Stocks were mixed in London at midday on Monday, with blue-chips benefiting from an oil price rise, but FTSE 100 constituent Endeavour Mining tumbling amid concerns in Burkina Faso.
The FTSE 100 index was up 30.29 points, 0.4%, at 8,310.88. The FTSE 250 was down 85.54 points, 0.4%, at 20,814.54, and the AIM All-Share was up 0.55 of a point, 0.1%, at 738.87.
The Cboe UK 100 was up 0.3% at 831.49, the Cboe UK 250 was down 0.5% at 18,284.51, and the Cboe Small Companies was little changed at 16,705.11.
In European equities on Monday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was down 0.2%.
‘European equities were lacklustre at the start of the new trading week despite the latest labour figures implying the US isn‘t heading towards recession,’ said Russ Mould, investment director at AJ Bell.
On Friday, the Bureau of Labor Statistics said nonfarm payroll employment increased by 254,000 in September, markedly ahead of the FXStreet cited consensus which predicted job additions of 140,000.
Nonfarm payrolls picked up from 159,000 in August. August’s reading was upwardly revised from 142,000. July’s figure was revised up by 55,000, to 144,000 from 89,000.
‘The US jobs report was incredibly strong on every front possible – job creation, unemployment, wages and hours worked,’ said analysts at ING.
The focus now switches to consumer price inflation figures on Thursday.
Pooja Sriram at Barclays expects US headline consumer prices to have risen 0.1% on-month in September. This would bring the annual rate lower to 2.3% from 2.5% in August, which itself was down from 2.9% in July.
The Barclays analyst expects core price growth, which excludes food and energy, to ease to 0.2% on-month from 0.3% growth in August. This would leave the annual rate of growth unchanged at 3.2%.
‘September inflation outcomes along the lines of our forecasts should reinforce the Federal Open Market Committee’s confidence that the disinflation process is intact and would likely keep the focus on upcoming labour market data and other indicators of activity,’ she commented.
Kathleen Brooks at XTB Research said the risk is to the upside after the recent bout of stronger than expected economic data, as the economy appears to have reaccelerated in late third quarter.
‘If we do get a larger than expected reading for inflation later this week, it may trigger a wave of risk aversion as US Treasury yields surge and as further interest rate cuts get priced out. It would also be dollar positive in our view.’
Stocks in New York were called lower. The Dow Jones Industrial Average is expected to open down 0.4%, the S&P 500 index is called 0.5% lower, while the Nasdaq Composite is seen falling 0.6%.
Brent oil was quoted at $79.80 a barrel at midday in London on Monday, up from $78.45 late Friday.
Stephen Innes at SPI Asset Management said the oil market is on a ‘wild ride, caught in a whirlwind of geopolitical tension, OPEC+ strategy shifts, and a slowdown from its biggest customer, China.’
But despite ‘Iran firing missiles at Israel and the drumbeat of war in the region, crude hasn’t exploded,’ he noted.
‘Sure, prices are up 10%, but that rise comes off a pretty low base. Traders are banking on the idea that this conflict won‘t lead to long-term disruptions in oil production from key players like Saudi Arabia and the UAE.’
‘The market is clearly betting that geopolitical tension won’t morph into a full-blown oil supply shock,’ he remarked.
The oil price rise supported Shell, up 2.1%, and BP, up 1.6%.
In addition, Shell said refining margins ebbed in the third quarter although it raised volume guidance across both upstream and liquefied natural gas businesses.
In a mixed third quarter trading update, Shell said Chemicals margins rose to $164 per tonne from $155/t in the second quarter, but noted the division is expected to revert to a loss again this quarter.
The company said the indicative refining margin for its Chemicals & Products arm amounted to $5.5 a barrel for the third-quarter of 2024, declining from $7.7 in the second-quarter.
Upstream production is predicted between 1,740 to 1,840 kboe/d. This was increased from 1,580 kboe/d to 1,780 kboe/d.
‘We see the release as positive given the increase in volume guidance across both upstream and Integrated Gas liquefaction in [the third quarter], which are the two key earnings drivers for Shell,’ analysts at RBC Capital Markets said.
Elsewhere, on London’s FTSE 100, Experian rose 0.9% as Deutsche Bank upgraded to ’buy’ from ’hold’, while Diploma climbed 1.1% as the same broker increased its share price target.
Rio Tinto was down 0.1% as it confirmed the potential acquisition of the US-based lithium producer Arcadium Lithium.
Rio said in a statement it had approached the company regarding the potential ‘non-binding’ acquisition.
If the deal goes ahead, it would transform Rio Tinto into the world’s third-largest lithium supplier.
But Endeavour Mining tumbled 8.0% amid concerns about its assets in Burkina Faso.
Burkina Faso junta leader Ibrahim Traore was quoted in a radio address saying the country is planning to withdraw mining permits from some foreign companies and will be seeking to produce more of its own gold, according to Reuters.
Housebuilders were mixed despite figures showing UK house prices grew at the strongest pace in almost two years last month, on ‘steadily improving’ market confidence.
Mortgage lender Halifax’s September report showed UK house prices rose 0.3% from August and 4.7% year-on-year. In August, house prices rose 0.3% from July and 4.3% on-year.
September’s annual climb was the strongest since November 2022, Halifax said.
‘It’s essential to view these recent gains in context. While the typical property value has risen by around £13,000 over the past year, this increase is largely a recovery of the ground lost over the previous 12 months. Looking back two years, prices have increased by just 0.4%,’ Halifax analyst Amanda Bryden commented.
Persimmon fell 1.5%, Taylor Wimpey declined 0.9% but Barratt Redrow rose 0.2%.
Among small caps, Ferrexpo fell 2.9% after the iron ore pellets producer in Ukraine reported weaker output in the third-quarter.
Total commercial production weakens 16% on-quarter to 1.4 million tonnes, while pellet output alone falls 14% to 1.3 million tonnes.
Interim Executive Chair Lucio Genovese said: ‘For Ferrexpo’s operations, the third quarter presented a very challenging operating and macroeconomic environment.’
The pound was quoted at $1.3068 at midday on Monday in London, falling from $1.3167 at the equities close on Friday.
Elsewhere, the euro stood at $1.0967, down against $1.1028. Against the yen, the dollar was trading at JP¥148.60, up compared to JP¥146.49.
Gold was quoted at $2,656.47 an ounce, down against $2,659.79.
Still to come on an address from Federal Reserve Governor Michelle Bowman.
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