Stock prices were mixed but the dollar was facing selling at midday on Friday, ahead of an economic indicator expected to influence the US central bank’s next interest-rate decision.
The FTSE 100 index was down 14.18 points, 0.2%, at 7,544.31. The FTSE 250 was up 106.91 points, 0.6%, at 19,516.33, and the AIM All-Share was up 4.35 points, 0.5%, at 854.91.
The Cboe UK 100 was down 0.2% at 754.26, the Cboe UK 250 was up 1.0% at 16,892.03, and the Cboe Small Companies was down 0.1% at 13,017.53.
‘The FTSE 100 was firmly lower on Friday, dragged down by some profit-taking in resources stocks. Investors may also be hedging their bets ahead of the US open,’ commented AJ Bell investment director Russ Mould.
Investors were looking ahead to the latest US jobs print, due at 1330 GMT.
Consensus, as cited by FXStreet, expects non-farm payroll employment to have increased by 200,000 in November. A stronger-than-expected figure would suggest ongoing strength in the US labour market, which would support the case for a larger interest rate hike by the Federal Reserve at its December meeting in just under two weeks time.
Whilst a strong NFP print would not bode well for equities, it would provide support for the dollar, which continues to weaken.
‘Ideally the labour market would neither be so hot that it suggests the Federal Reserve needs to stay aggressive on interest rates nor so cold that it implies the world’s largest economy is headed for a severe downturn,’ AJ Bell’s Mould said.
In a speech on Wednesday, Fed Chair Jerome Powell hinted the central bank may slow its rate hikes from the current pace of 75 basis points per meeting as soon as this month. ‘The time for moderating the pace of rate increases may come as soon as the December meeting,’ Powell said in a speech at the Brookings Institution think tank.
The pound was quoted at $1.2273 at midday on Friday in London, higher than $1.2266 at the London equities close on Thursday.
The euro stood at $1.0528, higher against $1.0487 late Thursday. Against the yen, the dollar was trading at JP¥134.00, down sharply from JP¥135.93.
‘While we still believe the fundamental outlook favours the dollar, we acknowledge that near-term dollar weakness is likely to continue after Powell’s unexpected dovish turn,’ commented Brown Brothers Harriman. ‘If the US data continue to weaken, that dovish Fed narrative will only get stronger.’
In European equities on Friday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.3%.
Producer prices eased more than expected in the eurozone, according to the latest figures.
Eurostat said industrial producer prices fell 2.9% in the eurozone in October from a month before. This is compared to a rise of 1.6% in September.
The reading confirms the easing of inflationary pressures observed in Thursday’s manufacturing purchasing managers’ index for the eurozone. However, while input pressures and supply-side woes ease, the industry is now reckoning with a softening of demand.
Meanwhile, France’s TotalEnergies said it will cut North Sea oil and gas investment by 25% next year after the UK government extended a windfall tax on energy firms.
Total will cut its North Sea investment by £100 million in 2023 after Chancellor Jeremy Hunt ramped up a windfall tax on oil and gas giants, whose profits have surged on fallout from the Ukraine war.
Total was 1.3% lower in Paris.
The move in last month’s budget was aimed at helping fund support for British consumers hit by rocketing energy bills.
Brent oil was quoted at $86.85 a barrel at midday in London, lower against $88.89 last Thursday.
It will be an consequential few days for the oil market. EU member states said they were close to agreeing a $60 dollar per barrel price cap on Russian oil on Thursday. However, the plans hit a diplomatic logjam on Friday. Poland said it does not think the $60 a barrel ceiling is low enough and has refused to back the plan.
On Thursday evening several European diplomats said the other 26 member states were ready to nod the plan through in time for it to go into effect on Monday along with an EU embargo on Russian crude.
But on Friday one negotiator told AFP: ‘The silence from Warsaw is deafening.’
From Monday, tankers will no longer be permitted to bring Russian crude to Europe - and the price cap is designed to make it harder to bypass the sanctions by selling beyond the EU.
In addition, the Organization of the Petroleum Exporting Countries will hold its meeting in Vienna on Sunday to decide on production quotas.
In London, oil stocks were leading the decline, with BP down 2.4%, Harbour Energy down 2.0% and Shell down 1.1%.
Miners also edged lower, succumbing to profit-taking. With Glencore down 1.2% and Fresnillo down 0.7%. Rio Tinto also shed 1.2%, as Citigroup cut the stock to ’neutral’ from ’buy’.
The bank noted the ‘market euphoria’ around China’s reopening has sent Rio Tinto shares higher over the past month.
‘For us, China reopening is an impact [to occur in the second half of 2023] and meantime we have a sharp ex-China downturn in steel production to navigate,’ the bank said, noting the miner’s exposure to iron ore, which is used to make steel.
Primark-owner Associated British Foods was the top large-cap performer in London at midday, adding 4.0%. Goldman Sach raised the stock to ’neutral’ from ’sell’.
In the FTSE 250, AJ Bell jumped 9.8%.
Jefferies raised the retail investment platform to ’buy’ from ’hold’.
On Thursday, the company upped its annual payout once again as it reported improved profit despite lowering prices and investing in new offerings.
Asos lost 0.2% after IT infrastructure firm Softcat said it has appointed Kathryn Mecklenburgh as its new chief financial officer.
Mecklenburgh is currently interim CFO at fast-fashion retailer Asos, but will join Softcat by ‘no later than mid-June’.
‘A year from hell for online fast fashion firm ASOS isn’t getting any better as interim finance boss Katy Mecklenburgh announces plans to step down just over a month after taking on the role,’ said AJ Bell’s Mould.
‘While there’s nothing unusual about someone in a temporary position getting a job elsewhere, and she’s not leaving for six months, it ramps up the pressure on ASOS to find a permanent replacement for Mecklenburgh’s predecessor Mat Dunn and adds to the somewhat chaotic feel around the business,’ he added.
Shares in Softcat were up 1.2%.
On AIM, Orosur Mining plummeted 33%.
The South America-focused diamond minerals mining company provided a disappointing update on the assay results at the Pepas and Pupino prospects in Colombia.
The assays found 3.49 grams per tonne of gold at an intersection between 492.35 metres and 494.00 metres below ground, while 8.36g/t of silver was found at an intersection between 516.30 metres and 517.40 metres below ground.
The results at Pepas 009 had lower levels of gold mineralisation than intersected in previous drilling. No significant results were found at the Pupino prospect.
‘While these drill results are not as exciting as hoped, this is not surprising. Epithermal gold systems by their nature are complex and several phases of drilling are often required to properly define the geometry before more substantial drilling can then be undertaken,’ said Orosur Chief Executive Officer Brad George.
The firm said it will now shift its focus to groundwork.
Gold was priced at $1,799.79 an ounce at midday on Friday, up from $1,796.43 late Thursday.
Stocks in New York were called lower, with the DJIA pointed down 0.2%, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.
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