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LONDON MARKET MIDDAY: Stocks mixed ahead of key US payroll data

3rd Nov 2023 11:45

(Alliance News) - Stock prices in London were mixed at midday Friday, as investors eye the "big economic event of the day", which is the US employment report.

The FTSE 100 index was down 4.58 points, 0.1%, at 7,441.95. The FTSE 250 was up 96.51 points, 0.5%, at 17,863.81, and the AIM All-Share was up 3.45 points, 0.5%, at 693.79.

The Cboe UK 100 was down 01% at 742.53, the Cboe UK 250 was up 0.8% at 15,578.93, and the Cboe Small Companies was up 0.7% at 12,865.11.

"It's encouraging to see equity markets continue to move higher following yesterday's big rally driven by the Fed's decision to hold rates once again. The fact markets across the US, Europe and Asia remained in an up-trend suggests investors are gaining confidence that we've finally reached the much-anticipated pivot in central bank policy," said AJ Bell investment director Russ Mould.

The Bank of England on Thursday followed in the Federal Reserve's footsteps, by pausing interest rate again.

All eyes are now on the US employment report, which is due out at 1230 GMT. Mould called the report "the big economic event of the day."

According to FXStreet cited consensus, US nonfarm payroll growth is expected to have eased to 180,000 in October, from 336,000 in September. That outcome would aid the notion that the Fed is done hiking. A hotter-than-expected reading may strengthen the case for the Fed to resume hiking, or at least leave rates at loftier territory for longer.

"US growth is strong, and the jobs market remains healthy. The Fed thinks that solid labour-force participation and immigration explain the resilience of the jobs market," said Swissquote Bank's Ipek Ozkardeskaya.

"Any strength in job additions or wages growth data could bring bond trades back to earth and remind them that if the US jobs market - and the economy - remains this strong, the Fed could turn hawkish again. But strong jobs data in a context of higher supply is not necessarily inflationary."

In the FTSE 100, Smith & Nephew was one of the best performers, up 3.4%.

JPMorgan raised the London-based medical technology company to 'overweight' from 'neutral'

On Thursday, Smith & Nephew updated shareholders on its third quarter performance.

It said revenue rose 8.8% to USD1.36 billion from USD1.25 billion a year earlier, representing underlying revenue growth of 7.7% and reported growth of 8.5% including an 80 basis point foreign exchange tailwind.

Looking ahead, Smith & Nephew expects full-year 2023 underlying revenue growth to be towards the higher end of the guidance range of 6.0% to 7.0%. Its trading profit margin is now expected to be around 17.5%, reflecting headwinds from China.

In the FTSE 250 index, Currys jumped 4.3%.

It said it has struck a deal to sell Dixons South East Europe, the holding company of its Greece and Cyprus retail business, which trades as Kotsovolos.

The London-based consumer electronics retailer said the unit will be sold to Public Power Corp SA for EUR200 million, or GBP175 million, on a debt-free, cash-free basis. It will exclude lease liabilities.

"The disposal will simplify the group's structure enabling it to focus on its larger markets of the UK & Ireland and Nordics, while simultaneously strengthening Currys' balance sheet, increasing flexibility to invest and grow the business and improve shareholder returns," the firm said.

On London's AIM, Capital Metals surged 20%.

The company extended gains after it said Thursday that it reached a milestone after securing more than one billion advertising impressions.

On the other hand, Surface Transforms plummeted 32%.

The carbon-ceramic automotive brake disc manufacturer said that while some technical problems have been overcome, it is still seeing challenges in its production line.

"These challenges, which are being resolved, are hindering us from creating sufficient capacity resilience and are constraining our production ramp up," it explained.

In the light of these challenges, Surface Transforms said sales guidance for 2023 is GBP8.6 million, which it said was a cut.

Stocks in New York were called lower. The Dow Jones Industrial Average was called down slightly, the S&P 500 index down 0.2%, and the Nasdaq Composite down 0.4%.

In pre-market trade, Apple was down 3.2%.

The Cupertino, California-based firm reported a fourth consecutive quarterly drop in revenue, with revenue in its final quarter down 0.7% to USD89.50 billion from USD90.15 billion the year before. The company's financial year runs to September 30.

Market attention was on sales dropping in China. In China sales fell to USD15.08 billion in the quarter, down 2.5% from USD15.47 billion a year earlier.

Swissquote Bank's Ozkardeskaya called the demand in China "sluggish", and blamed it for denting revenue.

In recent months, there have been reports of significant Chinese restrictions on iPhones at government offices and state-backed entities. The tech giant first established a presence in China in 1993. As well as restrictions from regulation, Apple has also faced some stiffer competition from local competitors such as Huawei.

In European equities on Friday, the CAC 40 in Paris was down 0.1%, while the DAX 40 in Frankfurt was up 0.1%.

The pound was quoted at USD1.2227 at midday on Friday in London, up compared to USD1.2176 at the equities close on Thursday. The euro stood at USD1.0652, higher against USD1.0613. Against the yen, the dollar was trading at JPY150.17, down compared to JPY150.48.

Brent oil was quoted at USD87.11 a barrel at midday in London on Friday, up from USD86.38 late Thursday. Gold was quoted at USD1,987.55 an ounce, higher against USD1,981.27.

By Sophie Rose, Alliance News senior reporter

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