FTSE 100 beats 2018 record to hit all-time high

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(Alliance News) – The FTSE 100 closed at an all-time high on Friday, ending a busy week of central bank interest rate decisions on a positive note .

The FTSE 100 index closed up 81.64 points, or 1.0% at 7,901.80 on Friday – a record for the index and the highest since 2018. It hit an intraday record high of 7,906.58. The index ended the week as a whole 1.8% higher.

The FTSE 250, meanwhile, ended up 21.23 points, or 0.1%, at 20,593.46, but ended the week 2.8% higher.

The AIM All-Share closed up 1.03 points, or 0.1% at 889.79, ending the past five days 2.6% higher.

The Cboe UK 100 ended up 1.1% at 789.78, the Cboe UK 250 closed up 0.2% at 17,937.50, and the Cboe Small Companies ended up 0.9% at 13,888.41.

Investors were upbeat after more dovish language from the Bank of England on Thursday, which many took as a sign that the central bank may be coming to the end of a sustained period of interest rate hikes .

The Bank of England raised interest rates by a further 50 basis points and eased its guidance for future increases as it acknowledged that UK inflation was “likely to have peaked”.

Thursday’s rate hike takes the benchmark bank rate to 4.00% from 3.50%. It was a result expected by the market, according to the consensus quoted by FXStreet.

Analysts at ING said it was “ample clear from both the press release and the new forecast that the Bank is laying the groundwork for the end of the current tightening cycle.”

The internationally focused FTSE 100 was also boosted after higher-than-expected US jobs growth data on Friday.

Avatrade analyst Naeem Aslam said: “Today we had a mind-boggling number for the US NFP; the reading was so good that many had to double-check the reading to make sure there was nothing wrong there. Id -data confirmed that the US labor market is not only healthy but robust, and worries about recessions are unnecessary.”

According to the Bureau of Labor Statistics, US nonfarm payrolls rose by 517,000 in January, nearly double the 260,000 from December. The January number was well ahead of the consensus of 185,000, according to FXStreet.

Average hourly earnings growth has slowed. Earnings rose 4.4% on the year last month, beating the 4.9% expected by consensus. Earnings were up 4.9% in December.

The numbers suggest that the US job market is still hot in the face of interest rate hikes by the Fed.

The central bank on Wednesday slowed the pace of its rate hikes, raising the federal funds rate range by 25 basis points to 4.50% to 4.75%.

The dollar strengthened significantly after the non-farm payrolls report. Sterling was quoted at USD1.2093 at the close of London shares on Friday, down sharply from USD1.2315 at the close on Thursday.

The euro was at USD1.0844, lower against USD1.0919 at the same time on Thursday. Against the yen, the dollar was trading at JPY130.94 late Friday, higher than JPY129.28 late Thursday.

Stocks in New York were broadly higher at the close in London, with the Dow Jones Industrial Average up 0.3%, the S&P 500 index flat, and the Nasdaq Composite up 0.2%.

In the FTSE 100, Shell closed up 4.0%. On Thursday, the oil major reported rising annual earnings on rising commodity prices. It also announced another USD4 billion buyback, having recently completed a repurchase program of the same size.

Shell exited 2022 with a fourth-quarter revenue increase of 12% to USD101.20 billion, from USD90.22 billion in 2021. Pre-tax profit rose a more modest 1.1% on the year to USD16.44 billion from USD16.27 billion.

For all of 2022, Shell made an annual pre-tax profit of USD64.81 billion, more than double from USD29.83 billion. Revenue for 2022 increased by 42% to USD386.20 billion from USD272.66 billion.

Peer BP finished 1.7% higher. Brent oil was quoted at USD81.44 per barrel in London shares close on Friday, down from USD84.42 late Thursday.

BT Group rose 1.9% after UK regulator Ofcom gave its early backing to BT’s Openreach broadband plan. Ofcom said its provisional view is that the BT Openreach unit’s Equinox 2 scheme does not breach competition rules in the UK.

In December, Openreach published plans to offer lower wholesale prices to other internet providers for access to its fiber network, but the move saw the network’s rivals raise competition concerns. It has announced plans to offer reduced rates on its fiber broadband products as part of its Equinox 2 scheme.

On Friday, Ofcom said it should not intervene to prevent Openreach from introducing Equinox 2.

“We consider that the offer is not anti-competitive and is consistent with the rules we consulted on before introducing them under our market review in 2021,” Ofcom said. It intends to publish its final decision before the end of March and welcomes responses until March 4.

Elsewhere in London, Nanoco fell 26% as it agreed a USD150 million settlement with Samsung Electronics Co for IP infringement.

“This has been a long and hard battle for Nanoco. The result is remarkable, given the relative scale of Nanoco and Samsung,” said Nanoco President Chris Richards.

Nanoco initially launched a US patent infringement lawsuit against the South Korea-based electronics company in December, along with lawsuits in Germany and China. It claimed that Samsung infringed on its unique synthesis and resin capabilities for quantum dots. Quantum dot technology is used on Samsung quantum light emitting diode televisions.

In European shares on Friday, the CAC 40 in Paris ended up 0.9%, while the DAX 40 in Frankfurt ended up 0.2%.

Data released by S&P Global showed that the euro zone economy grew in January, after six successive months of contraction.

The S&P Composite purchasing managers’ index for the single currency area rose to 50.3 points in January, from 49.3 in December. This marks the highest level in seven months and the first time the eurozone private sector economy has grown since June 2022.

S&P’s Chief Business Economist Chris William said: “Continuation of business output growth, even marginal, is welcome news and suggests that the euro area may escape recession.”

Gold was quoted at USD1,867.11 an ounce, much lower against USD1,928.82 at the close on Thursday.

In Monday’s UK corporate calendar, there is a trading statement from biological product supplier Plant Health Care and full-year results from investment firm BlackRock Throgmorton Trust.

On Monday’s economic calendar, there is a UK construction PMI print at 0930 GMT ahead of EU retail trade data at 1000 GMT.

By Heather Rydings, senior economics reporter for Alliance News

Comments and questions to newsroom@alliancenews.com

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