The FTSE 100 was higher on Friday, with banking shares and Pearson driving the gains.

The FTSE 100 was 0.3% higher going into the close on Friday.

Barclays, NatWest, Standard Chartered, and Lloyds were all comfortably higher on Friday, with gains of over 1.4%. Standard Chartered was 3.2% to the good, and Barclays gained 2.8%.

There were several factors at play in FTSE 100 banks on Friday.

In the case of Standard Chartered, more bad news from the Chinese economy last night raised the prospect of Chinese stimulus, which will support the Asia-focused bank’s earnings. In addition, Standard Chartered shares broke above the 200-day moving average for the first time since October, triggering technical buying in the stock, which is riding a wave of optimism after reporting strong results last week.

UK banks were enjoying upbeat UK house price data and suggestions by BoE officials that interest rates will not be cut in the short term.

Data released by Nationwide on Friday showed house prices rose year-on-year for the first time in 13 months.

“The momentum of moderating mortgages fuelled a first-class February, and hiked house prices, pushing them into positive territory for the first time in over a year,” said Sarah Coles, head of personal finance at Hargreaves Lansdown.

“For months at the end of 2023, buyers were sitting on their hands, waiting for a break in the clouds. Now they’ve snapped up cheaper deals and are hunting for a new home. We know from yesterday’s Bank of England data that mortgage approvals surged in December, and we’re seeing this filter though into more demand and higher prices.”

A healthy housing market is good for the banks, which will benefit from increased mortgage demand and lower default rates.

Banks were also supported by comments by the Bank of England’s chief economist suggesting voting members were in no rush to cut rates given inflation was still way above the 2% target and other areas of the economy showed signs of resilience.

“In my view, we have some way to go before such evidence becomes conclusive,” said Huw Pill, the Bank of England’s chief economist 

“While that persistent component of inflation continues to threaten the lasting and sustainable achievement of the 2% inflation target, the MPC will need to maintain a degree of restrictiveness in its monetary policy stance to squeeze this persistent component out of the system.”

Banks enjoy the higher interest rate environment as elevated rates feed directly into their key income metrics. Should rates remain higher for longer, it will result in higher profits for the banks than if borrowing costs were slashed.

Pearson was the top gainer after education services provided said operating profit grew and they were working AI into its offering.

“Pearson is continuing to show that an old dog can learn new tricks as the publisher continues its digital transformation journey, even touting integration of AI in this latest update,” said Adam Vettese, analyst at investment platform eToro.

“Assessments and qualifications, particularly English language courses, have been driving growth and there is plenty of cash being generated to facilitate a dividend increase and expansion of its buyback programme, which will keep shareholders happy.”

Pearson shares were 5% higher at the time of writing.

Rightmove shares were trading in the red on Friday after the property portal reported full-year results.

Revenue grew 10% to £364m and operating profit increased 7% to £258m.

A recovery in UK housing activity supported higher earnings, and the board increased the full-year dividend by 9% to 9.3p.

However, stronger earnings and a recovering housing market were not enough to support shares. Rightmove has dominated its competitors in recent years, and maintaining this position is proving to be a challenge.

Being so dominant makes it difficult to increase market share, and cracks have begun to appear in agent membership numbers, which declined by 1%.

Investors want to see growth. The problem for Rightmove is there isn’t tremendous scope to grow with a market share of 86%.

“Despite a strong year in terms of profit, and signs of recovery in the housing market, there are some nagging worries for property listing site Rightmove.

“Being the market leader creates a virtuous circle for the company. It has the most listings and is therefore the site which prospective property buyers are mostly likely to visit when looking for their next home. 

“This reinforces its position as a must-have product for estate agencies and provides significant pricing power when it comes to securing subscriptions from agencies. That’s why the threat from OnTheMarket – now backed by a big US operator in CoStar – is such a concern for investors.”

Rightmove shares were down 1.5% at the time of writing.

easyJet is set to rejoin the FTSE 100 after a prolonged period in London’s mid-cap FTSE 250.

easyjet shares have steadily ascended over the past year and are now almost 100% higher than the lows recorded in the midst of the pandemic.

The airline is one of many travel-related companies that have slowly but surely carved out a recovery from the pandemic and are in much stronger positions than they were in the immediate aftermath. That said, easyjet is yet to fully recover from the pandemic in terms of financial performance.

The same sentiments behind Rolls Royce meteoric recovery are at play in easyjet. The airline is enjoying a recovery in travel after the pandemic as pent up demand supports booking growth.

In addition, despite the cost of living crisis, undercurrents of a consumer more willing to spend disposable income on travel than consumer goods have created a favourable environment for EasyJet.

There will, of course, be concerns the economic malaise puts a stop to this, but for now, easyJet deserves its spot back in London’s leading index. 

“While recovering pre-pandemic form is still proving highly elusive, easyJet’s continued progress has cheered investors, with shares up 9% year to date. The ‘revenge travel’ trend is still proving strong, with people still determined to see more of the world again after being cooped up at home during the Covid crisis,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

“Consumers still appear to be ring-fencing chunks of disposal income to spend on airfares, seat upgrades and treats on board, with the desire to travel higher up wish-lists than home purchases like furniture and TVs. The company has shown particular prowess at selling extras to customers on flights, and that helped first quarter revenue jump 22%, with losses narrowing again. It’s also managed to largely ride out the turbulence caused by flight disruptions in the Middle East with summer bookings building well.”

eEnergy Group shares rose on Friday after announcing a financing agreement with National Westminster Bank Plc (NatWest).

eEnergy Group has partnered with NatWest to provide up to £40 million in project funding to finance energy efficiencies for public sector customer’s onsite power generation projects.

The new financing solution, tailored exclusively for eEnergy’s public sector clients, will drive efficiencies by enabling cost-effective adoption of the company’s full range of energy transition technologies. eEnergy will own and operate each project through a dedicated special purpose vehicle, retaining ownership and benefiting directly from the economics.

Structured with flexibility in mind, the 12-year facility consists of two £20 million tranches designed to match expected drawdowns. The second tranche becomes accessible once 75% of the first is deployed.

eEnergy Group shares were 22% higher at the time fo writing.

“We are extremely pleased to announce this £40m Facility with NatWest, marking the beginning of a new collaboration between our two organisations. This Facility is the result of significant investment in honing our proposition to public sector customers and gives  eEnergy a clear competitive advantage in the market. It also allows us to offer our leading net zero energy efficiency services to larger multi-site projects and contracts. This Facility has been structured to allow us to scale rapidly in a large addressable UK market,” said Harvey Sinclair, eEnergy CEO.

“What is particularly exciting about this new Facility is its innovative structure which will lower our cost of capital and also provide us with longer-term economic upside on each project.

“We look forward to this new relationship with NatWest which we hope is a start of a much longer-term relationship given the opportunities available.”