Blue-chip stocks in London underperformed their European and US peers on Friday, despite stable inflation data in the US, weighed down by falls in oil majors BP and Shell.
The FTSE 100 index closed down 43.86 points, or 0.5%, at 9,667.01. The FTSE 250 finished just 7.04 points lower at 22,063.95, but the AIM All-Share closed up 1.87 points, or 0.3%, at 751.30.
For the week, the FTSE 100 fell 0.6%, the FTSE 250 fell 0.5% and the AIM All-Share fell 0.3%.
In European stocks on Friday, the CAC 40 in Paris closed down 0.1%, while the DAX 40 in Frankfurt closed up 0.6%.
New York stocks rose at the close of London stocks.
The Dow Jones Industrial Average, S&P 500 Index and Nasdaq Composite rose 0.3%.
Markets were generally encouraged by US inflation data coming online, which supports hopes of a US rate cut next week.
According to data from the US Bureau of Economic Analysis, the September Personal Consumption Expenditures Price Index rose 0.3% MoM, unchanged from August, and in line with the FXStreet consensus.
Excluding food and energy, the core PCE price index, which is the Fed's preferred inflation gauge, rose 0.2% month-over-month in September, unchanged from August, and also in line with consensus.
Year-over-year, the PCE price index cooled to 2.8% growth in September, from 2.9% in August. The FXStreet consensus had forecast the rate to remain unchanged.
The core PCE price index rebounded to 2.8% year-on-year in September from 2.7% in August, as expected.
“September's rise in the core PCE deflator should be small enough for most FOMC members to revise down their near-term inflation forecast next week, helping to justify another policy easing,” said Samuel Tombs, chief U.S. economist at Pantheon Macroeconomics.
The CME's FedWatch tool now places an 87% probability of a quarter-point rate cut, although the decision could prove controversial.
Minutes from the October Federal Open Market Committee (FOMC) meeting showed that officials disagreed and expressed “very different views” on which policy decision would be most appropriate at the December meeting.
“The FOMC is increasingly divided over its near-term course of action, and multiple dissents appear likely,” Wells Fargo analysts said.
Bank of America believes Federal Reserve Chairman Jerome Powell faces the “most divided committee in recent memory.”
Separate figures showed U.S. consumer confidence rose for the first time in five months, supported by a more optimistic outlook among younger consumers.
The preliminary sentiment index for December rose to 53.3 from 51.0 the previous month, according to the University of Michigan. The estimate surpassed the FXStreet consensus, which predicted an increase to 52.0.
The pound was trading lower on Friday at $1.3326 at the close of the London Stock Exchange, compared to $1.3353 on Thursday.
The euro stood at $1.1635, down from $1.1658. Against the yen, the dollar was trading higher at 155.42 yen compared to 154.75 yen.
The 10-year US Treasury yield was quoted at 4.14%, widening from 4.10%. The 30-year US Treasury yield was at 4.80%, down from 4.76%.
Wall Street's attention was also captured by the news that Netflix reached a deal with Warner Bros. Discovery to buy Warner Bros.
The California-based streaming service said the deal includes the Burbank, California-based media and entertainment company's film and television studios, HBO Max and HBO.
The cash and stock transaction is valued at $27.75 per Warner Bros Discovery share, with a total enterprise value of around $82.7bn (£62bn) and an equity value of $72.0bn (£54bn).
Netflix traded down 0.7% in New York, while Warner Bros. rose 3.8%.
What held London's FTSE 100 back were declines in oil majors and index heavyweights BP and Shell, which fell 2.6% and 1.4% respectively.
Both were downgraded by Bank of America (BofA), which took BP to “underperform” from “neutral” with a reduced price target of 375p, down from 440p, and Shell to “neutral” from “buy” with a reduced price target of 3,100p, down from 3,200p.
“Lower oil and gas prices and deflating refining margins will leave the sector scrambling for more free cash flow reserves than it already has. And we see fewer inorganic reserves available that are not already priced into elevated share prices,” BofA said in a research note on Friday.
The broker cut its 2026 Brent oil price forecast by 14% to $60 per barrel and its 2027 forecast by 11% to $62.0 per barrel.
On the FTSE 250, Trustpilot rallied 13% following sharp falls on Thursday following a critical report from Grizzly Research.
On Friday afternoon, Trustpilot issued a response to Grizzly's report, saying it “contains factual inaccuracies and false statements, which were intended to negatively impact the company's stock price.”
“We are considering all appropriate options in response to (Grizzly's) demonstrably false statements,” the Copenhagen-based consumer review platform added.
Greggs rose 5.3% as JP Morgan (JPM) initiated coverage with an “overweight” rating.
A “rerating” is “on the menu,” JPM analysts said of Greggs, with stronger-than-expected catalysts in like-for-like sales and earnings delivery from financial year 2026 onwards, along with an inflection in free cash flow and capital returns.
Ocado rose 0.3% as it said it will receive a one-off cash payment of $350m (£262.5m) as compensation following Kroger's decision to close three customer fulfillment centers in 2026.
“An enhanced compensation payment at least softens Kroger's reduced use of Ocado's technology,” said AJ Bell chief investment officer Russ Mould.
Elsewhere, Big Yellow shares fell 4.3% after it abandoned acquisition talks with Blackstone.
Advanced Medical Solutions, however, rose 8.9% following a report from Sky News that private equity house Bridgepoint is considering making a bid for the company.
Sky said an offer could be launched at between 270p and 280p per share, well above Thursday's closing price of 207.5p.
Brent oil was trading at $63.60 a barrel at the close of the London Stock Exchange on Friday, up from $63.45 on Thursday.
Gold was trading at $4,208.77 an ounce on Friday, down from $4,214.64.
The biggest risers on the FTSE 100 were Rightmove, up 17.4p to 540.2p, JD Sports Fashion, up 2.22p to 82.72p, Smith & Nephew, up 33.5p to 1,265.0p. 2,084.0p.
The biggest fallers on the FTSE 100 were Smiths Group, down 86.0p to 2,372.0p, BP, down 12.15p to 452.85p, LondonMetric Property, down 3.7p to 186.5p, Severn Trent, down 47.0p to 2,769.0p. pence and Airtel Africa, which fell 5.2 pence to 2,372.0 pence. 309.0p.
Monday's economic calendar includes Japan's GDP data and the US consumer inflation expectations report.
Interest rate decisions will be made later in the week in Australia, Canada, Switzerland and the United States.
There are no significant events on Monday's UK corporate calendar. However, half-year results for equipment rental company Ashtead Group and housebuilder Berkeley Group will be presented later this week.
Contributed by Alliance News
