Robust oil and gold prices and the safe haven appeal of utility stocks supported the FTSE 100, though peers in Europe struggled as investors nervously count down the minutes until a US labour market reading.
The ADP jobs data is reported at 1315 BST on Wednesday. It is an understudy to the main event, Friday’s nonfarms. Elsewhere on Wednesday, there are US PMI readings at 1445 BST and 1500 BST.
The FTSE 100 index was up 32.50 points, 0.4%, at 7,667.02. The FTSE 250 was down 79.87 points, 0.4%, at 18,735.17, and the AIM All-Share was down 2.00 points, 0.3%, at 808.22.
The Cboe UK 100 was up 0.4% at 766.97, the Cboe UK 250 down 0.7% at 16,320.23, and the Cboe Small Companies down 0.1% at 13,219.82.
‘The FTSE 100 is heading into Easter with a spring in its step despite weaker than expected data from the US,’ AJ Bell analyst Danni Hewson commented.
‘Figures on job openings and factory orders are pointing towards a potential recession for the world‘??s largest economy, but the upside might be a pause in interest rates, which would typically be a positive for stocks. The concern is the Federal Reserve might have to sound the retreat before its war on inflation is truly done. This could leave us with the worst of all worlds - the dreaded stagflation where the economy is shrinking but prices are continuing to surge higher.’
In European equities on Wednesday, the CAC 40 in Paris was down 0.2%, and the DAX 40 in Frankfurt was down 0.4%.
Helping the FTSE outperform were gains for utility stocks, oil companies and gold producers.
United Utilities rose 2.9%, gold miner Endeavour Mining added 2.6% and BP climbed 1.3%.
General unease in markets ahead of Friday’s US jobs report lifted utility shares, and rallying spot prices lifted gold miners. Oil majors were boosted by a robust oil price.
Brent continued to top the $84 a barrel mark as traders continue to digest Sunday’s shock production cut from Opec+.
Brent oil was quoted at $84.69 a barrel at midday in London on Wednesday, up from $84.52 late Tuesday.
Meanwhile, gold continued to top the $2,000 mark. Gold was quoted at $2,022.32 an ounce, up against $2,016.62.
The euro stood at $1.0947 midday Wednesday, down against $1.0957 at the European equities close on Tuesday. Against the yen, the dollar was trading at JP¥131.68, down compared to JP¥131.83.
The eurozone private sector economy expanded at the strongest pace since May 2022, data from S&P Global showed.
The seasonally adjusted S&P Global eurozone composite purchasing managers’ index rose to 53.7 points in March, from 52.0 points in February. This marks the highest level since May 2022, and a third successive month above the critical 50.0 threshold that splits growth from contraction.
Furthermore, this marked a sustained increase in the headline index since it sank to a near two-year low in October last year when concerns surrounding the European energy crisis were particularly pronounced, S&P noted.
The eurozone services PMI rose markedly to 55.0 in March from 52.7 in the previous month. This is the highest reading in the last ten months.
‘The eurozone economy continues to bounce back from the lull we saw at the back-end of 2022 and the latest PMI survey will add fresh conviction to the view that, at least for now, the euro area is clear of a recession,’ said Joe Hayes, senior economist at S&P.
Meanwhile, in the UK, the private sector continued to grow for the second consecutive month in March.
The latest S&P Global/CIPS UK composite PMI fell to 52.2 points in March, from 53.1 points in February.
This marks the second consecutive month of growth, following a six-month period of decline. S&P said this sustained rebound in private sector output contrasts with six months of marginal declines between August 2022 and January 2023.
The UK services PMI registered 52.9 points, down from 53.5 points in February.
The pound was quoted at $1.2467 at midday on Wednesday in London, down compared to $1.2501 at the equities close on Tuesday. The pound reached an intraday high of $1.2524 on Tuesday, its best level since June last year.
On the FTSE 100, RS Group lost 4.5%, making it the worst performer on the index at midday.
For the year ended March 31, the London-based industrial and electronics products distributor said it saw 10% like-for-like revenue growth. It delivered growth of 12% in the Europe, Middle East & Africa and 11% growth in the Americas. Like-for-like revenue in the Asia Pacific region fell 1%, however.
For the fourth quarter alone, group like-for-like revenue improved 1% on-year, slowing from growth of 8% in the third quarter and 15% and 18% in the second and first, respectively.
Chief Financial Officer David Egan said: ‘Effective execution and the ongoing hard work, enthusiasm and passion of our people has led to a very strong performance in 2022/23 and we anticipate full year adjusted operating profit to be slightly ahead of consensus expectations.’
RS said adjusted operating profit consensus stands at £382.0 million, which if achieved, would represent growth of 19% from £320.4 million the prior year.
Consensus for revenue is £2.99 billion, up 17% from the £2.55 billion it achieved the last financial year. Adjusted pretax profit consensus stands at £373.0 million, up 19% from £313.8 million.
On the FTSE 250, Qinetiq was up 3.2%, after it penned a £259 million renewal for UK maritime pact.
Qinetiq is a Hampshire, England-based science & engineering company operating primarily in the defence and security markets.
The company said the renewed agreement, which provides design, test, evaluation and assurance services covering hydromechanics, stealth and signatures, structures and maritime life support, is for £259 million, and includes an option for a further five-year extension.
Qinetiq added that the new deal will allow for a seamless transition from its previous 15-tear agreement with the Submarine Delivery agency.
On London’s AIM market, Fulham Shore soared 32%, after the Franco Manca and The Real Greek owner agreed to a £93.4 million takeover.
Tokyo-listed food company Toridoll Holdings will pay 14.15 pence per share, a 35% premium to Fulham Shore’s Tuesday closing price.
‘One might argue that the 14.15p takeout price for Fulham Shore doesn’t fully price in its potential. Eighteen months ago, it was trading close to 20p a share, after all. But in an economically uncertain environment, the price on the table might seem reasonable given the circumstances and possibly the best deal that could emerge for some time,’ said AJ Bell’s Hewson.
Restaurant sector-focused private equity fund Capdesia will also be involved in the deal. Toridoll’s stake will eventually reduce to no less than 51%.
Fulham Shore Executive Chair David Page said: ‘We are proud of the significant progress that Fulham Shore has made since it was founded in 2012. We are proud of our two brands, Franco Manca and The Real Greek, and the growth we have delivered for Fulham Shore. Whilst we remain excited about the prospects for the business on a standalone basis, we have been in discussions with both Toridoll and Capdesia and received a proposal that we believe is compelling for all of our stakeholders. We believe Toridoll and Capdesia’s experience in successfully building restaurant businesses and their long-term vision for Fulham Shore, will enable Fulham Shore to fulfil its long-term potential.’
Stocks in New York were called lower. The Dow Jones Industrial Average is called down 0.1%, while both the S&P 500 index and the Nasdaq Composite are called down 0.2%.
UBS shares were up 0.1% in Zurich. UBS chiefs told shareholders on Wednesday that the Swiss bank’s emergency takeover of beleaguered rival Credit Suisse was a ‘Herculean task’ strewn with risks, but still the right decision.
UBS Chair Colm Kelleher told the bank’s annual general meeting in Basel that although the takeover was sprung upon them, it would offer stability.
‘Whilst we did not initiate these discussions, we believe that this transaction is financially attractive for UBS shareholders. I am convinced we made the right choice,’ he insisted.
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