Stock prices in Europe were mildly higher on Thursday morning, as investors await the start of the Jackson Hole conference on Thursday which could indicate clues on the trajectory of US interest rates.
Amongst individual stocks, JD Sports Fashion saw its shares jump, after updating shareholders on its second quarter growth. Eckoh also took some of the spotlight, after receiving a takeover offer from a private equity investor.
The FTSE 100 index opened up 18.12 points, 0.2%, at 8,301.55. The FTSE 250 was down 38.11 points, 0.2%, at 21,149.08, and the AIM All-Share was up just 0.39 of a point, 0.1%, at 777.20.
The Cboe UK 100 was up 0.2% at 829.59, the Cboe UK 250 was down slightly at 18,537.18, and the Cboe Small Companies was up 0.1% at 16,915.71.
In European equities on Thursday, the CAC 40 in Paris and the DAX 40 in Frankfurt were both up 0.2%.
Stocks on New York recovered on Wednesday from Tuesday‘s dip as investors digested revised nonfarms data and minutes from July’s US Federal Reserve meeting, ahead of the start of the Jackson Hole conference on Thursday.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.1%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.6%.
Minutes from the July Federal Open Market Committee meeting showed the ‘vast majority’ of participants ‘observed that, if the data continued to come in about as expected, it would likely be appropriate to ease policy at the next meeting.’
However, ‘several’ officials mulled a move in July, amid the risk of acting ‘too late or too little’.
Investors will now be eagerly waiting for the Jackson Hole symposium to kick off today in Wyoming, and for the further guidance that may come with Fed Chair Jerome Powell’s speech on Friday.
The annual gathering, which runs for three days, is hosted by the Federal Reserve Bank of Kansas City at Jackson Hole, Wyoming, and attended by central bankers from around the world.
‘Walking into the meeting, the swap markets are back to pricing in a 100bp cut from the Fed before the end of this year. The latter implies a jumbo rate cut at one of the last three FOMC meetings of the year. And because a jumbo rate cut wouldn‘t arrive unless there is a deeper economic and financial trouble, the market pricing of the moment is unsustainable for either the US dollar – which has gone too low with the expectation of a 100bp cut, or the stock markets – which have gone too high with the same expectation disregarding the fact that economic trouble is never good for profitability. In summary, I think that something must give: either the US dollar will rebound, or equities will fall,’ said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
The pound was quoted at $1.3094 early on Thursday in London, higher compared to $1.3020 at the equities close on Wednesday. The euro stood at $1.1151, up against $1.1138. Against the yen, the dollar was trading at JP¥145.41, higher compared to JP¥145.35.
In the FTSE 100, JD Sports Fashion was the start performing, jumping 5.4% in early trade.
JD reported sales growth perked up in the second quarter, boosted by double-digit organic sales growth in North America and Europe.
The Lancashire, England-based sports fashion retailer said like-for-like sales rose 2.4% in the 13 weeks to August 3, improving from a fall of 0.7% in the first quarter.
On an organic basis in the recent quarter, sales climbed 8.3%, with North America sales up 14%, and Europe and Asia Pacific up 11%. UK organic sales growth lagged at just 1.2%.
In the FTSE 250, Hays lost 1.3%.
The London-based recruitment company reported that net fees in the year ended June 30 fell 14% to £1.11 billion from £1.29 billion a year ago. Pretax profit plummeted 92% from £14.7 million from £192.1 million.
Hays maintained its core dividend per share at 3.00p.
Looking ahead, Hays said that near-term conditions ‘remain challenging’ but in line with its expectations.
Serco edged up 1.3%.
The Hampshire, England-based outsourcer said it has been awarded a new contract by US Army Corps of Engineers to manage the modernisation of the back-up electrical plant at the US Space Force’s Pituffik Space Base, in Greenland. The contract started in August and has an estimated value of around $320 million over its four-year term.
Elsewhere in London, Eckoh said it has received tentative takeover offer from an unnamed private equity investor, as part of the sale process that it launched back in March.
The proposed price of 54 pence per share doesn’t represent a large premium to Eckoh’s current share price; however the stock is up 39% since March. Eckoh shares were up 2.6% to 49.77p early Thursday in London, giving the company a market capitalisation of £144.6 million. They had closed on Wednesday at 48.52p.
Eckoh is a London-based provider of secure payment and customer contact products.
It said the offer from the private equity investor, which it didn’t name, was ‘highly conditional’, ‘non-binding’, and ‘indicative’. Eckoh is now in an offer period, but there is no certainty a formal offer will be made, it said.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 0.7%. In China, the Shanghai Composite was down 0.3%, while the Hang Seng index in Hong Kong was up 1.5%. The S&P/ASX 200 in Sydney closed up 0.2%.
Brent oil was quoted at $75.91 a barrel early in London on Thursday, down from $77.29 late Wednesday. Gold was quoted at $2,506.70 an ounce, slightly lower against $2,507.72.
Still to come on Thursday’s economic calendar, there is flash composite PMI data from the eurozone, the UK, and the US. There is also the weekly initial jobless claims data from the US due out at 1330 BST.
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