Stocks in Europe were mostly higher on Friday morning, with oil majors giving some ground as the oil price eased following US President Donald Trump’s announcement to consider his options for two weeks regarding the conflict between Israel and Iran.
The Office for National Statistics said borrowing surged to £17.7 billion last month, the second highest figure on record for May, surpassed only at the height of Covid. This was £700 million higher than a year earlier, though it was slightly less than the £18 billion most economists had been expecting.
This was despite the ONS reporting that compulsory social contributions, largely made up of national insurance contributions, NICs, jumped by £3.9 billion or 15% to a record £30.2 billion in April and May combined.
The FTSE 100 index opened up 25.17 points, 0.3%, at 8,816.97. The FTSE 250 was up 49.15 points, 0.2%, at 21,123.14, and the AIM All-Share was up 1.17 points, 0.2%, at 759.36.
The Cboe UK 100 was up 0.4% at 878.56, the Cboe UK 250 was up 0.3% at 18,664.36, and the Cboe Small Companies was up marginally at 17,008.95.
Melrose Industries led the FTSE 100, up 3.5%.
Berkeley Group led the laggers, down 9.5%.
The Cobham, England-based housebuilder’s pretax profit decreased on-year for the period ended April 30, to £528.9 million from £557.3 million.
Revenue rose slightly to £2.49 billion from £2.46 billion, however, and the dividend for the year is 240 pence, up from 92p.
Berkeley’s pretax profit guidance for the current year is ‘£450 million, with FY27 likely to be similar’. It said it is positive about the future, citing strong fundamentals, and that it is ready to invest £5 billion over the next decade.
Further, Berkeley set out leadership succession plans, with Chief Executive Rob Perrins set to become executive chair.
On the FTSE 250, other housebuilders in the red included Vistry, down 0.7%; Crest Nicholson, down 0.5%; and Bellway, down 0.8%.
Carnival led the FTSE 250, up 3.2%, while worst performer NCC was down 2.5%.
On AIM, Orchard Funding surged 31%.
The insurance premium finance company said trading for the year ending July 31 has been positive to date, and that it expects full-year earnings to ‘exceed current market expectations by over 20%’.
In European equities on Friday, the CAC 40 in Paris was up 0.6%, while the DAX 40 in Frankfurt was up 0.7%.
The EU on Friday banned Chinese firms from government medical device purchases worth more than €5 million in retaliation for limits Beijing places on access to its own market.
The latest salvo in trade tensions between the 27-nation bloc and China covers a wide range of healthcare supplies, from surgical masks to X-ray machines, that represent a market worth €150 billion in the EU.
The European Commission said in a statement the move was in ‘response to China’s longstanding exclusion of EU-made medical devices from Chinese government contracts’.
China has accused the EU of ‘double standards’ in response, AFP reports.
The pound was quoted at $1.3471 early on Friday in London, up compared to $1.3429 at the equities close on Thursday. The euro stood at $1.1515, up against $1.1468. Against the yen, the dollar was trading lower at JP¥145.37 compared to JP¥145.65.
‘The EURUSD continues to benefit from dollar weakness,’ commented Swissquote’s Ipek Ozkardeskaya. ‘The strong euro helps temper inflationary pressures. As long as the dollar stays weak and inflation remains contained, the ECB will have room to act.
‘Is that a reason to keep buying European stocks? Time will tell.’
In Asia on Friday, the Nikkei 225 index in Tokyo was down 0.2%. In China, the Shanghai Composite was marginally higher, while the Hang Seng index in Hong Kong was up 0.9%. The S&P/ASX 200 in Sydney closed down 0.2%.
In the US on Wednesday, Wall Street ended mixed, with the Dow Jones Industrial Average down 0.1%, the S&P 500 down 1.85 points and the Nasdaq Composite up 0.1%. Markets were closed on Thursday for Juneteenth.
The yield on the US 10-year Treasury was quoted at 4.37%, widening from 4.36% on Wednesday. The yield on the US 30-year Treasury was quoted at 4.87%, widening from 4.86%.
Brent oil was quoted lower at $76.81 a barrel early in London on Friday from $78.59 late Thursday.
On the FTSE 100, BP and Shell lost 0.9% and 0.7% respectively, having spent most of this week in the green as oil rose.
Oil prices tumbled Friday and equity traders fought to end a volatile week on a positive note after Donald Trump said he would consider over the next two weeks whether to join Israel’s attacks on Iran, AFP reported.
Speculation had been swirling that Trump would throw his lot in with Israel, but on Thursday he said he would decide ‘within the next two weeks’ whether to involve the US, giving diplomacy a shot to end the hostilities.
While tensions are sky high amid fears of an escalation, the US president’s remarks suggested the crisis could be prevented from spiralling into all-out war between the Middle East foes.
Since Israel first hit Iran last Friday, the two have exchanged deadly strikes and apocalyptic warnings, though observers said the conflict has not seen a critical escalation.
However, traders remained on edge, AFP said.
‘Crude still calls the shots, and volatility’s the devil in the room and every trader on the street knows we’re two headlines away from chaos,’ said Stephen Innes at SPI, quoted by AFP. ‘Make no mistake: we’re trading a geopolitical powder keg with a lit fuse.
‘President Trump’s two-week ’thinking window’ on whether to join Israel’s war against Iran is no cooling-off period it’s a ticking volatility clock.’
Gold was quoted lower at $3,354.95 an ounce against $3,368.94.
Still to come on Friday’s economic calendar is the US Philadelphia Fed manufacturing index, the US Conference Board leading index, and Canada’s retail sales and producer price inflation data.
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