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(Alliance News) - Stock prices in London opened in the green on Friday, following a rally on Wall Street as investors could see the end to the Federal Reserve's interest rate hiking cycle in sight.
The FTSE 100 index opened up 18.70 points, 0.2% at 7,862.08. The FTSE 250 was up 145.77 points, 0.8% at 19,215.90, and the AIM All-Share was up 3.91 points, 0.5%, at 828.71.
The midcap FTSE 250 index was outperforming, thanks to Dechra Pharmaceuticals, with the stock rising nearly 40% on a takeover offer late Thursday.
The Cboe UK 100 was up 0.2% at 786.07, the Cboe UK 250 was up 0.9% at 16,787.28, and the Cboe Small Companies was up 0.2% at 13,242.21.
In European equities, the CAC 40 in Paris was up 0.3%, while the DAX 40 in Frankfurt was 0.3%.
In the US on Thursday, Wall Street rallied, with the Dow Jones Industrial Average ending up 1.1%, the S&P 500 up 1.3% and the Nasdaq Composite up 2.0%.
Sentiment was buoyed by a cooler-than-expected wholesale inflation print.
According to the Department of Labor, producer price inflation eased to 2.7% year-on-year in March, from 4.9% in February, short of the FXStreet cited consensus of 3.4%. February's figure was upwardly revised from 4.5%.
This caused some to hope the Federal Reserve may be nearing the end of its rate hiking cycle.
"While the consensus remains that there is one more hike of 0.25% to come in May, there are no more rate rises expected thereafter this year," said interactive investor's Richard Hunter.
"Indeed, some are projecting that interest rate cuts could follow before the end of the year, depending on the severity of the recession which is expected to follow, although this is not currently the Fed’s base case," he added.
The dollar was mixed against major currencies, as the pound climbed higher above USD1.25, and the euro consolidated gains above USD1.10.
Sterling was quoted at USD1.2528 early Friday, higher than USD1.2519 at the London equities close on Thursday. The euro traded at USD1.1063 early Friday, higher than USD1.1053 late Thursday. Against the yen, the dollar was quoted at JPY132.58, up versus JPY132.41.
Later in the day, investors will hear from US banks, as Wells Fargo, JPMorgan and Citigroup report their quarterly earnings, along with asset manager BlackRock.
"The sector warrants particular attention given the recent banking turmoil, not least of which will be in terms of lending conditions, loan defaults, provisions for bad debts generally and the immediate outlook for the sector," said ii's Hunter.
Trading was upbeat in Asia on Friday, the Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite added 0.6%, while the Hang Seng index in Hong Kong was up 0.2%. The S&P/ASX 200 in Sydney closed up 0.5%.
Brent oil stayed above the USD86 mark, trading at USD86.25 a barrel, down a touch from USD87.01 late Thursday. This followed the Organization of the Petroleum Exporting Countries warning of a "significant" shortfall of some 2 million barrels per day by the end of the year.
This will be a result of the production cut from major producers.
"The big question is what these higher prices will mean for consumers and inflation. The elevated levels raise concerns about how this will shake out for energy bills, food prices and monetary policy," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Gold was quoted at USD2,040.26 an ounce early Friday, little changed from USD2,040.03 on Thursday.
In the FTSE 100, National Grid fell 1.2%, as it new UK tax measures for capital expenditure will weigh on earnings per share growth over the next few years.
The electricity infrastructure company said its annual performance was in line with its expectations. It continues to expect underlying earnings per share growth in the middle of its 6% to 8% compound annual growth rate. However, it warned that from financial 2024 to 2026, the UK government's introduction of 'full expensing' tax relief for capital expenditure will impact underlying EPS.
It now expects underlying EPS growth between financial 2022 to 2026 to be at the "lower end" of its 6-8% CAGR range.
In the FTSE 250, Dechra Pharmaceuticals surged 38% to 3,830 pence.
Late Thursday, the veterinary pharmaceutical company confirmed that it has entered into discussions with private equity firm EQT for a possible cash takeover offer.
Under the terms of the possible offer, Dechra shareholders would receive 4,070 pence per ordinary share in cash. The offer price is a 49% premium to Thursday's closing price.
"There can be no certainty that any firm offer will be made for Dechra," the company said.
Dr Martens fell 1.1% as it warned it will miss annual guidance slightly, thanks to weaker wholesale trade and costs from its LA distribution centre.
The bootmaker said that in the year to March 31, revenue was up 10%, with revenue in the fourth quarter up 6%. In January, it had guided for annual revenue growth of between 11% and 13%. During the final quarter, the firm noted strong direct-to-consumer trading led by retail growth, though this was partly offset by a weaker wholesale performance.
It now expects annual earnings before interest, tax, depreciation and amortisation of GBP245 million, below January's guidance of between GBP250 million and GBP260 million.
The miss is a result of higher-than-expected expenses related to solving operation issues at its LA distribution centre. Dr Martens maintains its guidance of mid-to-high single-digit revenue growth on a constant currency basis in financial 2024.
"The shares have fallen almost 70% since they listed in 2021, which was partly a function of a frothy valuation, but also raises questions about the long-term growth trajectory for the famous shoe brand," noted HL's Lund Yates.
Polling firm YouGov rose 1.7% as it appointed a former Meta Platforms executive as its new chief executive officer.
Steve Hatch, who served as Meta's vice president for Northern Europe, will join from August 1.
Last October, YouGov announced plans for its Founder & CEO Stephan Shakespeare to leave his role, and become non-executive chair from August 2023. He will replace current Chair Roger Parry.
Still to come in Friday's economic calendar, US retail sales are at 1330 BST, with US industrial production at 1500 BST.
By Elizabeth Winter, Alliance News senior markets reporter
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