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LONDON MARKET CLOSE: FTSE rises but New York feels heat from US jobs

5th Dec 2022 16:57

(Alliance News) - London's FTSE 100 ended higher on Monday, with China-exposed stocks getting a boost, though it was a less-than-stellar start to the week in New York with equities there still reeling from a red-hot jobs report.

The FTSE 100 index closed up 11.31 points, 0.2%, at 7,567.54. The FTSE 250 closed down 33.70 points, 0.2%, at 19,329.58, while the AIM All-Share closed down 2.60 points, 0.3%, at 850.72.

The Cboe UK 100 ended up 0.2% at 757.63, the Cboe UK 250 closed down 0.4% at 16,726.24, and the Cboe Small Companies closed 0.3% higher at 13,090.59.

In European equities on Monday, the CAC 40 in Paris ended down 0.7%, while the DAX 40 in Frankfurt closed down 0.6%.

"It's been a mixed start to the week as investors look towards the recent change of emphasis on a reopening of China's economy away from its zero-Covid approach," CMC Markets analyst Michael Hewson commented.

Authorities in China's financial hub of Shanghai will from Monday scrap some testing requirements in the country's latest relaxing of its strict zero-Covid policy, following nationwide protests unseen in decades.

Shanghai follows multiple cities including Beijing, Tianjin, Shenzhen and Chengdu, which all cancelled the testing requirement for public transport on Saturday.

CMC's Hewson added: "This more pragmatic approach to Covid by the Chinese government appears to be prompting optimism about the pace of a possible reopening with the likes of Prudential seeing further gains on top of last week’s strong performance, and helping to provide an uplift to the FTSE 100."

Asia-focused insurer Prudential rose 5.3%. Rio Tinto and Anglo American were among the next performers, adding 1.6% and 1.2%.

Among investment firms, Baillie Gifford China Growth Trust added 5.2%, JPMorgan China Growth & Income rose 4.7% and FTSE 250-listed Fidelity China Special Situations climbed 4.7%.

China-related optimism failed to filter through to New York.

The Dow Jones Industrial Average was down 0.8% at the time of the European close, the S&P 500 fell 1.1%, while the Nasdaq Composite shed 1.2%.

"Friday's jobs report continues to loom over markets, causing further losses as some dovish bets are pared back. While the pre-meeting blackout means we might be spared any Fed comments, it seems stocks will continue to trade in a negative fashion, at least until the meeting itself," IG analyst Chris Beauchamp commented.

Readings of the US service sector painted a mixed picture on Monday.

The seasonally adjusted S&P Global US Services PMI Business Activity Index registered 46.2 in November, compared to 47.8 in October. At below the 50.0 no-change mark, the score shows the sector remains in contraction.

The fall in business activity was largely linked to lower new orders and subdued client demand. The rate of contraction was the fastest since August and among the sharpest on record, according to S&P Global.

The Institute for Supply Management's tracker picked up, however.

ISM's services PMI rose to 56.5 points last month, from 54.4 in October. November's reading came in ahead of consensus of 53.1 points.

It was the 30th month of growth for the US service sector, according to ISM.

The pound was quoted at USD1.2189 at the time of the London equity market close on Monday, down from USD1.2240 at the London equities close on Friday. The euro stood at USD1.0515, higher against USD1.0478 late Friday. Against the yen, the dollar was trading at JPY136.42, up from JPY135.41.

Back in London, Burberry fell 1.9% and Watches of Switzerland Group lost 4.3%. HSBC cut Burberry to 'reduce' from 'hold' and WOSG to 'hold' from 'buy'.

On AIM, Fulcrum Utility Services shed 43% after the multi-utility infrastructure and services provider agreed to a GBP6 million convertible loan facility with Harwood Capital Management and Bayford & Co.

Fulcrum said proceeds from a fundraise had been used to repay debt, rather than support an entry into the smart meter infrastructure market. This was due to a shift in priorities amid wider market pressures due to inflation and supply chain issues.

"Clearly the situation that the company has found itself in is disappointing. Whilst it was known that the company had legacy operational issues, these were deeper and more longstanding than anticipated," said Chair Jennifer Babington.

On the up, however, Wentworth Resources jumped 25% to 31.20 pence. It has a market capitalisation of GBP56.2 million.

The Tanzania-focused natural gas producer agreed the terms of a potential takeover by Etablissements Maurel & Prom. The offer is for 32.5p per share in cash, valuing Wentworth at around GBP61.7 million.

The offer is a premium of around 30% to the closing price of 25.0p on Friday.

Analysts at SP Angel commented: "Today's offer provides shareholders with an immediate upfront realisation of value in cash for their holding at a substantial premium to the market price. In our view, this year has seen the E&P sector move towards consolidation and shareholder capital returns as companies look to squeeze costs and return excess cash to investors in the absence of wider M&A. Added to that, combinations often lower portfolio risk, improve balance sheet strength and reduce funding costs. We also expect a greater proportion of excess cash flows to also be directed towards higher risk portfolio activities such as exploration, appraisal and new greenfield developments as companies look to restock their development hoppers with low carbon barrels."

Brent oil was quoted at USD84.95 a barrel late Monday, down against USD86.65 on Friday. Gold was priced at USD1,776.79 an ounce, down from USD1,788.36 late Friday.

Tuesday's economic calendar has US trade data at 1330 GMT, after a British Retail Consortium retail sales monitor overnight. The Reserve Bank of Australia releases its latest interest rate decision in the early hours.

The local corporate calendar has half-year results from equipment rental firm Ashtead Group, first-quarter numbers from heating and plumbing products company Ferguson and annual figures from concessions operator SSP Group.

By Eric Cunha, Alliance News news editor

Comments and questions to [email protected]

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