UK equity markets ended the week on a more cautious note with both the blue chip FTSE 100 index and its mid-cap counterpart FTSE 250 index ending Friday’s session in negative territory with the former down 0.10% at 7122.32, and the latter 0.17% weaker at 22,646.08.
The UK market surrendered earlier gains in response to a significantly weaker than expected non-farm payrolls number.
Seema Shah, Chief Strategist at Principal Global Investors commented:
‘Just as the story was starting to come together, the jobs report threw out more questions than answers. Non-farm payrolls were widely expected to be strong, but in fact only increased by 210,000 in November - half the consensus forecast - and one of the weakest economic data points this month.
‘The November jobs report likely doesn’t change anything for the Fed’s recent hawkish pivot. Keeping monetary policy so accommodative doesn’t seem to have made any meaningful headway with participation, so why continue risking price stability?’.
All the major US equity markets were lower in response to the weaker non-farm payrolls print. The Nasdaq fell 2.5% to 14,983.02 and the SAP 500 was 1.3% weaker at 4,515.33
OIL STOCKS IN DEMAND
Oil stocks were in demand, reflecting firmer crude prices after OPEC+ said it would review supply additions ahead of its next scheduled meeting in light of the potential impact of the new Covid variant.
Shares in BP (BP) rose 1.2% to 340p helped by an upgrade note from Deutsche bank.
The broker has changed its recommendation from Hold to Buy and raised its price target from 320p to 404p. There are several factors driving the more positive stance.
First, an 18% increase in their 2022 Brent oil price forecast to $75. Second, Deutsche maintain that the oil majors have been exercising greater capital expenditure discipline, and that additional Iranian production is ‘nowhere in sight’.
Moreover, oil inventories are below five-year averages, and several OPEC members are encountering difficulties in raising production levels.
Shares in Royal Dutch Shell (RDSA) were also in demand rising 1.1% to £16.51.
RAISED GUIDANCE
Shares in Wickes (WIX) rallied 11.2% to 239.2p after the home improvement retailer raised its adjusted pre-tax profit guidance for the year to December 2021 to ‘no less than £83 million’, comfortably ahead of the £74 million-to-£75 million analyst consensus range.
Spun out of Travis Perkins (TPK) in April this year, the DIY retailer cited resilient trading and a ‘strong margin performance’ for its latest upgrade, as it continues to benefit from buoyant conditions in the repair, maintenance and improvement market.
Insurer Prudential (PRU) rose 0.83% to £12.81. and Legal & General (LGEN) climbed 0.85%% to 285.9p after German peer Allianz raised its targets for shareholder returns for the 2022 to 2024 period.
SMALL CAP WRAP
Beowulf Mining (BEM:AIM) led the AIM leader board with a 34% advance to 9.75p as hopes rise of a change of attitudes in Sweden towards mining projects.
Shares in alternative capital provider Duke Royalty (DUKE:AIM) gained 2.9% to 45.3p after the company reported strong first half growth in revenues and profit and said it was confident of exceeding market expectations for the full year to 31 March 2022.
Stripping out the non-cash movement adjusted earnings after tax grew 125% to £4.7 million. A dividend of 1.1p per share was paid over the period.
Strong growth in the period was driven by deployment of over £23 million of new investments into three new royalty partners, while two divestments were undertaken. In April the company raised £35 million of new equity.
