London close: Stocks finish firmer in subdued trading

(Sharecast News) - London stocks closed in positive territory on Friday, bolstered by hopes of an interest rate cut in the United States, although the gains were modest as trading remained subdued.

The FTSE 100 index rose 0.39% to end the day at 8,273.09 points, while the FTSE 250 climbed 0.96% to close at 20,895.37 points.

In currency markets, sterling was last up 0.1% on the dollar to trade at $1.3137, as it increased 0.03% against the euro, changing hands at €1.1855.

"European and US equity indices saw impressive gains this week, taking the Dow and the S&P 500 within a whisker of their record highs," said IG senior technical analyst Axel Rudolph.

"Following data showing that US consumer sentiment is at a 4-month high, investors are now looking forward to next week's probable first US Fed interest rate cut, possibly by as much as 50 basis points.

"It'll be the first in over four years after holding rates at a 23-year high of 5.25% to 5.5% since last July."

Rudolph also noted that the Bank of England was also holding a monetary policy meeting next week, at which it was not expected to cut its rates.

"After a dismal start to the week and a fall in the crude oil price to levels last traded in May 2023, the commodity is on track for its third straight day of gains and first positive week in a month.

"The gold price continues to hit new record highs and is fast approaching the psychological $2,600 per troy ounce mark amid probable central bank buying."

Inflation expectations decline further in the UK, US consumer sentiment improves

In economic news, public expectations for inflation in the UK declined to their lowest level in three years, according to the Bank of England's latest quarterly inflation attitudes survey.

Inflation expectations for the coming year dropped to 2.7% in August from 2.8% in May, marking the lowest reading since August 2021.

While expectations for the subsequent 12 months remained steady at 2.6%, the five-year outlook edged up slightly to 3.2% from 3.1%.

The survey is closely watched by the Bank's Monetary Policy Committee (MPC) as it informs future monetary policy decisions.

Committee members are scheduled to meet next Thursday, with the current interest rate standing at 5%.

Most analysts expected rates to remain unchanged, with a potential 25 basis point cut expected later in the year.

Inflation had reached the Bank's 2% target earlier in the summer but ticked up to 2.2% in July, according to data released last month.

The Bank of England projected that inflation will continue to rise modestly in the coming months, peaking around 2.75% before falling below 2% next year.

On the continent, industrial production in the eurozone contracted by 0.3% in July, aligning with economists' expectations, after a revised flat reading in June.

That marked the third decline in output over the past four months, signalling ongoing challenges in the manufacturing sector.

On an annual basis, production was 2.2% lower compared to July 2023, an improvement from the 4.1% decline recorded in June.

"We think that today's poor eurozone industrial data underscores weak near-term prospects for the sector and poses a downside risk to our 0.3% GDP growth call in the third quarter," said Mateusz Urban, senior economist at Oxford Economics.

However, Urban said industrial fortunes should improve in early 2025 "as a turn in inventory cycle, a modest pick-up in consumer demand and lower interest rates will all provide support to the sector".

Across the Atlantic, US consumer sentiment improved in September to its highest point since May, according to a preliminary survey by the University of Michigan.

The consumer sentiment index rose to 69.0 from 67.9 in August, surpassing analysts' expectations of 68.0. Compared to September 2023, the index increased from 67.8.

The index measuring current economic conditions climbed to 62.9 from 61.3 in the previous month but was down from 71.1 a year earlier.

The index of consumer expectations, which reflects optimism about the future, rose to 73.0 from 72.1 in August and 65.7 in September last year.

"Sentiment is now about 40% above its June 2022 low, though consumers remain guarded as the looming election continues to generate substantial uncertainty," said surveys of consumers director Joanne Hsu.

"A growing share of both Republicans and Democrats now anticipate a Harris win.

"Consistent with their divergent views of the implications of a Harris presidency for the economy, partisan gaps in sentiment inched up."

Gold miners shine, GSK and Rio Tinto slip

On London's equity markets gold mining companies led the risers as prices for the precious commodity soared to new record highs above $2,500 per ounce.

Shares of Fresnillo climbed by 5.67%, and Endeavour Mining saw a substantial increase of 10.54%.

"The glittering performance has been buoyed by sustained high levels of purchases by central banks in the face of a weakening dollar, geopolitical uncertainty, and the downward-looking trajectory for interest rates," said Derren Nathan, head of equity research at Hargreaves Lansdown.

"These conditions could persist for a while, so there's potential for the high-water mark to rise further in the coming months."

Endeavour Mining was further boosted by announcing that it had achieved commercial production at its mines in Senegal and Côte d'Ivoire.

Vodafone Group shares rose 1.07%, even after the Competition and Markets Authority said that its planned merger with Three could lead to a "substantial" lessening of competition and higher prices for consumers.

The CMA highlighted concerns in both the supply of mobile telecommunications services to end customers and wholesale markets.

Infrastructure firm Balfour Beatty edged up 0.48% after being awarded a £363m contract by National Grid.

The company said it would deliver the Bramford to Twinstead Reinforcement project, enhancing the UK's electricity transmission infrastructure.

Flutter Entertainment, the owner of Paddy Power, closed flat, reversing earlier losses.

The company earlier announced the acquisition of a 56% stake in NSX Group, a Brazilian operator of the Betnacional brand, for around $350m.

On the downside, GSK slipped 0.31%, despite announcing that China's health authority granted its blood cancer treatment Blenrep a 'breakthrough therapy designation'.

In broker note action, AstraZeneca fell by 1.01% following a downgrade to 'sell' by Deutsche Bank, while Rio Tinto gained 0.77% after Macquarie upgraded the mining giant to 'outperform'.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,273.09 0.39% FTSE 250 (MCX) 20,895.37 0.96% techMARK (TASX) 4,894.17 0.33%

FTSE 100 - Risers

Fresnillo (FRES) 568.00p 5.67% Entain (ENT) 734.60p 2.86% Smurfit Westrock (DI) (SWR) 3,472.00p 2.84% JD Sports Fashion (JD.) 148.90p 2.76% Airtel Africa (AAF) 118.50p 2.42% Smith (DS) (SMDS) 467.00p 2.41% Convatec Group (CTEC) 235.00p 2.17% Anglo American (AAL) 2,104.50p 2.06% Frasers Group (FRAS) 845.50p 2.05% Intermediate Capital Group (ICG) 2,294.00p 2.05%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 289.80p -2.03% Diageo (DGE) 2,470.00p -1.44% AstraZeneca (AZN) 11,928.00p -1.01% Tesco (TSCO) 365.90p -0.84% Sage Group (SGE) 1,031.00p -0.67% Compass Group (CPG) 2,436.00p -0.65% Marks & Spencer Group (MKS) 349.80p -0.57% Darktrace (DARK) 584.40p -0.51% Vistry Group (VTY) 1,365.00p -0.51% Whitbread (WTB) 3,077.00p -0.32%

FTSE 250 - Risers

Endeavour Mining (EDV) 1,836.00p 10.54% TI Fluid Systems (TIFS) 145.80p 7.36% Watches of Switzerland Group (WOSG) 392.00p 5.26% Trustpilot Group (TRST) 228.50p 4.82% Discoverie Group (DSCV) 603.00p 4.51% Hochschild Mining (HOC) 182.40p 3.99% Wood Group (John) (WG.) 128.60p 3.63% Ashmore Group (ASHM) 185.80p 3.63% Bridgepoint Group (Reg S) (BPT) 357.60p 3.47% Genus (GNS) 1,984.00p 3.33%

FTSE 250 - Fallers

Spire Healthcare Group (SPI) 243.50p -1.81% Senior (SNR) 162.20p -1.22% Investec (INVP) 569.00p -1.13% Petershill Partners (PHLL) 216.00p -0.92% Renishaw (RSW) 3,400.00p -0.87% XPS Pensions Group (XPS) 293.00p -0.68% TBC Bank Group (TBCG) 2,825.00p -0.53% Pantheon International (PIN) 310.50p -0.48% Babcock International Group (BAB) 474.00p -0.42% Clarkson (CKN) 3,600.00p -0.41%