency net memberships have risen by around 250 in the first four months of the year.

Rightmove said the rise in memberships is ‘positive for revenue and profit’, though it noted that lettings-only agents usually have a lower average revenue per advertiser.

Its new homes offering has seen 90 new developments added to the Access, entry-level package, tailored for housing associations. Similar to the increase in memberships, this is positive for revenue and profit, but has a lower ARPA.

Rightmove said that its ARPA growth for the first four months of the year would have been in line with guidance, were it not for a ‘recent change in customer mix’.

As a result, ARPA for 2024 is expected to grow in the £75 to £85 range, its guidance lowered from £100 to £110.

Mothercare tumbled 19% after it said it was pursuing refinancing options with its senior lender, following a tough financial year in which franchise partner sales were dragged down by weak trading in the Middle East.

In a trading update for the 53 weeks to March 30, Mothercare said that retail sales by its franchise partners fell 13% to £281 million from £323 million a year prior. The company specialises in clothes, prams and other children’s essentials.

Mothercare added that adjusted earnings before interest, tax, depreciation and amortisation for the year were ‘marginally’ above the £6.7 million delivered in financial 2023.

The company said that the Middle Eastern markets, representing around 41% of total retail sales, continued to be challenging over the year.

‘In addition to the global economic uncertainties which are impacting our retail sales, in many of our territories our partners are still clearing inventory due to the suppressed demand during Covid-19,’ Mothercare said.

Brent oil was trading at $83.66 a barrel at the time of the London equities close on Friday, slightly higher than $83.62 late Thursday.

Gold was quoted at $2,362.94 an ounce late on Friday afternoon, higher than $2,332.88 on Thursday.

Monday’s economic calendar is quiet, though there is a Chinese inflation reading due on Saturday.

The local corporate calendar has half-year results from technical products and services provider Diploma.

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