Lunchtime market roundup: Stocks up but 'not getting too carried away'

European stocks were higher midday Friday as investors hoped for a peace deal between the US and Iran, while a loftier than expected UK public sector borrowing reading gave the Treasury some food for thought.

‘The market, having been burned before, is not getting too carried away on speculation about a US-Iran peace deal but the reports did lead to a higher open on Friday,’ AJ Bell analyst Russ Mould commented.

The FTSE 100 index traded up 28.92 points, 0.3%, at 10,472.39. It is up 2.7% so far this week.

The FTSE 250 rose 130.67 points, 0.6%, at 23,078.59, and the AIM all-share rose 2.15 points, 0.3%, at 798.79.

The Cboe UK 100 was flat at 1,041.25, the Cboe UK 250 was up 0.7% at 20,008.00, and the Cboe small companies climbed 0.6% at 18,730.88.

In Paris, the CAC 40 was up 0.3%. The DAX 40 in Frankfurt added 0.7%, on the back of data which confirmed the German economy expanded 0.3% on-quarter in the first three months of the year.

A barrel of Brent fell to $105.26 early Friday afternoon, from $107.98 at the time of the London equities close on Thursday. Gold rose to $4,514.67 an ounce from $4,508.26.

US Secretary of State Marco Rubio on Thursday said there were ‘some good signs’ in the negotiations between the US and Iran, but added that he did not want to be ‘overly optimistic’.

The US and Iran have just a ‘50-50’ chance of reaching an agreement that would free up the Strait of Hormuz, a senior UAE official said on Friday.

Presidential adviser Anwar Gargash urged Tehran not to overplay its hand in the stop-start negotiations during the Middle East war’s fragile ceasefire.

Iranian officials ‘have missed a lot of chances over the years because there’s a tendency to overestimate their cards’, Gargash told the GLOBSEC Forum in Prague.

‘I hope they don’t do that this time.’

The yield on the 10-year US Treasury narrowed to 4.56% from 4.62% late Thursday. The 30-year yield cooled to 5.08% from 5.14%.

In New York, the Dow Jones Industrial Average is called up 0.2%, the S&P 500 0.1% higher and the Nasdaq Composite flat.

Sterling rose to $1.3424 midday Friday, from $1.3401 late Thursday afternoon. Against the euro, it was steady at €1.1568 from €1.1566. The euro climbed to $1.1599 from $1.1587. Against the yen, the dollar faded to JP¥159.11 from JP¥159.17.

UK public sector borrowing was higher than expected last month, numbers on Friday showed, while retail sales were shy of expectations.

The Office for National Statistics said borrowing in April totalled £24.34 billion, rising from £11.48 billion in March and higher than the £19.46 billion recorded a year prior.

The ONS said the April figure was ‘£3.4 billion more than the £20.9 billion forecast by the Office for Budget Responsibility’.

However, borrowing in the financial year to March was below an OBR forecast. Borrowing in the financial year ended March was provisionally estimated at £129.0 billion, down 15% on-year and £3.7 billion below the OBR’s £132.7 billion forecast.

Borrowing in the year to March was estimated at 4.2% of gross domestic product, the lowest figure since financial 2020 when it was 2.6%.

The ONS said its forecast for borrowing in the year to March was reduced by £3.0 billion from its last estimate.

Separately, the ONS said retail sales volumes fell 1.3% in April from March. They had risen 0.6% in March, revised down from an initially reported 0.7% climb. A lesser decline of 0.6% had been expected for April, according to consensus cited by FXStreet.

‘The high street – real or virtual – is a tough place right now. With prices set to rise over the rest of the year people‘s ability to spend will be tested, especially if the kind of wage hikes experienced during the last cost of living crisis are tempered by a subdued labour market,’ AJ Bell analyst Danni Hewson commented.

Softcat shares shot up 11% on a guidance hike. Softcat said profit in the third quarter surged, and it is ‘encouraged’ by momentum it is seeing.

The provider of IT infrastructure products said it saw double-digit year-on-year growth in gross profit and underlying operating profit in the third quarter ended April 30.

Softcat added: ‘Growth remains broad-based with particular strength in corporate, supported by customer demand for AI-enabled infrastructure and continued pull forward of some orders due to memory shortages. The board is pleased with progress to date and now expects mid-teens growth in underlying operating profit for the full year, up from high single-digit previously. Looking further ahead, the board is encouraged by the momentum in the business and prospects for continued market share gains, while recognising the uncertainty caused by the ongoing memory shortages and macroeconomic environment.’

Luxury in Europe was largely weaker. Burberry fell 1.7%, while Kering declined 0.7% in Paris.

The Swiss luxury goods group Richemont reported pretax profit of €4.35 billion for the financial year ended March 31, down 3.1% from €4.49 billion a year earlier. It attributed the decline to adverse exchange rate movements, higher raw material costs and additional US customs duties.

However, revenue rose 4.8% to €22.42 billion from €21.39 billion, with sales higher across all regions, led by the Americas and Middle East & Africa.

Richemont shares were down 1.5% in Zurich.

Back in London, Creo Medical shot up 26%. It has successfully raised £5.5 million through a placing, after earlier announcing plans to sell its remaining 49% stake in Creo Medical Europe SL and reporting narrowed annual losses.

In addition, the medical device company said revenue in 2025 rose 50% to £6.0 million from £4.0 million a year earlier, while its pretax loss narrowed to £17.5 million from £29.0 million.

Creo raised the funds at 15p each, a 32% premium to its previous closing price.

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