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London close: Stocks manage some gains on quiet Friday

By Josh White
Sunrise, Looking Up, Hyatt Centre, Chicago, Illinois, America

London stocks managed to finish in the green on Friday, as Wall Street put in a truncated post-Thanksgiving session, with little in the way of corporate or economic news to provide direction.
The FTSE 100 ended the session up 0.27% at 7,486.67, and the FTSE 250 was 0.03% firmer at 19,545.70.

Sterling was little changed by the end of the day, and was last trading down 0.02% on the dollar at $1.2111, while it was flat against the euro at €1.1635.

“The FTSE 100 certainly looks in need of something to move it on, with the index having barely moved over the last three sessions,” said IG chief market analyst Chris Beauchamp.

“It now seems vulnerable to at least a short-term drop, although if oil prices can rejoin the risk party at least there is hope that oil stocks can help prop the index for the time being.”

On the economic front, the Office for National Statistics was forced to revise up its producer price inflation figures due to an error, meaning factory gate inflation had recently been higher than published.

Headline annual output producer price inflation (PPI) was revised up by an average of 1.8 percentage points for the January-to-October period, with the reading for last month revised to 17.2% from 14.8%.

“The error was because of diesel fuel not being allocated a correct weight within the output price index, which resulted in petroleum products being around half the correct weight of 6.5% since the start of the year,” the ONS said in a statement.

“The correction in output PPI weights, and the inclusion of diesel prices within the data, now mean that from January to October petroleum products have the largest positive contribution to the 12-month rate of output inflation.”

For October, the ONS said petroleum products contributed 6.1 percentage points to the 12-month rate, revised up from zero.

“This is notably higher than the second main contributor, food products, which has a revised contribution of 3.5 percentage points in October.”

It also revised up slightly its October reading for annual input PPI to 19.5% from 19.2%.

“We are adopting additional system checks to ensure that this does not happen in the future.”

Elsewhere, UK car production returned to growth in October, rising 7.4% to 69,524 units, according to the latest figures from the Society of Motor Manufacturers and Traders (SMMT).

The industry body said the rise followed September’s fall, which came after four consecutive months of growth.

It said that turbulence showed how supply chain volatility, particularly in global chip shortages, was continuing to affect UK car manufacturers.

Although positive, with production for both home and overseas markets up 12.5% and 6.3% respectively, the SMMT said October’s performance was still 48.4% below 2019’s total of 134,669 units, and 52.8% down from the five-year pre-Covid average for the month.

“A return to growth for UK car production in October is welcome – though output is still down significantly on pre-Covid levels amid turbulent component supply,” said SMMT chief executive Mike Hawes.

“Getting the sector back on track in 2023 is a priority, given the jobs, exports and economic contribution the automotive industry sustains.”

On the continent, the German economy grew more than initially estimated in the third quarter, according to data from the Destatis federal statistics office.

GDP rose 0.4% on the previous quarter, coming in ahead of an initial estimate of 0.3% growth.

Compared with the same quarter a year earlier, GDP rose 1.3%, versus expectations of 1.2%.

German consumer sentiment was meanwhile expected to continue to stabilise next month, according to a survey from market research outfit GfK.

Its forward-looking consumer sentiment index for December printed at -40.2, up 1.7 points from November.

Economists had been expecting a reading of -39.6.

The survey showed that the propensity to buy index ticked down 1.1 points to -18.6, while the income expectations index rose to -54.3 from -60.0.

Finally in economic news, China said earlier that it would cut its reserve requirement ratio for banks next month as it looked to bolster the economy.

The People’s Bank of China announced a 25-basis point cut from 5 December, for all banks except those already charging a 5% ratio.

It followed an earlier 25-basis points cut in April for all banks.

The move – which was expected after the State Council called for more efforts to support the economic recovery – was expected to release CNY 500bn of liquidity into the economy.

“How effective that will prove to be when cities are seeing restrictions and effective lockdowns reimposed is hard to say,” said Oanda market analyst Craig Erlam.

“But combined with other measures to boost the property market and ease Covid curbs, the cut could be supportive over the medium term when growth remains highly uncertain.”

On London’s equity markets, Mike Ashley’s Frasers Group closed up 1.14% after it was confirmed that it bought bespoke tailors Gieves & Hawkes.

Energy giants BP and Shell gained 0.99% and 1.05%, respectively, as investors kept an eye out for any fresh headlines around the G7 and European Union’s proposed price cap on Russian crude oil exports.

Imperial Brands was ahead 1.24% after a price target upgrade from Deutsche Bank. to 2,350.0p from 2,250.0p.

Elsewhere, Lloyds Banking Group nudged 0.81% higher after an upgrade to ‘outperform’ from ‘underperform’ at RBC Capital Markets, but NatWest Group was 1.04% lower after a downgrade to ‘sector perform’ from ‘outperform’.

Continuing on the downside, energy utility SSE reversed earlier gains to slip 0.43%, after announcing it was selling a 25% stake in its electricity transmission network business to the Ontario Teachers’ Pension Plan Board for £1.46bn.

The company said the deal would “unlock significant growth in both the transmission business and across the wider SSE group”.

Housebuilders fell as Berenberg reiterated its cautious stance on the sector, initially outlined in September.

“As a result of further declines in affordability, we lower our base-case forecasts for the UK housing market and cut profit before tax forecasts by circa 40%, on average,” Berenberg said.

“Importantly, we do not expect the sector-wide trough in earnings to occur until 2024.

“Indeed, we do not yet believe that company valuations are attractive enough for us to turn more positive on the sector and we maintain just two buy ratings, primarily for stock-specific reasons.”

Bellway was down 0.64%, Vistry Group slid 1%, Redrow lost 0.98%, and Taylor Wimpey was 1% weaker.

Trendy bootmaker Dr. Martens tumbled further, losing 6.23% after issuing a profit warning on Thursday as direct-to-consumer sales softened in the second quarter.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,486.67 0.27%
FTSE 250 (MCX) 19,545.70 0.03%
techMARK (TASX) 4,432.38 0.43%

FTSE 100 – Risers

Airtel Africa (AAF) 122.30p 1.41%
Smith & Nephew (SN.) 1,103.50p 1.33%
Imperial Brands (IMB) 2,126.00p 1.24%
Frasers Group (FRAS) 888.00p 1.14%
BAE Systems (BA.) 806.80p 1.13%
Shell (SHEL) 2,367.00p 1.05%
Admiral Group (ADM) 2,128.00p 1.00%
BP (BP.) 488.35p 0.99%
Scottish Mortgage Inv Trust (SMT) 769.20p 0.92%
Burberry Group (BRBY) 2,113.00p 0.91%

FTSE 100 – Fallers

Ocado Group (OCDO) 649.80p -2.05%
United Utilities Group (UU.) 1,064.50p -1.98%
Centrica (CNA) 93.94p -1.96%
Endeavour Mining (EDV) 1,682.00p -1.75%
RS Group (RS1) 941.50p -1.72%
Auto Trader Group (AUTO) 577.40p -1.64%
Rightmove (RMV) 561.20p -1.47%
Antofagasta (ANTO) 1,341.00p -1.43%
Harbour Energy (HBR) 309.90p -1.27%
SEGRO (SGRO) 828.00p -1.10%

FTSE 250 – Risers

Discoverie Group (DSCV) 815.00p 4.62%
PureTech Health (PRTC) 271.50p 4.22%
Vietnam Enterprise Investments (DI) (VEIL) 545.00p 3.61%
ICG Enterprise Trust (ICGT) 1,168.00p 3.00%
easyJet (EZJ) 404.20p 2.74%
Virgin Money UK (VMUK) 175.75p 2.60%
Britvic (BVIC) 803.50p 2.42%
Genuit Group (GEN) 322.00p 2.21%
Just Group (JUST) 72.80p 2.18%
Cranswick (CWK) 3,212.00p 2.16%

FTSE 250 – Fallers

Home Reit (HOME) 60.00p -8.15%
Dr. Martens (DOCS) 207.60p -6.23%
Moonpig Group (MOON) 159.60p -5.62%
Pets at Home Group (PETS) 276.40p -3.89%
Workspace Group (WKP) 445.60p -3.80%
Petrofac Ltd. (PFC) 94.25p -3.53%
ASOS (ASC) 641.50p -3.46%
Sirius Real Estate Ltd. (SRE) 82.90p -2.93%
LXI Reit (LXI) 120.80p -2.89%
Aston Martin Lagonda Global Holdings (AML) 126.80p -2.68%

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