British stocks drifted higher on Friday, with the FTSE 100 adding 0.4% as the market recovered from a 0.8% fall in the prior session. Despite the daily advance, the benchmark was on track to end the week largely unchanged after volatile trading.
Buying interest was concentrated in industrial miners and domestic mid-cap companies, which helped offset ongoing weakness among energy majors including Shell and BP. Trading in the City remained cautious and contained within a familiar range as market participants awaited a headline address by Federal Reserve Chair Kevin Warsh at the Jackson Hole Economic Policy Symposium later in the day - a speech seen by some investors as a potential market mover.
Homegrown economic indicators offered support to the market. A monthly Lloyds Bank survey released on Friday showed British business confidence climbed four percentage points in August to +53% - its strongest reading since March. That figure sits comfortably above the 12-month average of 47% and was driven by stronger consumer spending power, improved trading prospects and a more upbeat overall economic outlook for the UK.
Corporate news included reports that Shell PLC halted talks to sell its 37.5% interest in Germany's Russia-linked PCK Schwedt refinery to Polish energy group Unimot. At the same time, BP PLC appealed to leadership at United Steelworkers Local 7-1 to accept federal mediation and return to formal contract negotiations to resolve a prolonged labour dispute at its 440,000 barrel-per-day Whiting refinery in Indiana. Both oil majors were modestly higher on the session, each advancing about 0.4%.
Global crude markets moved in the opposite direction on Friday, with oil prices falling and Brent crude poised to end a two-week winning run. The retreat followed reports that the U.S. administration is not inclined to revert to previous agreement terms with Iran. The decline in oil weighed on sentiment for energy stocks even as the broader market found support from domestic economic data.
Overall, market activity remained measured as investors balanced improving UK-focused fundamentals against external drivers in commodities and the potential for fresh policy signals from the Jackson Hole gathering.
Key points
- FTSE 100 rose 0.4% on Friday but looked set to finish the week nearly flat after a volatile spell of trading - equity markets.
- Lloyds Bank's monthly survey recorded a rise in UK business confidence to +53% in August, above the 12-month average of 47% - domestic economy and consumer spending.
- Energy majors faced pressure as global crude prices fell, with Brent crude on course to end a two-week gain - energy and commodities.
Risks and uncertainties
- Investor caution ahead of Federal Reserve Chair Kevin Warsh's Jackson Hole address could prompt range-bound trading or sudden volatility - affects equities and fixed income.
- Continued softness in global oil prices represents a downside risk for energy stocks, which could weigh on sector performance - impacts energy companies and commodities-linked sectors.
- Labour disputes and unresolved corporate negotiations, such as the BP-related talks at the Whiting refinery, create operational and reputational uncertainty for affected firms - impacts energy and industrial sectors.