2nd Oct 2024 17:01
(Alliance News) - London's FTSE 100 faded into the close but still posted modest gains on Wednesday, while mid-and-small caps fell back amid ongoing Middle East nerves.
The FTSE 100 index ended up 14.21 points, 0.2%, at 8,290.86. The FTSE 250 closed 130.92 points lower, 0.6%, at 20,783.78, and the AIM All-Share shed 2.50 points, 0.3%, at 734.30.
The Cboe UK 100 ended 0.1% higher at 829.88. The Cboe UK 250 fell 1.0% to 18,238.29, and the Cboe Small Companies ebbed 0.1% to 16,777.11.
London's early gains came as the oil price climbed following Iran's attack on Israel on Tuesday, firing what it said were 200 missiles in retaliation for the killings of Tehran-backed militants.
Israeli Prime Minister Benjamin Netanyahu vowed to make Iran "pay" for its "big mistake" while Tehran warned that it would launch an even bigger attack if it is targeted.
But by the close, the price of 'black gold' had fallen back. Brent oil was quoted at USD74.05 a barrel late on Wednesday afternoon in London, down from USD74.51 late Tuesday.
"It is all about Middle East conflict now, when it comes to oil prices," said Fawad Razaqzada, analyst at City Index and Forex.com.
"The extent of Israel's potential response to Iran will influence how much further geopolitical risk markets are likely to factor in," he said.
Prices could fall if Israel's has a "measured" response and avoids hitting Iran's nuclear facilities, he said.
"However, if Israel lures in the US in its fight, or responds with an even bigger attack this time, then watch out for oil prices to potentially sky rocket," Razaqzada added.
On the FTSE 100, Shell rose 2.4% and BP climbed 2.1%. In Milan, Eni advanced 1.6% and in Paris TotalEnergies firmed 1.5%.
Also prospering amid the Middle East crisis, defence manufacturer BAE Systems rose 2.0%.
In European equities on Wednesday, the CAC 40 in Paris ended slightly higher, while the DAX 40 in Frankfurt ended 0.3% lower.
In New York at the time of the London market close, the DJIA was up 0.2%, the S&P 500 was 0.1% higher while the Nasdaq Composite advanced 0.2%.
There was some more encouraging news on the US labour market ahead of Friday's nonfarm payrolls report.
The US private sector economy added more jobs than expected last month, according to a tracker from payroll company ADP.
The latest ADP jobs report showed US private sector hiring picked up to 143,000 jobs in September, from an upwardly revised 103,000 in August. August's figure was initially reported as 99,000.
The September number topped the FXStreet cited consensus of 120,000.
"Job creation showed a widespread rebound after a five-month slowdown. Only one sector, information, lost jobs. Manufacturing added jobs for the first time since April," ADP said.
Back in London, and the Bank of England warned that markets are vulnerable to a correction, while a survey by the central bank found geopolitical risks are front-and-centre in the minds of those at the helm of finance firms.
Threadneedle Street published both its latest financial stability report, and its biannual systemic risk survey survey.
The report showed "risks to UK financial stability are broadly unchanged since the June 2024" iteration. However, Threadneedle Street cautioned that "significant financial market and global vulnerabilities remain".
"There was a significant spike in volatility across global financial markets in August. Although short-lived, the extent of the moves, in response to relatively limited economic news, illustrates the potential for vulnerabilities in market-based finance to amplify shocks. But while there was evidence that investor deleveraging had amplified price moves, it did not spillover or materially affect the functioning of core markets. It might have done so if subsequent economic news had not been positive or deleveraging had been more significant or broad-based," the BoE said.
Mining stocks also supported the FTSE 100 after the Hang Seng jumped 6.2% boosted by stimulus measures in China. Mainland Chinese markets are closed for Golden Week.
Rio Tinto, which rose 1.5%, was further boosted as Berenberg upgraded to 'buy' after a visit to the firm's aluminium and titanium dioxide operations in Quebec, Canada.
Glencore rose 1.0%, Anglo American gained 1.4% and Fresnillo added 1.7%.
Asia-focused insurer Prudential topped the blue-chip risers, up 4.2%, while HSBC and Standard Chartered climbed 1.7% and 1.9% respectively.
But JD Sports tumbled 6.1% despite first-half results ahead of City forecasts.
The Bury, England-based sportswear retailer said adjusted pretax profit rose 2.0% to GBP405.6 million in the 26 weeks to August 3 from GBP397.6 million. This was ahead of a company-compiled consensus of GBP395 million.
The sports retailer held guidance but flagged a foreign exchange hit from the strong pound. Analysts expect to trim consensus forecasts as a result.
JD was also under pressure as key sales partner, Nike, endured another tough day in New York, falling 6.0%.
The iconic sports footwear and clothing retailer withdrew its financial year outlook, lowered second quarter guidance and cancelled its investor day planned for November.
Elsewhere in London, musicmagpie leapt 51% after agreeing a takeover from electricals retailer AO World.
According to the terms of the acquisition, each musicMagpie shareholder will be entitled to receive 9.07 pence per share in cash for each musicMagpie share. The buy values musicMagpie at just under GBP10.0 million.
AO World rose 0.5%.
Saga jumped 11% as it confirmed it was holding talks with Belgium's Ageas with regard to a potential partnership arrangement for its Insurance business.
The confirmation was in response to a Sky News report naming Ageas, which earlier this year tried to buy Direct Line Insurance. Sky said Saga wants a deal that would allow it to repay a chunk of its debt pile.
The pound was quoted at USD1.3271 at the time of the London equities close, down compared to USD1.3276 on Tuesday. The euro stood at USD1.1046, down against USD1.1064. Against the yen, the dollar was trading at JPY146.06, up compared to JPY143.87.
Gold eased to USD2,650.17 an ounce against USD2,660.31 on Tuesday.
Thursday's UK corporate calendar sees half-year results from grocer Tesco.
The economic calendar on Thursday sees a slew of composite PMI readings, US weekly initial jobless claims and US factory orders data.
By Jeremy Cutler, Alliance News reporter
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