With investor eyes fixed nervously on a trio of central bank interest rate decision next week, the FTSE 100 closed in the red on Thursday despite a strong performance from mining stocks.
The US Federal Reserve will announce its next interest rate decision on Wednesday next week, a day before the Bank of England and the European Central Bank reveal their own respective decisions.
‘Financial markets are currently expecting (or at least hoping for) a slowdown in the rate of increases leading to a pause and peak in the first half of 2023, with the first rate cuts coming in late 2023 or early 2024,’ explained Danni Hewson at AJ Bell.
The FTSE 100 index closed down 17.02 points, or 0.2%, at 7,472.17. The FTSE 250 ended down 106.56 points, or 0.6%, at 18,824.01, and the AIM All-Share closed down just 0.12 of a point at 834.41.
The Cboe UK 100 ended down 0.3% at 748.17, the Cboe UK 250 closed down 0.8% at 16,261.64, and the Cboe Small Companies ended down 0.4% at 13088.49.
In European equities on Thursday, the CAC 40 in Paris ended down 0.2%, while the DAX 40 in Frankfurt ended just 3.37 points higher.
The dollar was weaker at the London equities close on Thursday, ahead of the trio of central banking announcements next week.
The pound was quoted at $1.2218 at the London equities close on Thursday, up compared to $1.2194 at the close on Wednesday. The euro stood at $1.0547, higher against $1.0506 on Wednesday. Against the yen, the dollar was trading at JP¥135.56, lower compared to JP¥136.56 late Wednesday.
‘While we still believe the fundamental outlook favours the dollar, we acknowledge that near-term dollar weakness is likely to persist after Powell‘??s unexpected dovish turn,’ said analysts at Brown Brothers Harriman.
‘If the US data continue to come in firm like ISM services did, that dovish Fed narrative could start to crack ahead of next week’??s [Federal Open Market Committee] meeting,’ BBH continued.
The Institute for Supply Management’s services index rose to 56.5% in November, data revealed on Monday.
The print came well above the 50% threshold indicating growth and defied expectations that activity would ease as consumers draw down on their savings.
On Thursday, fresh data showed that new unemployment claims in the US ticked up last week.
According to the Department of Labor, the number of workers filing for first-time unemployment benefits rose to 230,000 in the week that ended December 2, increasing from an upwardly revised figure of 226,000 a week earlier.
The latest figure came in line with FXStreet-cited consensus.
Still to come, on Friday, the US producer price index is due. Oanda’s Craig Erlam said that may give investors a ‘welcome boost’ ahead of the ‘main event’ next week when the Fed announces its latest interest rate decision.
Stocks in New York were in the green at the London equities close, with the Dow Jones up 0.5%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.8%.
In London, mining stocks made gains as China eased its Covid curbs, boosting demand outlook for commodities.
Fresnillo was up 2.2%, Rio Tinto up 3.1%, Glencore was up 1.6% and Antofagasta added 1.7%.
China’s National Health Commission issued relaxed anti-pandemic regulations on Wednesday, including a loosening of lockdowns and the elimination of a requirement for a recent negative Covid-19 test to be shown to enter most public places.
Though the nation has not formally abandoned ’zero Covid’, which seeks to track and eliminate all infections, its recent steps seem to indicate it is dropping the policy in all but name.
Brent oil was quoted at $76.38 a barrel at the London equities close Thursday, down from $78.00 late Wednesday. Gold was quoted at $1,787.73 an ounce, higher against $1,783.10.
Frasers Group plunged 9.0% despite reporting that its revenue rose 13% to £2.64 billion in the six months that ended October 23 from £2.34 billion a year prior, largely thanks to acquisitions.
The Sports Direct owner also reported its pretax profit jumped 53% to £284.6 million from £186.0 million.
However, the stock was hit by investor concerns around the cost-of-living crisis and rising inflation moving.
In the FTSE 250, Balfour Beatty finished 2.8% higher after it announced its 2022 profit is expected to be ahead of expectations, following positive net interest income and the recognition of deferred tax assets reducing its tax charge for the year.
Revenue is expected to grow by 5% from £8.3 billion in 2021, and the year-end order book is forecast to grow 5% from £16.1 billion a year before, due to favourable foreign exchange movements.
Elsewhere, On the Beach fell 4.8% despite reporting it swung to a pretax profit of £2.1 million in year ended September 30, from a loss of £36.7 million the year prior.
The online travel agent’s revenue multiplied to £144.1 million, from £21.2 million a year ago, as travel restrictions were removed in financial 2022.
For AJ Bell’s Russ Mould, however, Shaun Morton - the company’s newly announced chief executive - will ‘have to work hard to ensure the brand remains relevant and affordable for people struggling with highly pressured household finances.’
In the UK corporate calendar on Friday, there are trading statements from retailer Associated British Foods and mining firm Anglo American.
The economic calendar has CPI and PPI prints from China overnight. The US will also publish PPI data at 1330 GMT.
By Heather Rydings, Alliance News senior economics reporter
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