LONDON MARKET MIDDAY: Sell-offs hit Europe and NY set for weak open

(Alliance News) - European stocks were markedly lower midday Friday, a dour end to a difficult week for equities, as uninspiring sessions in the US and Asia hurt fragile sentiment even further.

So far in 2022, markets have been uneasy about the prospect of tighter monetary policy. The US Federal Reserve reveals its latest interest rate decision next week Wednesday.

US equities suffered heavy falls on Thursday, and stock market futures suggest those losses will not be recovered as the week draws to a close.

"Anyone who put money into the stock market for the first time during the pandemic might have thought investing was easy, with share prices shooting upwards daily. January 2022 has been that nasty wake-up call that stocks and shares can go down as well as up. The week ends on a sour note, with most of the main stock indices across Asia and Europe in the red," AJ Bell analyst Danni Hewson commented.

The FTSE 100 index was down 72.71 points, or 1.0%, at 7,512.30 midday Friday. The FTSE has lost 0.4% so far this week.

The mid-cap FTSE 250 index was down 329.06 points, or 1.5%, at 22,385.92. The AIM All-Share index was down 15.97 points, 1.4%, at 1,140.48.

The Cboe UK 100 index was down 0.9% at 746.06. The Cboe 250 was down 1.4% at 20,071.10, and the Cboe Small Companies down 0.7% at 15,702.84.

In mainland Europe, the CAC 40 in Paris was 1.4% lower and the DAX 40 in Frankfurt was down 1.6%.

Interactive Investor analyst Richard Hunter commented: "Late weakness in US markets followed through to Asian indices and the UK has been unable to dodge this particular bullet. For the moment, sentiment is dominating investor behaviour, with few positive catalysts visible on the immediate horizon. For the UK, there may be something of a short term boost to the economy after the loosening of the latest variant restrictions, but inevitably these will take time to feed through. Consumer sentiment will also face the challenge in the coming months of further rises in energy prices and forthcoming tax hikes."

Sterling was quoted at USD1.3559 midday Friday, down from USD1.3657 at the London equities close on Thursday.

Glum UK retail sales data added to the uncertain mood. Retail sales were down 3.7% month-on-month in December as the Omicron variant hit footfall.

The figure is "unlikely to throw the Bank of England off course", however, analysts at ING commented.

"All in, these latest figures are unlikely to move the needle much for the Bank of England, which looks poised to hike rates again in February. But prospects for a more gradual consumer story are another reason to suspect subsequent rate rises will be more gradual. We expect two rate hikes this year," analysts at the Dutch Bank commented.

The euro traded at USD1.1329 at midday in London on Friday, lower than USD1.1359 late Thursday. Against the yen, the dollar was quoted at JPY113.82, down from JPY114.00.

In London, among the handful of blue-chip stocks in the green was Rentokil Initial, up 0.8%. Berenberg upped the stock to Buy from Hold.

Defensive stocks were slightly higher, with Unilever up 0.4% and Reckitt climbing 0.1%.

Playtech was the worst FTSE 250 performer, down 17%. JKO Play confirmed it does not intend to make an offer to acquire the gambling software company.

Playtech had previously agreed to be acquired by Aristocrat Leisure Ltd in mid-October, but delayed the vote from January 12 to February 2 to give JKO more time to prepare an offer.

Playtech had received an approach by JKO back in November. JKO is controlled by Keith O'Loughlin and Eddie Jordan, the former boss of a Formula One team.

On AIM, training technology and product support provider Pennant International jumped 24%, after being named as a key supplier by a Boeing subsidiary.

Pennant is finalising a long-term deal with Boeing to service the UK's new Apache helicopter fleet. Pennant will deliver several new and upgraded part-task trainers compatible with the fleet. The award is expected "imminently".

Equities in New York are set for a lower open on Friday, after a tough session on Thursday. The Dow Jones Industrial Average is called down 0.2%, the S&P 500 is called down 0.5% and the Nasdaq Composite down 0.9%.

Netflix shares were 20% lower in pre-market trade after the streaming services provider's subscriber numbers underwhelmed.

The Los Gatos, California-based firm added 8.28 million global paid net subscribers in the fourth quarter of 2021, down 2.7% from 8.51 million in the corresponding period a year earlier.

Netflix at the time of its third quarter results release had guided to 8.5 million additions in the final three months of the year.

"Netflix earnings came in higher than the analyst forecasts, but all investors saw was mediocre subscription growth forecast of 2.5 million additional subscribers, far below than the near 4 million added the first quarter of last year, and far, far below the 6.3 million expected by analysts. Raising the monthly fees may explain a part of the subscriptions slowdown, and the end of the pandemic may explain the rest. Slowdown in subscriptions will certainly take a toll on the future earnings and Netflix stock will feel the pinch of the re-pricing," Swissquote analyst Ipek Ozkardeskaya commented.

Gold was quoted at USD1,832.99 an ounce on Friday, lower than USD1,845.00 on Thursday. Brent oil was trading at USD86.80 a barrel, down markedly from USD88.67 late Thursday.

Still to come on Friday is a eurozone consumer confidence reading at 1500 GMT.

By Eric Cunha; ericcunha@alliancenews.com

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