6th Oct 2022 12:00
(Alliance News) - London's FTSE 100 went into Thursday afternoon in negative territory, as investors nervously await Friday's US jobs report, which could test the Federal Reserve's hawkish resolve.
The central bank has moved aggressively recently, lifting rates by 75 basis points in each of its previous three meetings. Stocks perked up earlier this week as weaker data led to hopes that the Fed would pivot, dialling back rate hikes in a bid to support a struggling economy.
There was some nervousness in the air on Thursday, however, as the nonfarm payrolls report edges ever closer.
The FTSE 100 index fell 48.40 points, or 0.7%, at 7,004.22. The FTSE 250 was up just 7.10 points at 17,569.52. The AIM All-Share was down by 0.90 of a point, or 0.1%, at 814.54.
The Cboe UK 100 lost 0.7% at 699.44, the Cboe UK 250 added 0.2% at 15,020.65, and the Cboe Small Companies was down 0.6% at 12,683.37.
In mainland Europe, the CAC 40 in Paris lost 0.5%, while the DAX 40 in Frankfurt fell 0.3%.
The dollar was mixed on Thursday as currency traders weigh up whether or not the Fed will put the brakes on rate hikes.
The pound was quoted at USD1.1253 at midday in London on Thursday, flat from USD1.1252 at the equities close on Wednesday.
The euro stood at USD0.9882 Thursday, up against USD0.9859 late Wednesday. Against the yen, the dollar was trading at JPY144.76, largely unchanged from JPY144.78.
"The dollar downtrend appears to be running out of steam. In our view, a further USD recovery is likely from current levels as markets show reluctance to fully jump in on bets of a Fed pivot," analysts at ING commented.
Central banks are juggling rampant inflation with weaker growth. The Reserve Bank of Australia on Tuesday slowed the pace of its rate rises, in a bid to strike a balance.
Inflationary worries intensified on Wednesday, AJ Bell analyst Russ Mould noted, after a group of oil producers cut output.
"Adding to a difficult picture, oil prices are back on the move. Having helped ease inflationary pressures in the last month or two as crude slipped back, OPEC's decision to go for higher-than-expected output cuts is driving the market higher once again," Mould commented.
Brent oil was quoted at USD92.86 a barrel at midday on Thursday, down from USD93.34 late Wednesday.
Oil edged lower heading into Thursday afternoon, but had topped the USD94 a barrel mark in morning trade.
OPEC's output cut was not enough to spare Shell from a share price slide in London. The oil major fell 4.7%.
It expects a third-quarter hit of USD1.0 billion to USD1.4 billion in its Chemicals & Products arm as indicative refining margins weaken.
Refining margins in the third quarter of 2022 weakened to USD15 a barrel, from USD28 a barrel in the previous three months.
Shell's earnings warning came after its departing Chief Executive Ben van Beurden on Tuesday said governments should "probably" tax energy firms more to help protect the poorest from soaring electricity and gas bills.
Topping the FTSE 100, Imperials Brands added 3.6%. The owner of the Davidoff cigarette brand announced a GBP1 billion share buyback programme, and said including dividends, annual capital returns are expected to exceed GBP2.3 billion. This is about 13% of current market capitalisation, it noted.
It also said trading in its financial year ended September 30 was in line with expectations. It expects net revenue and adjusted operating profit to grow by around 1% in constant currency, in line with previous guidance.
Volution Group rose 9.3%, the best FTSE 250 performer, as the manufacturer of energy-efficient indoor air quality products reported double-digit rises in annual revenue and profit.
It said revenue in the year ended July 31 rose 13% year-on-year to GBP307.7 million from GBP272.6 million, and pretax profit increased 57% to GBP47.2 million from GBP30.0 million.
Victorian Plumbing was a standout performer on AIM, surging 15%.
The bathroom retailer said its revenue, earnings and cash flow topped market expectations in the year ended September 30.
Revenue in the second half alone rose 5% annually.
"Against a wider bathroom market that is down year-on-year, this establishes Victorian Plumbing's position as the No. 1 bathroom retailer in the UK," it says.
Thursday's share price surge was welcome relief for a stock that has plunged more than 80% over the past 12 months.
It was one of the most valuable companies on the AIM junior market when it floated in June of last year, its market capitalisation even briefly hit the GBP1 billion mark, but stands at just GBP133.4 million now.
Shares in retailer N Brown dropped 12%. The Jacamo owner's revenue dropped 4.6% to GBP331.5 million in the half-year ended August 27, from GBP347.4 million a year prior. Pretax profit plunged 75% to GBP7.2 million from GBP28.4 million.
"We anticipate continued softness in trading over the second half as macroeconomic pressures continue to weigh on consumers, despite government support," Chief Executive Steve Johnson warned.
Gold was quoted at USD1,713.14 an ounce midday Thursday, up against USD1,709.08 late Wednesday.
Still to come on Thursday is the latest US initial jobless claims reading at 1330 BST.
Ahead of the data, New York equity market futures were weaker. The Dow Jones Industrial is called down 0.6%, and the S&P 500 and Nasdaq Composite each down 0.7%.
By Eric Cunha; [email protected]
Copyright 2022 Alliance News Limited. All Rights Reserved.
Related Shares:
ShellImperial BrandsVolution Group PLSVictorian PlumbingBrown Group