UK stocks reached a two-week high on Friday on the back of decent performances from heavyweights Vodafone and HSBC, along with gains in defensive categories such as pharmaceuticals.
Markets across Europe were struggling to push higher on concerns about Greece, while Wall Street opened in the red on speculation surrounding interest rates.
Data released during Friday morning showed that the UK budget deficit narrowed in April from last year. Public sector net borrowing exc luding state-controlled banks fell 27% from a year earlier to £6.8bn, compared with economists’ expectations for a shortfall of £8.1bn, thanks to stronger tax receipts.
Meanwhile, the German Ifo business climate index nudged down to 108.5 in May from 108.6 in April, marking its first drop since October last year, but still a touch ahead of analysts’ expectations for a reading of 108.3.
Markets are looking, the speech on Friday from the U.S. central bank’s chair, Janet Yellen, for new clues on when it could hike interest rates. Trading volumes in the U.S. were sluggish on Friday, however, ahead of the three-day Memorial Day weekend. In Asia, Shanghai shares hit fresh seven-year highs, outperforming the region that traded broadly mixed on the final trading day of the week. Meanwhile, the Bank of Japan (BOJ) maintained its expansionary monetary stimulus at the conclusion of its two-day meeting on Friday. Oil is also in focus after prices jumped more than 2 percent on Thursday, crude futures boosted optimism that a supply glut was easing. At an European Union (EU) summit in Riga, Latvia, on Thursday, the French and German leaders, Francois Hollande and Angela Merkel, urged their Greek counterpart, Alexis Tsipras to complete the country’s bailout program and said he needs to do more to secure funds urgently needed to avert bankruptcy.
The stock market is closed on Monday (25 May) due to the second May Bank Holiday. Trading in London will resume on Tuesday and there are two announcements from the US which may interest investors. First is an update from the Census Bureau on the number of purchase orders placed with manufacturers for ‘durable goods’ – this is a leading indicator of levels of activity in factories as manufacturers will increase activity if there is an increased number of orders to fulfil. Later in the day there’s an update on consumer confidence. The rest of the week is fairly quiet although there are two pretty important releases out on Friday (29 May) which are worth marking in your diary. The first is the second estimate of UK gross domestic product (GDP) growth for the first quarter of 2015. The market will be watching closely for any revision from disappointing growth of 0.3% seen in the initial projection. There’s also a second reading of Q1 US GDP.