(Alliance News) – Stock prices in London were mostly higher at midday on Friday, marking a calmer end to a turbulent week, after UK private sector activity expanded faster than expected.
The FTSE 100 index opened up 19.47 points, 0.2%, at 10,169.52. The FTSE 250 was down 52.50 points, 0.2%, at 23,318.43, and the AIM all-share was up 2.20 points, 0.3% at 819.87.
The Cboe UK 100 was up 0.2% at 1,017.43, the Cboe UK 250 was down 0.1% at 20,519.53, and the Cboe small companies was 0.2% lower at 18,143.35.
In European equities on Friday, the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was up 0.1%.
Sterling was at USD1.3521 at midday on Friday, up from USD1.3498 at the London equities close on Thursday. The euro was lower at USD1.1738 from USD1.1749. Against the yen, the dollar was lower at JPY158.12 versus JPY158.27.
“It’s a calmer end to a chaotic week on the markets,” said AJ Bell analyst Dan Coatsworth. “While it looks like a crisis has been averted, investors’ patience has been well and truly tested.”
“The FTSE 100 advanced… as investors loaded up on three names that have served them well over the past year – Rolls-Royce, Endeavour Mining and BAE Systems.
Rolls-Royce was up 0.8%, Endeavour Mining climbed 1.2% and BAE Systems led the index and was 2.1% higher.
“There’s a lot for investors to process given the volatile first three days of the trading week, and it’s only natural for people to pause and take stock of events,” Coatsworth added.
Meanwhile, the growth in UK’s service and manufacturing sectors accelerated in January, flash data published by S&P Global showed, though cost pressure intensified.
The UK purchasing managers’ composite output index rose to a 21-month high of 53.9 points in January from 51.4 points in December, easily beating the FXStreet-cited consensus of a softer uptick to 51.7 points in January. Climbing further above the neutral 50-point mark separating growth from contraction, it indicates UK private sector activity accelerated in January.
The composite data is calculated using a weighted average of the services and manufacturing readings.
The flash services business PMI improved to 54.3 points in January from 51.4 points in December, outperforming the consensus of 51.7 points in January.
Notably, companies reported the greatest optimism about the business outlook since before the 2024 autumn budget.
S&P Global said January signalled “a sustained improvement in new order intakes across the private sector economy, which contributed to the most upbeat level of business optimism for 16 months. However, strong input cost inflation persisted, which resulted in the greatest increase in average prices charged by private sector firms since August 2025.”
The flash manufacturing PMI climbed to 51.6 points in January, a 17-month-high, from 50.6 points in December.
The flash manufacturing output index rose to 51.5 points in January from 51.0 points in December.
S&P Global Market Intelligence analyst Chris Williamson said: “While growth continues to be driven by the service sector, and in particular financial services and tech, the manufacturing sector is also continuing to report a gathering recovery aided by resurgent demand, with goods exports notably rising for the first time in four years.
“The good news was tempered, however, by the upturn in order books failing to stem a steep loss of jobs, which companies commonly blamed on the need to reduce high costs. These cost pressures were again often linked to government policies relating to higher national insurance contributions and the national minimum wage, and led to an especially steep drop in hospitality jobs.
“High staffing costs were meanwhile again widely reported as a key cause of higher selling prices, hinting at an intensification of price pressures at a level above the Bank of England target.”
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.2%, the S&P 500 index 0.1% lower, and the Nasdaq Composite down 0.2%.
The yield on the US 10-year Treasury was quoted at 4.23% at midday on Friday, narrowing from 4.27% at the close on Thursday. The yield on the US 30-year Treasury slimmed to 4.82% from 4.87%.
In London, Babcock International shares were flat after it announced that its chief executive officer is stepping down, and said it is confident in delivering on expectations for the full year.
The London-based aerospace and defence engineering firm said CEO David Lockwood has decided to retire by the end of calendar 2026. It has promoted Harry Holt, currently the CEO of its Nuclear sector, as Lockwood’s successor.
Babcock said Holt will assume the newly-created role of deputy CEO and join the board in June, replacing Lockwood after “a comprehensive and seamless transition”. It added that Lockwood, who joined as CEO in 2020, will continue to support the business following his retirement.
Babcock also released a trading update for its third quarter, which ended on December 31, calling its performance a continuation of the strong performance reported at the half-year.
As a result, Babcock is “confident in delivering on the board’s expectations for FY26 trading, including meeting the FY26 margin target of 8%.”
Babcock said the average of analysts’ forecasts is revenue of GBP5.08 billion, up 5.1% from GBP4.83 billion in financial 2025, and underlying operating profit of GBP409 million for the year, up 13% on-year from GBP362.9 million.
On the FTSE 250, C&C Group was down the most as shares fell 10%.
The firm reported weak trading in the period leading up to Christmas due to tepid consumer confidence amid UK budget nerves.
The Dublin-based firm, which makes beer, cider, wine, spirits and soft drinks, said it now expects adjusted operating profit in the range of EUR70 million and EUR73 million for the year that ends on February 28. C&C had achieved an operating profit before exceptional items of EUR77.1 million in financial 2025.
“Customer performance across November and early December was impacted by weak consumer confidence associated with the November UK budget. Our business performance was driven primarily by softer than anticipated demand in hospitality, alongside adverse product mix, as consumers continue to move away from the consumption of wine and spirits, in favour of beer, across the market,” C&C said.
C&C, whose offering includes brands such as Bulmers, Magners and Orchard Pig, added that trading “across the Christmas fortnight” was in line with expectations.
However, it cautioned: “In January to date we have seen continued softness of consumer demand in the market and anticipate that this will continue for the balance of the current financial year.”
Brent oil was trading higher at USD65.10 a barrel from USD64.26 at Thursday’s close.
Gold was higher at USD4,932.50 an ounce at midday on Friday from USD4,874.80 late Thursday.
The yellow metal hit another new record of USD4,967.37 earlier on Friday.
Still to come on Friday’s economic calendar is the US flash composite PMI reading, as well as Canada retail sales data.
By Michael Hennessey, Alliance News reporter
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