Stock markets were hardly budged early Wednesday, with little in the way of significant company news and with the release of eurozone inflation figures awaited as the next spur for trading.
The key economic indicator for the European Central Bank is due at 1000 BST. Consensus, according to FXStreet, expects the bloc's annual inflation rate will tick up to 9% in August from 8.9% in July.
‘Will the ECB hike by 50 or 75bp in September? The August inflation data from the euro zone is likely to have a major effect on that decision. If inflation was to surprise on the upside again the ECB hawks who favour a 75bp step should at least go into the rate meeting next week with some strong tailwinds,’ said Commerzbank.
The ECB raised its key interest rate by half a percentage point - 50 basis points - in July, deeming a ‘larger’ first-step towards policy normalisation was needed given sky-high inflation. The next ECB rate decision is on Thursday next week.
The FTSE 100 index was down 5.71 points, or 0.1%, at 7,355.92 early Wednesday. The mid-cap FTSE 250 index was down 14.19 points, or 0.1%, at 19,135.46. The AIM All-Share index was up 0.57 points, or 0.1%, at 887.88.
The Cboe UK 100 index was flat at 734.99. The Cboe 250 was down 0.1% at 16,429.13, and the Cboe Small Companies flat at 13,931.32.
In mainland Europe, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.4% early Wednesday.
Commzerbank added that the immediate outlook for the eurozone ‘remains a fundamental minefield’.
Russia's Gazprom on Wednesday cut off its gas supplies to Germany via the Nord Stream 1 pipeline for maintenance work, further raising tensions on an already taut electricity market.
The three-day works at a compressor station are ‘necessary’, Gazprom has said, adding that they had to be carried out after ‘every 1,000 hours of operation’.
But Germany's Federal Network Agency chief, Klaus Mueller, has called it a ‘technically incomprehensible’ decision, warning that it was likely just a pretext by Moscow to wield energy supplies as a threat.
The euro traded at $1.0016 early Wednesday, edging down from $1.0022 late Tuesday.
Sterling was quoted at $1.1667, marginally higher than $1.1662 at the London equities close on Tuesday. Against the yen, the dollar eased to JP¥138.49 from JP¥138.75.
In Asia on Wednesday, the Japanese Nikkei 225 index closed down 0.4%. In China, the Shanghai Composite closed down 0.8%, while the Hang Seng index in Hong Kong was up 0.1% in late trade. The S&P/ASX 200 in Sydney ended down 0.2%.
Out early Wednesday, official data showed China's factory activity shrank in August for the second month in a row. However, the contraction was not as bad as feared.
The purchasing managers' index, a key gauge of manufacturing in the world's second-biggest economy, came in at 49.4 points, up from July's 49.0 but still below the 50-point mark separating growth from contraction, National Bureau of Statistics data showed. The figure beat the consensus forecast, according to FXStreet, of 49.2.
China's non-manufacturing PMI came in at 52.6 points in August, down from 53.8 in July, NBS data showed, but again topping consensus, which had sat at 52.2.
In London, Anglo American was at the top of the FTSE 100, rising 1.6% after saying De Beers's seventh rough diamond sales cycle of 2022 amounted to $630 million, down marginally on $638 million in the sixth cycle but up from $522 million in the seventh cycle of 2021.
‘De Beers group rough diamond sales continued at a steady level in the seventh sales cycle of 2022. In line with normal seasonal trends, we anticipate that sales in the next few cycles will be affected by the temporary closure of polishing factories for the Diwali holidays,’ said Chief Executive Bruce Cleaver.
Diwali, the Hindu festival of lights, falls on October 24 this year, and India is an important centre for polishing rough diamonds.
On AIM, shares in Cake Box tumbled 40% after warning on full-year profit.
The fresh cream cakes maker said inflationary pressures have increased, and it has only managed to pass part of this onto franchisees, meaning its full-year gross margin will be hit.
This has been compounded by weaker-than-expected sales at the franchise level during July and August.
‘Accordingly, due to the worsening outlook and increasing cost of living pressures on the consumer, the group now expects full year profitability to be significantly below current market forecasts,’ Cake Box said, adding that it does not expect inflationary pressures to eased up before the end of the financial year.
In contrast, Futura Medical soared 28%. The pharmaceutical company reported positive results from the confirmatory phase 3 clinical study for its MED3000 as an erectile dysfunction treatment to be made available over-the-counter.
‘FM71 results are highly positive, in line with data generated in the previous phase 3 clinical study and broadly comparable with results from a recent ’real world‘, home use study. Accumulated MED3000 clinical data demonstrates that it presents an effective treatment option with a rapid onset of action and a favourable risk versus benefit profile ideally suited for OTC classification,’ said Futura.
The company is on track to file a dossier with the US Food & Drug Administration by the end of September, targeting marketing authorisation of MED3000 in the first quarter of 2023 as ‘the first major ED treatment available OTC throughout the USA’.
‘In the USA all clinically proven oral ED therapies are prescription-only and therefore MED3000 has the potential to be a significant innovation with its key differentiator of a rapid speed of onset and by creating a major new OTC category for ED treatment,’ said Chief Executive James Barder.
Gold was quoted at $1,721.51 an ounce early Wednesday, below $1,725.60 late on Tuesday.
Brent oil was trading at $99.80 a barrel early Wednesday, lower than $99.99 late Tuesday and still below a peak above $105 seen earlier this week.
In addition to the eurozone inflation figures, the international economic calendar on Wednesday has German import prices and unemployment alongside France inflation data. At 1315 BST, US ADP employment data are due.
Copyright 2022 Alliance News Limited. All Rights Reserved.
