Late market roundup: FTSE rises on Iran peace hopes, UK data

London stocks ended the week on a strong footing as upbeat UK economic data reinforced confidence in the domestic outlook, before reports that US-Iran peace talks could resume sent oil prices sharply lower and fuelled a late rally across equity markets.

The FTSE 100 index closed up 97.06 points, 0.9%, at 10,736.23. The FTSE 250 ended up 174.16 points, 0.7%, at 23,801.49, and the AIM all-share closed up 4.22 points, 0.6%, at 772.98.

For the week, the FTSE 100 rose 1.3%, the FTSE 250 climbed 0.8%, and the AIM all-share advanced 1.6%.

The Cboe UK 100 was up 1.0% at 1,067.97, the Cboe UK 250 was up 0.8% at 20,727.73, and the Cboe Small Companies was 0.5% higher at 18,558.27.

In London, investors were cheered by stronger-than-forecast retail sales figures, a pick-up in private sector activity and an improvement in consumer confidence.

According to a purchasing managers' index reading, the UK private sector returned to growth at the start of the third quarter, amid a slight rise in new work.

The S&P Global flash composite purchasing managers' index rose to 52.1 points in July from 49.3 in June, a three-month high, beating FXStreet-cited market consensus of 49.7 points.

The composite PMI is made up of the services and manufacturing PMIs.

The services PMI also returned to growth territory and similarly hit a three-month high, rising to 51.8 points in July from June's final tally of 48.8.

Separate figures from the Office for National Statistics showed UK retail sales were stronger than expected last month, with annual growth spiking to the loftiest level since January.

UK retail sales volumes surged 4.2% year-on-year in June, picking up speed from 3.5% in May. The June figure topped the FXStreet-cited consensus, which had pencilled in a slowdown in annual retail sales growth to 2.3%.

It was the chunkiest annual surge since a 4.6% rise in January.

Completing the trio of good news, the GfK UK consumer confidence index rose to minus 17 points in July from minus 23 points in June, again ahead of consensus.

Neil Bellamy, consumer insights director at GfK, said: "Hot on the heels of the summer heatwaves, July has delivered a wave of optimism...The lion's share of the improvement is in the economy, with a ten-point advance in how consumers view the past year and an eight-point gain for the next 12 months.

Allan Monks at JPMorgan said the pick-up in consumer confidence was likely influenced by a number of temporary factors, including hot weather, the World Cup and political changes, adding that these effects are likely to fade.

Nonetheless, Monks said the overall message of the data releases is one of "growth resilience".

The figures come ahead of next week's Bank of England interest rate call.

In June, the BoE's Monetary Policy Committee voted 7-2 to leave the bank rate at 3.75%. A hold is expected this time around too, despite the renewed hostilities in the Middle East. Barclays expects guidance to be "limited, cautious and non-committal".

JPMorgan's Monks looks for a 6-3 vote this time around "with a little less push back against future rate hikes from the centre-ground."

While Monks does not expect the BoE to "overreact" to geopolitical developments over the past week or so, he says the "balance of risks continues to shift in a hawkish direction."

The pound was higher at USD1.3342 on Friday afternoon from USD1.3303 at the equities close on Thursday. Against the euro, sterling was higher at EUR1.1717 from EUR1.1696 a day prior.

The euro stood higher at USD1.1385 from USD1.1370. Against the yen, the dollar was trading lower at JPY163.70 compared to JPY163.88.

Also supporting stocks, a drop in oil prices which took Brent crude back below USD100 per barrel.

Late in Friday's trading session in London, Reuters reported, citing three Pakistani sources, that Pakistan is ​considering a path toward establishing new peace negotiations between the US and Iran. The decision came after a push initiated by China, the report said.

The report saw oil price falls accelerate. Brent oil for September delivery traded lower at USD95.49 a barrel on Friday afternoon, from USD100.98 late Thursday.

In European equities on Friday, the CAC 40 in Paris closed up 0.9%, while the DAX 40 in Frankfurt ended 1.4% higher.

Stocks in New York were higher. The Dow Jones Industrial Average was up 0.7%, the S&P 500 index was 0.6% higher, and the Nasdaq Composite edged up 0.1%.

Tariffs were back on the agenda, as the US announced a fresh round of levies on a list of 60 countries ranging between 10% and 12.5%. The EU and the UK will both be subject to a 10% tariff.

AJ Bell investment director Russ Mould said while the new tariffs won't come as a "complete shock to markets, it is nonetheless another unwelcome source of uncertainty."

The yield on the US 10-year Treasury narrowed to 4.66% on Friday from 4.71% on Thursday. The yield on the US 30-year Treasury fell to 5.14% from 5.18%.

Gold rose to USD4,078.09 an ounce on Friday from USD4,047.56 on Thursday.

On the FTSE, Relx led the risers, up 4.8% after positive broker comments following Thursday's trading update.

Bank of America raised its share price target to 3,950p and thinks shares are poised for a "significant and sustained re-rating."

The broker said: "We struggle to reconcile prevailing AI concerns with both an accelerating top line - in the areas AI concerns are most acute - and expanding margins."

JD Sports climbed 3.7% supported by an upgrade to 'buy' from Exane BNP.

HSBC gained 1.7% as it sold its Singapore life and health insurance business to German insurer Allianz for around USD2.1 billion.

On the FTSE 250, discoverIE Group shot up 6.3% as it said the "strong momentum" it saw in its prior financial year has continued into this one.

Sales in the first quarter ended June were up 6% on-year organically, with orders surging 31% organically. Including the recent buys of Trival and Storm, constant currency sales are 10% higher.

Renishaw rose 5.2% as it hailed "record" fourth quarter revenue, and said it expects annual profit "ahead of expectations".

The supplier of manufacturing technologies, analytical instruments, and medical devices said it saw "accelerating growth" as the year ended June 30 progressed. It culminated in record fourth-quarter revenue of £243 million, a rise of 27% on-year and 18% on-quarter. "

Wise Group shares fell 4.9%. The money transfer services provider reported that a US national trust bank charter application has been rejected by the nation's Office of the Comptroller of the Currency.

A trust bank licence would have allowed Wise to perform some custodial and fiduciary duties for clients.

The biggest risers on the FTSE 100 were Relx, up 117.00p at 2,568.00p, Sage Group, up 36.60p at 858.20p, Rolls Royce, up 56.60p at 1,415.60p, JD Sports Fashion, up 3.18p at 88.96p and Metlen Energy & Metals, up 1.48p at 44.02p.

The biggest fallers on the FTSE 100 were Airtel Africa, down 11.40p at 334.20p, BP, down 7.50p at 548.40p, Vodafone, down 1.55p at 114.60p, Shell, down 38.50p at 3,305.50p and Babcock International, down 13.00p at 1,121.00p.

Monday's economic calendar has the Ifo business climate in Germany and durable goods orders data in the US.

Later in the week, interest decisions are due in the US, UK and Japan, plus inflation prints in Australia and the eurozone.

On Monday's UK corporate calendar, drugs maker AstraZeneca reports half-year results, while telecoms firm Vodafone delivers a trading update.

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