Tariff optimism lifts shares after US-China deal
European blue-chips ended solidly higher on Friday, shaking off robust US data which may have cemented another Federal Reserve hold next month, with tariff optimism lifting morale.
The FTSE 100 index closed up 63.31 points, 0.7%, at 8,798.91. The FTSE 250 was up 241.30 points, 1.1%, at 21,715.96, and the AIM All-Share added 2.29 points, 0.3%, at 769.33.
For the week, the FTSE 100 added 0.3%, the FTSE 250 surged 2.7% and the AIM All-Share gained 1.3%.
Over the course of the whole first half of the year, the FTSE 100 has climbed 7.7%.
In European equities on Friday, the CAC 40 in Paris jumped 1.8%, while the DAX 40 in Frankfurt surged 1.6%.
The pound was quoted lower at 1.3713 dollars at the time of the London equities close, compared to 1.3733 dollars on Thursday. The euro stood at 1.1717 dollars, higher against 1.1698 dollars. Against the yen, the dollar was trading higher at 144.75 yen compared with 144.48 yen.
The yield on the US 10-year Treasury was quoted at 4.27%, narrowing from 4.28%. The yield on the US 30-year Treasury was quoted at 4.82%, narrowing from 4.84%.
In New York, the Dow Jones Industrial Average was up 1.0%, while the S&P 500 and Nasdaq Composite each added 0.6%.
'Stock markets this week have been on a frenzy, with Nasdaq leading the US Indices to new all-times on Wednesday and the S&P 500 is joining its tech-focused colleague,' Oanda analyst Elior Manier commented.
'Markets are awaiting and getting a few good news on the US trade deals – the latest is the White House announcing that July 9 is in the end not too important, and Trump mentioning the completion of a deal with China, however the details are still missing.'
The analyst added: 'Even the release of PCE data hasn't sparked major volatility. The buying momentum after the de-escalation and ceasefire in the Middle East really has been mind-boggling. Dip buyers have had the hand in the past five years, particularly when bullish catalysts come into play (or bearish catalysts fade away). A three-month recovery took the [S&P 500] back from 4,800 all the way to 6,160 current levels.'
The US Federal Reserve's key inflationary gauge, the core personal consumption expenditures price index, was higher than anticipated in May, data published by the Bureau of Economic Analysis showed Friday.
Annual core PCE inflation was 2.7% in May, accelerating a notch from 2.6% in April, the latter upwardly revised from 2.5%. Market consensus for May had been 2.6%, according to FXStreet.
With core PCE inflation rising, it is unlikely that the Federal Reserve will cut US interest rates before September, much to the chagrin of President Donald Trump, who is pushing for immediate rate cuts.
The White House said on Thursday no decision is imminent on naming a successor to Federal Reserve chairman Jerome Powell, after a report suggested the president could do so this summer.
'No decisions are imminent, although the president has the right to change his mind,' a White House official told AFP.
'The president has many good options to nominate as the next Federal Reserve chairman,' the official added.
Mr Powell's term as chief of the independent central bank ends in May 2026, and the choice of a successor by this summer or autumn would be sooner than usual.
But a Wall Street Journal report late Wednesday said President Trump has considered selecting and unveiling Mr Powell's replacement by September or October.
Among the stocks shining across the Atlantic, Nike jumped 15%. The sportswear firm reported a drop in annual profit amid softer revenue and warned of a one billion dollar cost increase in financial 2026 due to new tariffs, which it aims to mitigate through targeted actions across the business.
AJ Bell analyst Russ Mould commented: 'The footwear manufacturer has brought back Elliott Hill as CEO to drive a turnaround and investors lapped up his every word on plans to get the business back on track with new sports-focused product lines.'
JD Sports rose 7.6%, the athleisure retailer leading the way on the FTSE 100 in a positive read across.
'A healthier Nike playing catch-up with product innovation could stimulate new demand for its products and theoretically JD Sports would benefit as it is a key retailer of Nike shoes,' Mr Mould added.
Also on the up in London were stocks with an exposure to China. Among them, luxury fashion firm Burberry added 7.1%.
XTB analyst Kathleen Brooks commented: 'The key theme for markets in the next week and a half will be US trade agreements, as July 9 is the deadline for the reciprocal tariff reprieve. There has been some good news on this front. Both China and the US have confirmed that they have agreed a trade framework going forward.'
Brent oil was quoted lower at 66.83 dollars a barrel late on Friday afternoon in London from 67.83 dollars late Thursday. Gold fetched 3,273.76 dollars an ounce, lower against 3,322.21 dollars.
Weaker gold prices hurt precious metal miners. Hochschild Mining gave back 2.6%.
Elsewhere, Next 15 added 15%, recovering some of its 28% slide from Thursday. It confirmed it is in early talks to dispose of some of its brands, a day after it announced a new chief executive and warned on profit.
The London-based business growth consultant said it is actively considering options to speed up value creation across its business units and enhancing the delivery of its commercial and strategic objectives.
'The board's primary focus is maximising shareholder value. At this time, there can be no certainty that any agreement will be reached, nor as to the terms of any such agreement, including if sufficient value is not realised. Further updates will be provided as appropriate,' Next 15 said.
The biggest risers on the FTSE 100 were JD Sports, up 6.18p at 87.88p, Ashtead Group, up 249.00p at 4,732.00p, Melrose Industries, up 18.60p at 536.00p, Standard Chartered, up 33.00p at 1,219.00p, and IMI, up 50.00p at 2,116.00p.
The biggest fallers on the FTSE 100 were Endeavour Mining, down 96.00p at 2,176.00p, Fresnillo, down 63.00p at 1,433.00p, Babcock, down 20.00p at 1,137.00p, BAE Systems, down 25.50p at 1,862.00p, and Coca-Cola Europacific Partners, down 70.00p at 6,640.00p.
Monday's economic calendar has UK GDP data at 7am and a German inflation reading at 1pm. The week picks up pace with eurozone consumer price data and a host of PMI readings on Tuesday. US nonfarm payrolls will be the main event on Thursday, before markets in New York closed for Independence Day on Friday.
On the UK corporate front, grocer Sainsbury's releases a trading statement on Tuesday.
Contributed by Alliance News.
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