The FTSE 100 closed down while US indexes were wavering after a week of central bank action. (Michael M. Santiago via Getty Images)
The FTSE 100 closed down and European markets were in a mixed mood on Friday, while US indexes wavered following a week of key data and central bank action.
The S&P 500 (^GSPC) was flat by the close in London, as the Dow (^DJI) fell 0.2% and Nasdaq (^IXIC) rose 0.4% in early trade.
The FTSE slipped despite a positive reading from the latest purchasing managers' index (PMI) data, which showed private order books at a six-month high.
The FTSE (^FTSE) was down 0.9% by the close, the DAX in Frankfurt (^GDAXI) fell 0.1% and the CAC (^FCHI) in Paris was up 0.4%.
Stocks across a number of sectors were down in the blue chip index, with asset manager St James's Place, Auto Trader Group and Hargreaves Lansdown leading fallers.
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On Thursday, the Bank of England (BoE) had moved to hold interest rates steady at 5.25%, sending the pound higher against the dollar. This is the third time in a row the bank has held firm on rates.
BoE chief Andrew Bailey hinted that interest rates would remain elevated while borrowing is set to be "restrictive for an extended period of time".
"My view at the moment is, it's really to early to start speculating about cutting interest rates, we have got to see more progress," he said.
At first, the BoE's stance seemed different than that of the US Federal Reserve, which had dropped hints on Wednesday that it would take a hawkish stance going into the new year. However, New Federal Reserve boss John C Williams sewed confusion by saying on Friday: “We aren’t really talking about rate cuts right now."
“One thing we’ve learned even over the past year is that the data can move and in surprising ways, we need to be ready to move to tighten the policy further, if the progress of inflation were to stall or reverse," Williams added.
On Friday afternoon, the pound (GBPUSD=X) was still trading just below $1.27.
Despite the prospect of higher borrowing costs, UK consumer confidence is on the up. GfK’s latest consumer confidence index rose two points to -22.
All five sub-measures showed modest improvement with personal finance situation for the coming year ticked up 1 point to -2, while the outlook for the general economic situation also improved by one point, to -25. The major purchase index rose one point to -23.
Follow along with us live today:
LIVE COVERAGE IS OVER8 updates
Lucy Harley-McKeown
That's all from me today! Head over to our friends on the Yahoo Finance US site to continue following market moves. Happy Friday!
Lucy Harley-McKeown
IG's senior market analyst Axel Rudolph takes a view on the central bank madness of the week:
"This week the Fed, BoE, ECB and SNB extended their pause in interest rate hikes with some like the US central bank talking about future rate cuts but others like the ECB not doing so. Next week's Bank of Japan monetary policy meeting will be the main event on the economic calendar ahead of the festive season."
Lucy Harley-McKeown
Here's CMC's Michael Hewson on those Williams comments:
Given the sharp move in bond markets since Wednesday it was perhaps felt necessary to pour a little cold water on the moves of the last 48 hours, with Williams sent out to say it was premature to be thinking in terms of rate cuts. That’s not to say they wouldn’t happen next year but to be pricing in between 5-6 rate cuts next year as markets appeared to be doing seems to be a case of getting a little carried away.
And what to watch in US equities:
On the earnings front Olive Garden owner Darden Restaurants shares have slipped back after reporting Q2 revenue of $2.73bn and profits of $1.76 a share. Looking ahead the guidance for the full year was to expect profits of between $8.75 and $8.90 a share on sales of $11.5bn, with the sales number coming in slightly below what had been expected.
Rivian shares have slipped back after recording two days of strong gains after winning an order from AT&T for a fleet of electric vans.
Lucy Harley-McKeown
Trending tickers
Here we have the day's trending tickers, via my colleague Pedro Goncalves.
UK private sector output ticks up to six-month high
UK purchasing managers' index (PMIs) are out and it's looking kind of positive. Here are the top lines:
A reading of 50 or more indicates growth, anything below means contraction.
Flash UK PMI composite output index at 51.7 (Nov: 50.7). 6-month high.
Flash UK services PMI business activity index at 52.7 (Nov: 50.9). 6-month high.
Flash UK manufacturing output index at 45.9 (Nov: 49.2). 2-month low.
Flash UK manufacturing PMI at 46.4 (Nov: 47.2). 2-month low.
Lucy Harley-McKeown
Nationwide agrees on house prices
Nationwide figures released this morning track with what Halifax has predicted, in that they say a rapid rebound in house prices is 'unlikely'.
They say: While cost-of-living pressures are easing, with the rate of inflation now running below the rate of average wage growth, consumer confidence remains weak, and surveyors continue to report subdued levels of new buyer enquiries. Moreover, while markets are projecting that the next bank rate move will be down, there are still upward risks to interest rates. Inflation is declining, but measures of domestic price pressures remain far too high.
Lucy Harley-McKeown
House price falls on the horizon, says Halifax
House prices are set to fall by up to 4% next year, according to Halifax, as pressure on household finances and consistently elevated interest rates take their toll.
On Tuesday, it was revealed new mortgage commitments — lending agreed by banks to be advanced in the coming months — shrank by 41.4% year-on-year in the third quarter of 2023, as high interest rates continue to take their toll on the UK housing market.
Data released by the Bank of England showed that there was a 16.5% decrease in new lending quarter-on-quarter, dropping to £51.5bn in Q3.
Meanwhile, the outstanding value of all residential mortgage loans decreased by 0.1% from the previous quarter, data showed, and was 0.8% lower than a year earlier.
Lucy Harley-McKeown
Overnight in the US and Asia
Markets pained a mixed picture across Asia on Friday, with gains across Japan's main index and a rally in Hong Kong.
The Hang Seng (^HSI) rose 2.5%, closing out its best week since July, after news from Beijing and Shanghai that the government would ease downpayment ratios and repayment rules in the Chinese housing sector. Stocks were also spurred on by optimism about an end to the global central bank rate hiking cycle.
Meanwhile the SSE Composite (000001.SS) fell 0.6% and the Nikkei in Japan (^N225) rose 0.9%.
Equities closed Thursday out in the US higher, too, with the S&P 500 (^GSPC) up 0.3%, the Dow (^DJI) rising 0.4% and the Nasdaq (^IXIC) up 0.2%.
The good mood came after the 10-year Treasury sank below 4% and retail sales clocked surprising gains, giving investors further confidence headed into 2024.
Watch: Bank of England keeps interest rates at 15-year high
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